I was born a frugal person. Penny-pinching, deal searching and avoiding retail prices like the plague has been my life’s story. But for many, it doesn’t come naturally.
You may have a larger tendency or desire to spend and thus it takes more willpower to hold back on spending. You may also wonder why some people who look like they should have all the money in the world, and barely have a penny to their name. While others who make a modest income never seem to be stressed about money.
Habits Frugal People live by
Below is a summary of a few habits that frugal people live by. I know because I live by all of them. They aren’t learned or adopted overnight. If you looking to save more, but are someone who is a natural spender, read through the list and see if one or two speak to you to try to work the action step to get you one step closer to reaching your financial goals.
1. They know how to say “no” politely.
Think about time as a non-renewable resource!
If you commit to doing anything that is not contributing value to your life, that is a time you cannot get back. It’s an opportunity cost. Time spent doing one thing is time you can’t spend doing another. Make sure when you commit to a “yes” it’s something worthy of your time.
Not only do commitments you say yes to cost you time, but many cost you money. Did you blurt out a “yes” commitment before you had the time to think through your schedule? Does the “yes” fit in your budget?
“Yes” budget busters:
- Going out to lunch or dinner that was un-budgeted
- Saying yes to a concert or other event you can’t afford
- A weekend getaway that wasn’t planned for
- The latest piece of expensive technology your child is asking for
Action: Politely say “no” the next time you are asked to do something you simply don’t want to do or something that doesn’t fit your budget. Don’t feel guilty about it and don’t feel like you need to have an excuse. No thank you is enough to protect your time and to protect your finances. Say yes when you can afford to.
2. They plan ahead.
My husband accuses me of being an over-planner all the time. It’s something that annoys me and annoys him. He claims I want to know what we’re having for dinner three weeks from now (which is not true). But I’m trying to avoid coming home from work and not having a plan for dinner and ultimately going out or eating something unhealthy when a little planning would have saved us money and calories.
Not only do frugal people plan ahead for the small purchases, but they also plan ahead for the big ones.
They start saving for the holidays in January. They don’t have to scrape money together when it’s time to pay the car insurance bill every 6 months because it’s an expense they’ve been budgeting for. The cost of their annual vacation has been divvied out over 12 months of saving so they are ready to pay cash for the beach vacation in the winter when the time comes.
Frugal people plan ahead so they don’t waste money overpaying and are able to pay in cash.
3. They are intentional with their money.
They know where their money is, and where it is going. They have a plan for saving AND a plan for spending. Yes, they plan out how they will spend their money to make sure they don’t overextend on their budget in a given month.
They know how much they are earning each month, and know-how each cent will be accounted for. They know that if they don’t have a plan for their money, they lose control. They tell their money where to go, and by budgeting, give themselves the freedom to spend.
Action: If you don’t have a budget, create one now. The sooner you get a handle on the money coming in and money going out, the better off you will be in hitting your savings goals.
4. They know the value of second-hand.
Just because something is used does not make it less worthy or less usable. Frugal people know that someone else’s trash can be someone else’s treasure. Buying second hand is a great way to save money, as many like-new items can easily be purchased at a consignment shop, garage sale or Goodwill.
They realize how quickly kids grow out of their clothes and shoes and don’t spend a fortune on them. They know that many spenders get rid of like-new items that have a lot of use left because overconsumption drives people to purge.
Action: Before you go to make your next household goods or clothing purchase, just try consignment or second-hand shop.
5. They never leave money on the table.
Frugal people know the value of a dollar. They know that a dollar spent on something today is a dollar less they will have to invest tomorrow. They see a penny on the ground and pick it up.
They know the value of:
- Taking advantage of their employer’s 401k match
- Using sites like Rakuten to save on online purchases or Ibotta to save on groceries.
- Actively watching their financial situation using tools like Personal Capital
- Looking for sale prices at the grocery store to confirm they are getting the best price per the unit of measure.
- Delaying a purchase to ensure they really need to make it, and that they can get the best price for it.
Frugal people are diligent about checking bank statements for miscellaneous charges. Checking receipts to ensure they weren’t overcharged. Keeping tabs on savings accounts and investments to ensure they are earning what they should be.
Action: Can you find a different bank with a higher savings percentage? Is there an opportunity to refinance your house and save some money? Could you save money on insurance premiums? Don’t just stick with the status quo, dive in and find the money you might be leaving on the table.
6. They fix before they replace.
Just because something is broken doesn’t mean it’s garbage or has to be replaced. Can you sew it? Can you replace the broken part?
Frugal people take care of what they have. They get the annual maintenance on their furnace and air conditioner. They change the oil in their cars regularly. They know the small investments they make to upkeep their belongings are small compared to the cost of replacing the item.
Action: Take care of your belongings, especially the larger ticket items that would be expensive to replace.
7. They appreciate the comforts of home.
Frugal people can have fun wherever they are. They know that they can entertain themselves with board games or movies at their house vs. leaving to pay for entertainment. They know that the company of local friends and neighbors is when they laugh the hardest and feel the best.
They know that purchasing food and alcohol at the grocery store (even the “nice” bottle of wine and steak) and bringing it home to enjoy is so much more cost-effective than bellying up to an expensive restaurant or bar.
Frugal people recognize the investment they’ve made in their homes and are comfortable staying in and keeping money in their pockets.
Action: If you usually hit the restaurant, try a nice date night in (check out our favorites)
8. They learn about money.
Frugal people aren’t satisfied with the status quo. They are hungry to make their money work hard for them and will seek out opportunities to learn more about money.
Reading books, researching online, listening to podcasts, or asking friends.
They will find new ways to make more money. They will side hustle. They will ask questions. They will change their tactics and try new ones.
They know their money can make money and will find more effective ways to save or invest in pursuit of their financial goals.
Action: Learn a new saving or investment tip and implement it.
9. They don’t know or care about the Joneses.
They aren’t interested in spending money on things they don’t need to impress people they don’t care about. They are fine not being fashion-forward and purchasing the latest piece of technology. They embrace their frugalness and aren’t shy about it.
In fact, they like to talk about how frugal they are and share their knowledge with others. They aren’t impressed by your new designer purse or fancy gadget. They are content in their own financial situation and would prefer to keep money in their savings account than spend on something trendy or something they truly don’t need.
Action: The next time you find yourself making an impulse purchase; pause. Ask yourself if you will be happy you purchased this a year from now?
10. They know that the most valuable things in life are the things money can’t buy.
Since having my daughter in December of 2015, my mindset on this has changed. I’ve always loved my husband but the love I have for my daughter is different. When I think about the things money can’t buy, I think about times with her. Watching her grow up, the laughs we’ve had together. She is such an entertainer and I sometimes wonder how I felt fulfilled before her since she brings me so much joy now.
She is one of the invaluable things in my life that money cannot buy. I know spending time with her and making memories with her will benefit us both in the long room over purchasing things for her. I’d rather take her to the park or make memories doing an activity together than buying more toys for her. The value comes in memories, not in physical belongings.
Something else money cannot buy is health. Okay, maybe to a point having good health insurance can help in this area. But taking care of yourself, your mind and your body are invaluable. Go for that walk, make healthier choices when you can, get your annual exam. If you think something seems “off”, go and see a doctor. Listen to the signs your body is giving you and take action when something is amiss. Your health is extremely important.
Action: Take a few minutes to think about all of the things you have in life that money can’t buy and be grateful for them.
11. They make saving a priority.
They know the importance of paying themselves first and not just living for today. They recognize that money in their checking account isn’t a license to spend. As they have a budget, they know how they are going to spend their money each month and have a plan to cover both expected and unexpected expenses.
They are willing to forego or delay purchases when they don’t have the money to pay for them. They would prefer to not purchase something they don’t truly need and keep that money in a savings account or an investment.
To maximize their savings they will take their own lunch, avoid eating out and find cost-effective ways to make or build things at home. I recently started using Acorns to save small amounts regularly that I don’t even notice!
Action: What items do you pay for out of convenience that you could easily make at home? Try making it at home and cut down on one expense a week. Check out 12 sneaky ways to trick yourself into saving
12. They live below their means.
They are approved for a $400,000 loan on a house and go for the $150,000 home. They could “afford” to go out to eat but choose to bring their lunch to work. They would like the $40,000 SUV but know the minivan is more cost-effective and practical. They know the more they save today, the faster they will achieve their financial goals of becoming debt-free or retiring early.
They could afford to spend more, but choose not to in the name of savings and are proud of it. They like to share frugal and cost-savings tips because they can’t relate to people who spend more than they earn and are happy to share what they know.
Action: What income is coming in each month, and what are your expenses each month? If you are spending more than you’re earning, take steps to reverse that today!
Frugal people have chosen a frugal lifestyle and wouldn’t have it any other way. They have little if any debt, pay cash for things, and avoid impulse purchases that would steer them away from their financial goals. They have a plan for their money and know they need to pay themselves first.
If you are not a natural saver or you are a natural spender, many of these habits may seem unattainable to you. But over time if you identify areas of spending that you could easily curb, you’ll find yourself adopting more of those frugal behaviors as saving truly is addictive.
What is your most frugal habit?
Take one small step today – to help your finances tomorrow,
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