Rules of Thumb and Tips for FIRE frugality

I’m not gonna lie, I’m pretty frugal at the moment. My savings rate teeters around 80+% of my income for most months, and I am pretty determined to keep it that way. I want to reach FIRE, and I am totally obsessed with pumping up my portfolio as fast as possible. Discipline with spending is important to maximise your savings for investing, so its important to figure out some rules of thumb you could use to figure out your spending and work out how much you should reasonably spend. Fair warning though, I am in ultra savings mode toward reaching Financial Independence, and this lifestyle isn’t for everyone.

The first thing is your gonna have to take a deep breath and Reject consumerism. Think about the role that advertising plays in getting you to buy things you probably don’t need or that aren’t good for you…

  • Food: food that has to advertise itself to you is not good for you! Junk food, fast food, processed food, crappy and overpriced food subscription services… the list goes on
  • Loans: err you should probably stay away from personal debt. Any loan having to advertise itself to you is not a good loan!
  • Cars: I see a fancy car and to be honest I wonder what their weekly repayment is. All jokes aside, good on you if you’ve worked hard and are now able to sustainably afford those things. My priority is in my family’s financial stability, not in wasting money on fancy cars.

My rules of thumb

  • Drive a car worth no more than 5% of your take home (after tax) salary – for example, if you earn a $120,000 salary, and pay $31,900 income tax, your net salary is $88,100. Using this rule your car should cost no more than about $4400. $4400 gets you an amazing second hand car, and every year these older cars are featuring more and more technology. Use your car sparingly, and where you have to (such as if you need to drive to work). I ride by bike to get my groceries, and where I can to get to my mates houses. A good value second hand car means you can buy a new one at any time from your emergency savings, so you can afford to only pay for third party insurance and crank your excess up – that way your only insuring against something which will financially ruin you – like rear ending a Ferarri! My ongoing car budget is about $180 a month once I factor in the cost of registration, fuel, third party insurance (budget direct), $50 a year for an oil filter and 4L of oil and a new set of tyres every 50,000kms. Once a year I give old faithful a good service at home, saving on expensive mechanics. Sure, there are things that pop up like getting a flat, or eventually needing new brake pads, but I usually source parts second hand and do the work myself to minimise costs. That’s what the emergency fund is for. If you have a car space you’re not using, why not rent it out?
  • A majority fresh Whole food plant based grocery shop should cost no more than $40 per week per person. This equals just under $2 per meal, which is a seriously lush meal. I can produce (meal-prep) food for myself for easily under $1 per meal – which is $1 per serve (think lots of rice, pasta, and veggies like pumpkins, potatoes, peas etc. Start meal prepping by planning a meal on calorie content, and then macros and nutritional content. Whole food plant based is best – I don’t waste my money on toxic processed carcinogenic food like ham, salami or bacon (and pork farming is an incredibly cruel industry FYI). By raising my spending to almost $2 a meal I feel like I am living like a king. For breakfast I get fresh fruit and berries, luxurious nuts like almonds, walnuts, hazelnuts, macadamias and cashews, seeds like chia, pepita and flax to put in my muesli, shredded coconut, steel cut oats and delicious almond milk. For lunch and dinners I get rich curries and pastas, fried rice, roasted vegetables, salads, soups, dumplings, rice paper rolls and the like. I snack on mountains of fresh fruit and veggies like carrot and celery sticks dipped in hommus, and I treat myself with luxury treats like avocado (smashed avocado toast on weekends!), herbal teas and home baked goods like puff pastry berry danishes and sticky date puddings.
  • Holiday and travel should cost no more than 2.5% of your annual net salary; for a $120K earner, this is a sum total of vacations of about $2200. For $2200, I would be able to go on the most amazing road trip around the country and do the most amazing things like cage diving with sharks, going to the snow, drinking champagne on the beach during sunset, have the most amazing meals or travel to the mountains. $2200 is also enough money for international holidays which would cover flights, lush resorts and a lot of spending money for food and experiences especially if you are travelling to South East Asia. I have done three week holidays to Indonesia which have cost me less than $2000 for my sister and I, including spending a week in a popular tourist resort and doing many tourist activities like day cruises.
  • Your housing costs should be no more than 15% of your income. Now I see people bandy around recommendations of 30% as a general rule, but for me that’s too high. I actually spend about 10% of my take-home on rent, which is in a small 1 bedroom apartment which provides free internet and utilities. Its similar to student accommodation, and actually a number of my coworkers live in the apartment complex. Yes it would be nice to have a guest room but hey, they can sleep on my couch (or on an inflatable lie-lo mattress on the floor). I used to rent a 4 bedroom house in a well off suburb and had a dedicated hobby room, study and guest bedroom but you know what – most of the time my girlfriend and I just sat on our couch (studying on our laptops, not on the desktop in the study), and we only ever had visitors once a week at best! At the moment I also don’t live right in the centre of the city, which is quite horrendously expensive. I am happy to commute a small distance to work, and in the process this compromise makes a massive difference to my bottom line. The irony is I’m away for work most nights so what does it matter if my clothes, uniforms and kitchen appliances are left unattended in a small apartment versus a big house??
  • Phones: My mobile phone plan provides unlimited call and text, and a massive 7 Gigs of data per month for only $150 a year. thats $12.5 per month. There is literally no reason why you need to sign up to a bloody expensive $100 per month plan. In this day and age, there is free WiFi everywhere anyway, and I barely get through 4gigs of my data plan per month (and I am addicted to YouTube and the internets). I use my ‘old’ iPhone handset which still works perfectly amazing. I’ve even had friends and family offer to sell or gift me their old handset which would ‘technically’ be an upgrade, but I love my phone and it does the job. I have a really epic ‘lifeproof’ case which has proved virtually indestructible (I have put this phone and case through literal hell and high water) and I don’t want to have to pay another $200 for a new one that fits the new phone.
  • Clothes: This could be a massive expense for some. Not me. I actually have too many clothes! I can’t seem to stop people from giving me clothes – am I some sort of magnet-man that attracts clothing or perceived naked madman that needs clothes strewn on him at any opportunity?! Who needs 32 pairs of socks! Yes, 32 pairs of socks. I have two sock draws! I have 35 undershirts, and 4 pairs of jeans. Its too much, and I am now working on the philosophy of ‘Wear it out – don’t throw it out’ to slowly get through it all and reach my minimalist goals. So I don’t really buy new clothes. I sort of just take care of the ones I have, and most of the time I’m wearing either a work uniform or gym gear anyway. Because of this, I don’t really have a budget for clothes, and I don’t really feel qualified to even suggest what a clothes budget should be. But it shouldn’t be a lot!
  • Recreation: Now this one is very personal. I allow myself up to $50 per week spending money, no questions asked. Although I will still internally berate myself for spending money if I didn’t need to. You can spend whatever you want, but realise that most of the best things in life are actually free. Trips to the beach, or the river. Bushwalks and hiking. Downhill or mountain biking. Picnics. Working on your hobbies and passions like learning a language, learning to play an instrument, reading books or writing. They are all free or nearly free with some very minimal transport costs. Compare watching a free movie online through your library streaming service or on demand television service, versus paying $20 per ticket at the cinema. You choose.


I use my rules of thumb against percentage income, but also set figures to track my spending and rationalise my budgeting. These might be a little too frugal for some – what rules of thumb or tips do you use when saving and budgeting towards FIRE? Let us know in the comments if you have any different ideas or suggestions!

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