7 Strategies for Frugal Urban Living

Editor's Note: This story originally appeared on Living on the Cheap.

The cost of living in a major metropolitan area runs higher than average. Frugal urban living is the ultimate oxymoron because there are just so many fun ways to spend money.

Consumer temptations abound in the city. From parking and lattes to fashion and entertainment, the cosmopolitan lifestyle can take a big bite out of your income, as well as rack up debt and leave you feeling empty and miserable.

We’re here to help with some simple strategies for frugal urban living that will tell you how to buy wisely and live happily.

1. Know the difference between value and price

Being frugal is about understanding the difference between price and value. Being cheap considers only the amount spent in dollars and cents.

Value can certainly be measured in terms of cost. But value is not always about calculating cost or savings. Many factors can contribute to your perception of the value of any purchase and whether you decide to buy it.

2. Know your three N’s: necessities, nest egg, nonessentials

Necessities include housing (mortgage or rent and utilities), food, clothing, transportation, and medical or health expenses. These living expenses should require no more than 50% of your take-home pay.

Your nest egg has a few parts. First, you need enough cash (in an interest-bearing savings account) to cover a minimum of three months’ living expenses, plus a reserve for any expected annual expenses such as insurance premiums or taxes. Beyond that, put nest-egg money (30% of your take-home pay) into a retirement account.

What’s left over — 20% of your take-home pay — can go toward nonessentials. These extras include smartphones, entertainment, dining out, home services, personal services, vacations, and any other extras beyond your necessities.

If you are over-budget in either necessities or nonessentials, you are living an extravagant lifestyle above your means. That is, you are slowly going broke and definitely not living frugally.

3. And the five R’s: reduce, repair, reuse, recycle, rent

Before you buy anything on your shopping list, especially clothes and household goods, evaluate whether you need to buy something new.

Do you really need it? Some people refuse to add a new item to the household unless they discard something else. Can you repair or re-purpose something you already own? Can you rent it?

If you must buy it, can you trade or barter for it, or buy it used or second-hand?

4. Spend with purpose — curate, don’t buy on impulse

Spend purposely by only shopping from a list. This goes for groceries, clothes, household goods, nonessentials, or any other purchase.

If you’re tempted to buy something not on your list, resist the impulse and simply postpone the purchase by adding it to a future shopping trip. After you give yourself time to think about it more carefully, you may decide against it.

For example, I considered purchasing a new chair for the living room. It was to die for.

After considering other options, I decided to re-purpose an unused chair from another part of the house, recovered it, and saved hundreds of dollars. I felt very clever, relieved, and happy.

5. Never pay full price

There are many ways to save money: clipping coupons, downloading smartphone apps, signing up for loyalty programs, keeping track of seasonal shopping bargains, using coupon books, perusing deal websites, and buying discount gift cards.

“The Ultimate Guide to Coupons” explains how to use these techniques to save money on everyday items from shampoo to auto maintenance, as well as niceties like dining out and going to the movies. It’s written by veteran frugalists right here at Living on the Cheap. The book is available in print or via download.

6. Put people over things

American marketers are adept at tempting us with happiness and success through the purchase of things. If you haven’t already figured it out, I’m happy to be the one to tell you: It’s a lie.

Relationships with people are worth more than any of the things that money can buy. These include casual conversations with a barista or bus driver, your work relationships, your faithfulness as a friend, and commitment to family (whether they’re blood relatives or adopted into your life for any reason).

So along with understanding the difference between price and value, understand that people and relationships are the stuff that money can’t buy. They simply have no price.

7. Focus on needs, not wants

Going back to the three N’s, focus most of your time and attention on necessities and building a nest egg. Be purposeful in the value you place on things, and get creative about your purchases.

Do you need an expensive smartphone with a big data plan — or could you do more of the tasks from your computer by adjusting your daily habits?

Do you need to eat out several nights a week — or could you eat in more nights with a little pre-planning to cook dinner with friends or family?

Have you tried “shopping your closet” and simply combining items differently to make new outfits?

Parting thoughts on frugal urban living

So these are some basic strategies to achieve a frugal urban lifestyle. It’s not a matter of buying cheap. It’s not austerity or self-denial. Quite the opposite.

Frugal urban living is a matter of spending wisely. It’s about thoughtful economy, appropriating the value of things and people, and building a contented and happy life.