How much someone should cut back on their expenses or look for additional income streams will depend a lot on their situation at home, their lifestyle and current career, their job prospects, as well as where in the world they live. For example, in the United States, consumers have been spending a lot this holiday season. The job market remains strong and inflation continues to ease, though interest rates are still extremely high.

CNN reports that retail sales rose 0.3% in November compared to October, though economists expected a decline. Retail sales rose even more (0.6%) if you don’t count gasoline sales. In short, Americans are, on average, eating out more at restaurants, as well as buying more things in stores and online.

As Allison Morrow recently wrote on CNN, many Americans might complain about how 'bad' the economy is and how high many prices are when asked. However, their actions "tell a different story" when you look at their behavior.

"Despite higher prices and all-around sour mood, American consumers have been exceptionally willing to spend money on dining out, travel, concert tickets, and all manner of goods."

However, across the Atlantic Ocean, the United Kingdom is ringing alarm bells about the deepening state of financial inequality in the country. The Center for Social Justice think tank recently warned about the growing gap between the haves and the have-nots.

The BBC states that, according to the report, stagnant wages, poor housing family breakdown, crime, and mental health issues have widened the gap during the Covid-19 pandemic. The disadvantaged are “no better off than they were 15 years ago.”

The danger, according to the Center for Social Justice report, is that the UK might slip back into a level of deep social divide the likes of which have not been seen since the Victorian era.

The think tank explains that for many poor Brits, “work is not worth it” because it is poor quality, offers little to no security, and gives little chance of progression. That’s why people turn to welfare.

We asked personal finance expert Orford about the biggest barriers that people tend to have when it comes to saving money. He was kind enough to share some insights with us and stressed the importance of budgeting and even seemingly minuscule savings.

“In the media, it's common to hear ‘cut back on the little expenses’ to save money. Having been in a situation myself where I was spending far more than I earned, I recall asking myself, ‘How could saving $4 on this or that make any meaningful change?’ The fact is, every little bit helps,” the author of ‘The Financially Independent Millennial’ told Bored Panda via email.

“In my case, to be successful in spending less than I earn started with ‘paying myself first.’ This meant keeping three separate bank accounts: one for needs, one for wants, and another for savings/investment.”

Orford explained that his ‘needs’ included necessities like rent, insurance, and groceries. Meanwhile, his ‘wants’ included going out to eat at restaurants, going shopping, and holidays—things that usually meant he was spending more than he was earning. His solution to the problem was to create a budget.

“My needs money stayed in the needs account, and I moved a portion of the remainder to my ‘wants.’ The key was sticking within the ‘wants’ budget, and not going over. I recall my in my first month with this exercise, I ran out of all my ‘wants money’ after the first weekend! That meant staying at home for the remainder of the month—and that got me thinking, ‘How can I go out more, have a life, while not over-spending.’ The answer? I found a balance. I didn't go out as much, didn't shop as much, and before I knew it, I had money left over in the ‘wants’ account at the end of the month. This is the monthly surplus.”

The personal finance expert told us that he then moved this surplus to his third “and most important account” meant for his savings and investments. “Growing this account was the key to becoming financially independent,” he opened up to us.

According to Orford, the ‘every little bit counts’ philosophy applies not only to reducing one’s expenses but also their savings and investments. 

“I believe the money is best spent buying a home, even with higher than normal mortgages. But, the home should be affordable: so that means perhaps living with parents, or in an economical rental as long as needed until one can buy the home,” he gave some advice on what to invest in first.

“Once the home is purchased, the next step is to evaluate whether the goal is to pay it off fast or invest it in other things. Some say mortgage debt is bad, but I'm not one of them,” Orford told Bored Panda.

“That said, paying off a mortgage faster results in immediate savings as the funds will go toward the principal, thereby reducing years of interest payments,” he said.

“On the other hand, investing the money into a low-cost S&P 500 index fund, for example, historically returns 10% on average. In the end, I wouldn't fault anyone for making either choice as the money is put to work regardless.”

The r/frugal online community covers a lot of different aspects of frugal living. As the moderator team behind the project points out, everyone has their own definition of frugality, as well as their own reasons for being frugal.

It’s something to keep in mind so that all those friendly discussions about saving cash, time, and energy don’t turn into fiery arguments. “Discuss and debate, but don't fight over it, or be condescending to those who do not share your particular view on frugality,” the team shares.

Meanwhile, it helps to remember that the online community includes internet users from all over the globe. That means that general advice and personal finance philosophies might appeal to (nearly) everyone. However, tips about specific stores, products, or deals might only be helpful to folks living in certain countries.

The more specific someone is about their particular situation, without revealing sensitive overly personal information, the more accurate the advice they receive can be. 

For some more frugal living hacks, take a peek at Bored Panda’s previous features. But before you do that, why not share your own tips on saving money and living frugally in the comments? We always love hearing from you, dear Pandas!