January is usually the month that people try to get back into physical shape to kickstart their new year, but what about a month for financial fitness? That’s where Frugal February comes in. For one calendar month, you embrace frugality – in whatever way speaks to you.
For some people, Frugal February is their motivation to try a buy-nothing month and dig out their old board games, concoct homemade toiletries and burn up neighbourhood swap groups for some money-free fun. Yet there is a growing number of participants who aren’t just using Frugal February as an opportunity to get their latte habit under control. They’re using it as the impetus to make big changes in their financial life, and tackle the big hairy stuff that gets left to the wayside—stuff like renegotiating contracts, engaging professionals, reviewing portfolios and start moving in on their financial goals.
“A lot of personal finance advice focuses on the small, obvious wins, like cutting back on lattes and other treats,” says Ottawa-based financial literacy advocate Doris Belland. “But really, those savings won’t move your financial needle...from a purely practical level, focusing on the big wins will have a far greater impact on your life.”
There’s a reason why so many jokes are made about giving up avocado toast in order to buy a house. It’s absurd to think that momentary acts of thrift can compensate for the chasms caused by social inequity and uncertain economies. Setting restrictive goals can feel futile at times and it’s easy to get discouraged.
Instead, use Frugal February as the push you need to get going on all the financial tasks you’ve been putting aside. So go ahead and sip your latte. Just be prepared to dig into the big stuff to secure you a better financial future. (Good thing it’s a short month!).
Set goals that speak to you
Frugal February is a great opportunity to reassess your goals and financial future. Not only will this give you a clearer idea of what kind of life you want (and how to get there), but it can also help kickstart your journey toward long-term financial self-improvement.
“For those who need a motivation boost to keep going over the long term, I suggest that they tie their savings to a goal,” says Belland. “Why do you want to save money? Is it to build an emergency fund? Create a nest egg so you have time and freedom sooner rather than later. Pay for a course or a piece of technology that will help you increase your earnings.”
She recommends opening up a high-interest saving account if you don’t already have one and giving that account a name. Maybe it’s called “Emergency Funds”, “Grad School Tuition” or even “New Mountain Bike”. She says having a visible reminder every time you see your account name will serve as a motivation boost over the long term.
Think big, not small
Starting off Frugal February with some easy wins can be energizing. Hello, homemade lunches! But while it’s fun to find some extra money in your monthly budget, Frugal February is about much more than cutting small costs. Instead, think about the small actions that you can do that will lead to bigger savings down the line. Maybe this is switching data and internet providers to a lower-cost option, or doing an audit of your subscriptions to eliminate any that you aren’t using.
“Let’s say you cut back on those three lattes you buy every week and that your savings amount to roughly $12 per week,” says Belland. “One year later, you would have saved $624. That’s nothing to sneeze at. But when I had one of my clients focus on some of the bigger items in her life—like her inflated cell phone package and car insurance—she ended up saving nearly $2,000 per year after only a few minutes of research online and two phone calls.”
Invest in the best: yourself
In my first year participating in Frugal February, I actually spent more money than usual, despite swearing off temptations at the mall. That’s because I finally met with a lawyer to create a will and powers of attorney. It’s a task I had put off for a decade! But Frugal February was just the nudge I needed to finally do it. I know I’ve protected both my financial assets and my family and that’s money that will pay back in real dividends.
If you’re planning any major financial changes in your life (like quitting your job or buying a house), this is also when you might consider bringing in a fee-based financial advisor to help you develop a short or long-term financial plan that works with your goals to set you up for success.
Other thrifty investments include home energy audits, energy-saving appliances, and energy-smart thermostats. Maybe the challenge of Frugal February is just the spark you need to tackle a money-sapping home repair, like a leaking pipe or a drafty window in need of some caulking. Not only will these home repairs help you save money in the long run, but they’ll also future-proof your home and help shrink your carbon footprint, too!
This is also a great time to look at what insurance you have as a tenant or homeowner. A better policy might cost less than you think.
Cull your credit cards
Frugal February is ideal for fine-tuning every aspect of your personal finances, and a major component of that is credit cards. Most of us charge all of our online purchases and most of our everyday items with credit cards but we rarely think about the true benefits of this little piece of plastic. . If you’ve been paying for a travel rewards card but you’re planning on staying grounded for a while, a cashback card might give you more immediate benefits.
If you’re struggling with credit card debt, Frugal February would also be a good time to move to a low-interest credit card or capitalize on a card with a timed no-interest transfer bonus to really make a dent in your debt repayment strategy.
And if you’re on the other end of the spectrum and have too many credit cards that aren’t doing anything for you, now’s the time to pay ‘em off and cut ‘em loose for good.
Negotiate a better future
Last year, I tackled my biggest Frugal February mission of all: renegotiating my mortgage. I had an independent mortgage broker to guide me through the process. As it turns out, the marathon of paperwork was well worth it. Even after absorbing a penalty to break away from the old lender, the new rate saves us tens of thousands of dollars. It was one of the biggest financial moves I’ll ever make and it all started with a simple challenge to be more frugal.
This year, I’m tackling my retirement portfolio. Like renegotiating my mortgage, this is a big task, not to mention an intimidating one. I could easily push it off for months or even years. But knowing I’m one of many people who draw inspiration from Frugal February gives me the motivation I need to see this plan through.
Read more: A guide to retirement planning in Canada
The bottom line
While tasks like the ones I outlined above are ones that you can take on any time of the year, the reality is that many of us are content to just keep putting them off until we can’t any longer. But in the end, that’s just going to cost you more in the long run and leave you with bigger headaches than if you had just nipped them in the bud early.
Instead, you can think of Frugal February as a companion to tax season: It’s a time to sort out your documents, review your goals and put your financial plans into action. But if that all sounds too daunting, start modestly and build up to the tasks that will help you reach your financial goals. Just remember: It’s not about restricting yourself from enjoying your life, it’s about reprogramming your finances to propel you into the future and keep you thriving.