While you might think that frugal individuals simply pinch pennies, their habits go beyond just saving money.
They practice various strategies to stretch their resources and make the most out of what they have.
In this article, I’ll discuss 11 smart habits of frugal people that you can incorporate into your own life to save money and live more efficiently!
1. They build an emergency fund to avoid debt during financial crises
Emergencies often arrive without warning, and a lack of funds to handle them can really throw your finances into chaos.
That’s why many frugal individuals heed the advice of financial expert Dave Ramsey: stash away $1,000.
Adopting the 50/20/30 budgeting rule can also simplify this process:
- Allocate 50% of your income to necessities.
- Dedicate 20% to savings and paying off debts, which should include contributions to your emergency fund.
- The remaining 30% can be used for discretionary spending.
To further strengthen your financial security, aim to save enough to cover 3 to 6 months of your essential expenses instead.
This cushion is especially vital if you’re the only earner, a single parent, or if your income tends to fluctuate — six months’ worth is ideal.
For singles or stable dual-income couples, though, three months’ savings should suffice.
Pro Tip: Keep tabs on your emergency fund with the You Need a Budget (YNAB) app!
Before YNAB, I was just tracking my expenses randomly. But now, I can confidently manage my funds and stay prepared for any financial curveballs.
Additionally, I’ve leveraged the app to save up for a well-deserved vacation and to reduce my debt.
The app also allowed me to set precise saving targets, and it provided real-time progress updates.
Note: For anyone new to budgeting, YNAB offers a free 34-day trial!
2. They regularly check for discounts, cashback, and coupons
Frugal people also save with discounts, cashback apps, and coupons!
On a personal note, one tool that has made saving money on online purchases nearly effortless for me is Honey.
This browser extension automatically applies the best coupon codes at checkout, and it’s completely free.
I just shop like I normally would, and Honey takes care of finding the discounts.
Note: Honey is also available as an app, which makes saving easy on any device.
Their Honey Gold feature is my top favorite, though. As I shop, I accumulate points which can be redeemed for cash back.
It’s rewarding to see those points grow into tangible rewards.
For those watching a high-ticket item, Honey’s Droplist feature is helpful. You can add items to the Droplist, and Honey alerts you when the price drops.
This feature has saved me from daily price checking and the stress of missing out on a good deal.
3. They choose hobbies that are low-cost or free
Choosing hobbies that are low-cost or free is a key habit among frugal individuals.
Instead of spending on entertainment, they lean towards activities that don’t hit the wallet hard but still provide enrichment and enjoyment.
For instance, taking walks in local parks or nature reserves offers a chance to relax and connect with nature at no cost.
Similarly, free webinars on topics that interest you can expand your knowledge without the fees associated with courses.
Practicing a new language using free apps can also be an enriching way to spend time. Doing so definitely adds to personal growth.
Moreover, I’ve found that borrowing books, movies, and audiobooks from the library instead of purchasing them saves a lot, especially over time.
4. They reevaluate monthly expenses regularly to cut non-essentials
Many people end the month puzzled about where their money has gone.
Frugal people tackle this mystery head-on by regularly reviewing their monthly expenses to eliminate unnecessary spending.
You can do this by writing down every expense you incur over a month and categorizing them into groups like housing, entertainment, and groceries.
This practice will show areas where you might be overspending, such as regular takeout, pricey coffee shops, or multiple streaming subscriptions.
After doing this, you can set a budget that aligns with your real income. Then, you can now cut back on unnecessary expenses!
Here’s a practical example of how you can make gradual changes in your spending habits to effectively reduce your expenses over a six-month period:
| Month | Housing | Groceries | Dining Out | Misc. | Total Spending |
| Jan | $1,200 | $400 | $300 | $100 | $2,000 |
| Feb | $1,200 | $380 | $275 | $90 | $1,945 |
| March | $1,200 | $370 | $250 | $80 | $1,900 |
| April | $1,200 | $360 | $200 | $70 | $1,830 |
| May | $1,200 | $350 | $180 | $60 | $1,790 |
| June | $1,200 | $340 | $150 | $50 | $1,740 |
Key insights for each month:
- January: Started tracking monthly expenses to better monitor spending.
- February: Cut down on eating out, which really helped lower overall spending.
- March: Continued efforts to cut back on non-essential expenses.
- April: Adjusted spending on groceries and miscellaneous items to save even more.
- May: Further reduced dining out expenses.
- June: Optimized the overall budget, achieving significant savings.
Notes:
- Housing: Remains constant as a fixed expense.
- Groceries: Gradual reduction by shopping sales and using coupons.
- Dining Out: Significant cut by cooking more meals at home.
- Miscellaneous: Decreased by eliminating unnecessary purchases.
The example above shows how keeping up with your finances regularly can help you spend smarter and gain better control over your money.
5. They are not afraid to declutter and downsize
Frugal people often find that downsizing their living arrangements or moving to a less costly area greatly enhances their financial health.
Think about the car sitting unused in your driveway or the rooms in your home that go mostly untouched.
Selling off that rarely used vehicle or moving to a smaller space can free up substantial funds and reduce upkeep costs.
For commuting, look into alternatives like public transit, biking, or carpooling.
Another area to declutter could be your digital space.
Unused apps, outdated files, and old emails can overwhelm your devices and lead to unnecessary spending on additional storage or faster hardware.
6. They optimize cell phone plans to fit actual usage
Another effective habit that frugal individuals make is optimizing a more affordable phone plan that aligns with their actual usage.
I have personally switched to Mint Mobile and noticed a substantial difference in my spending.
Mint’s user-friendly app makes it easy to manage my account and adjust services as needed.
One feature I particularly value is the mobile hotspot, which has come to my rescue on several occasions, like during times when Wi-Fi was unavailable.
This functionality has allowed me to stay connected and productive during both personal and professional scenarios.
Furthermore, Mint Mobile includes international calling to Mexico and Canada at no extra charge.
This is a great bonus for anyone with family or business connections in these countries.
This feature alone has helped me keep in touch with relatives without worrying about excessive phone bills.
Note: Currently, Mint Mobile is offering an introductory deal at just $15 per month for the first three months.
7. They frequently cook meals at home
Frugal individuals often opt to cook meals at home rather than dining out. This habit not only saves money but also encourages a healthier lifestyle.
Note: Investing in a freezer, particularly a chest freezer, is a wise decision for anyone looking to extend the shelf life of their food.
Chest freezers are more energy-efficient because the cold air stays inside when opened, unlike upright freezers, where cold air escapes.
This feature makes them ideal for storing prepared meals that can last beyond the typical 3 to 4 days in a refrigerator.
Additionally, frugal cooks don’t just freeze raw meat and precooked meals! They also store a variety of foods.
Bread, tortillas, cheese, butter, and even chopped vegetables can all be frozen to preserve their freshness.
Pro Tip: Invest in a freezer alarm! For about $20, a freezer alarm can prevent food spoilage by alerting you if the freezer door is left open.
This small investment can save hundreds of dollars in lost food over time.
8. They challenge themselves with no-spend days or weeks
Interestingly, frugal people take on “no spend challenges” as a way to tighten their belts even further.
Starting with a seven-day no-spend challenge can set the stage for better financial habits and significant savings.
During a no-spend week, the goal is to avoid buying anything non-essential. This requires some creativity, especially in the kitchen.
For example, instead of shopping, use what’s already in your pantry and freezer to plan your meals for the week.
If you run out of an ingredient, get creative with substitutions rather than heading to the store.
An instance from my own experience involves my daily coffee routine!
If I run out of cream, instead of buying more, I might use powdered milk or blend-soaked almonds to create a makeshift almond milk.
To ensure success, stay away from physical stores and online shopping platforms during your no-spend period.
Writing a list of necessities as they run out helps keep track of what’s essential. This allows for a more mindful return to spending when the challenge ends.
Review your budget during this time, too. Ensure that your allocations for necessities like bills, groceries, and pet care are accurate and sufficient.
This reflection can help adjust spending habits permanently, which will make your financial health much stronger in the long run.
9. They invest in quality products that last longer
Savvy savers know that investing in high-quality products can lead to bigger savings.
This habit involves choosing items that, despite their higher initial cost, will last longer and offer greater efficiency.
Take, for example, energy-efficient appliances. Although they might come with a higher price tag, they significantly reduce utility bills in the long run.
Durable clothing is another area where frugal people tend to invest!
Instead of buying cheap, fast fashion that wears out quickly, they choose well-made pieces that can withstand years of wear.
Also, investing in high-quality tools for home and garden maintenance is a smart move for frugal homesteaders.
High-quality tools might cost more initially but will perform better and last longer than cheaper alternatives. This means fewer replacements and repairs.
For instance, buying a well-crafted set of tools can keep your home landscape in good shape for years without the need for costly professional services.
When it comes to technology, opting for slightly older yet reliable models of smartphones or laptops can also be an excellent choice.
10. They minimize subscriptions
Frugal people are adept at minimizing their subscriptions to simplify their expenses.
They scrutinize each subscription, whether it’s for entertainment, fitness, or information, to ensure it provides value proportional to its cost.
For example, rather than maintaining multiple streaming services, a frugal person might select just one that best suits their viewing preferences.
They apply the same principle to email subscriptions by regularly cleaning up their inboxes to avoid temptation from marketing emails, which often lead to overspending.
Magazine subscriptions can also accumulate unnoticed.
Frugal individuals often replace these with digital versions or use public libraries to access their favorite magazines and newspapers.
Additional scenarios include app subscriptions on smartphones.
Many apps offer similar functionalities, so keeping only the most used ones and uninstalling others can reduce monthly expenses significantly.
11. They invest in secondhand items
You might be surprised, but thrifty individuals usually take advantage of secondhand items.
For one thing, books can be purchased for a fraction of their retail price at used bookstores or online marketplaces.
Clothes are a great find in secondhand shops, too. With patience, you can find high-quality, barely worn items that cost much less than new ones.
Furniture is a smart secondhand buy as well. Many pieces are built to last, and buying used furniture can save you a significant amount of money.
Similarly, frugal individuals seek out secondhand tools and sports equipment.
Items like drills, bicycles, or even camping gear are available at much lower prices than new ones and are usually still in good condition.
I hope you found these 11 habits useful for improving your financial health! Have any tips of your own or questions about what we’ve covered? Drop them in the comments!
