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Today's case study isn't about one named person because this person wishes to stay anonymous. They don't want everyone to know they have become the millionaire next door. They are happy being frugal with money and don't want a spotlight on their life. Simple living at its finest.
Being frugal with money is about deciding a lifestyle that works for your personality and your money situation.
It means making choices on how to spend that money.
To be frugal, you take money saving tips and tricks and apply these additional principles in order to learn how to become a frugal person.
The combination of the two is what makes frugal living a lifestyle instead of just saving money hacks.
One of the keys of being frugal with money is being frugal with how you spend your money. But, not overspending just in the name of frugality.
A primary goal with frugality is spending less money overall and thoroughly understanding the difference between frugal and cheap.
So, now a look instead of a life of frugal person and simple living.
Being Frugal with Money
These are all the traits our anonymous millionaire next door does on a daily basis. These are the things that help them in their frugal lifestyle and attaining a significant net worth.
1. Be Okay Living with Less
Part of frugal living is living without what others deem normal.
It is a money mindset that is happy to be living with less.
The benefit is spending less money than the average consumer. Also, frugal people tend to be less wasteful and more resourceful.
It is a happy life to combine simply living with frugality and living with less.
A frugal person loves to know that they are able to live below their means.
2. Simple Living
Frugality is one part of simple living.
Simple living is choosing to step away from the chaos – the busy schedules, the cluttered homes, the materialism – to focus on simplicity, living intentionally, and simplifying your life.
The emphasis of simple living and money is pairing down the big expenses to align with the desire of this type of lifestyle.
By embracing simple living, you are shying away from lifestyle creep, and thus, able to save thousands of dollars on stuff.
3. Save a Lot of Money
The intent of a frugal lifestyle is to free up money.
That means every paycheck a hefty sum is saved for another purpose.
That also means you are living on way less than you make.
Many people view living below your means in a negative connotation. However, in all practicality, it means you are willing to “sacrifice” materialism to enjoy a different lifestyle.
The Savings Percentage – This number is important to those who are choosing to being frugal. It is lag indicator to show whether or not the frugal lifestyle is actually making a difference in your finances.
For many, the initial goal is to save 30% of income. Then, each year continually increasing their percentage to reach 50% or beyond.
The trick is combining saving money hacks with spending less to save lots of money.
Key Note… Everyone has to start somewhere. So, start with a saving percentage goal of 10% of your income. Then, work up from there.
4. No Debt
Being frugal means under no circumstances will you ever pay debt payments and interest payments.
It means sacrificing basics others deem necessary in order to pay in cash. Saving up for a purchase rather than going into debt.
In today's society, it is hard to say no to debt. Debt is easily accessible, and very honestly, expected in our culture. One of the key tips of a frugal person is saying no to debt and not even having debt as an option.
If you are in debt now and want to live a different lifestyle that combines frugal living with simple living, then it is time to pay off debt now.
Get Out of Debt Resources:
- How to Get Out of Debt in 5 Easy Steps
- 7 Things to Give UP to Pay Off Debt Faster
- Are You Making One of these Common Debt Payoff Mistakes?
6. Make Decision in Advance
This is huge benefit for being frugal.
Before temptation arise, you already know how to handle these decisions.
Simply put… you already know what you want and won't be tempted by impulse purchases.
Spending Amounts – Any purchase over a certain, predetermined amount must wait at least 24 hours before purchased. If more than one person makes money decision, then all parties must be present in making the decision.
Spending Wish List – When you think you want something add it to the spending wish list, this will help you make decisions about spending before you pull out your wallet. Download your spending wish list from our resource library.
7. Cut Spending
The goal of frugal living is to cut spending not to spend more just because there was a sale.
With a frugal lifestyle, there are ample ways to cut spending.
It is just learning the tricks from the best frugal living tips to get your started.
The other key factor is to know why you want to live on less. What are the money goals you can reach with frugality?
- 12 Things I Quit Buying to Save Money
- What is the Best Cheap Foods to Buy When Broke?
- The Vicious Cycle- Learn How to Stop Spending Money Now
8. Sales and Discounts
Part of being frugal is shopping sales and discounts. However, the key is not overspending just to fulfill the desire to live a frugal life.
There are two reasons sales and discounts become a problem in the long term.
First, while you are saving a buck to be frugal, you may be overspending too much money. This will ultimately ruin the whole point of saving money. In the end, your new frugal lifestyle won't pay off because it is costing you more money.
Second, with more stuff comes more stuff to maintain. That means more money in the long run.
Lastly, the quality may not be up to par. Just because you can pick up shoes for dirt cheap, it may hurt your feet to be wearing the wrong size or fit.
9. Wary of Clutter
Clutter comes with a mental price, too. While learning to be frugal, you must be careful that your newfound frugality doesn't cause your house to look like a store.
This was a lesson I learned personally. While extreme frugal living helped in some areas, it also meant our cabinets were full of supplies. Yes, we would use them and we saved a lot of money. But, the clutter can become over-bearable.
So, just be wary of how much space you have and if you truly need of all it. This is especially true with kid's toys.
10. Invest in Quality
The biggest key with being frugal is knowing when to invest in quality. The debate of frugal vs. cheap gets old for someone wanting to live a frugal lifestyle.
A frugal lifestyle does NOT mean sacrificing and choosing the lowest cost price each and every time.
This is part of the lifestyle piece, you decide in what areas you consciously choose to invest in quality items. Then, consciously choose to save money in other areas. Think of it as a balancing act in saving money.
Here is an example of investing in quality…
A kid's backpack.
You can pick up a cheap backpack for $5-10. But, by the end of the year, it may be in shreds and held together by a couple of pieces of thread.
Or you invest in a quality backpack (these are my favorites) spending $30 and know that it will last for a long time.
Frugal & Minimalism
Many times it is hard to frugal and minimalist in the same household. However, it is possible and that is when you really start seeing the extreme benefits of both.
Frugal + Minimalism = Huge Money Savings!
When you combine the two practices into one, you become an ultimate powerhouse of being frugal and saving money.
The key is knowing what you want (in terms of materialistic items) and how much you are willing to spend to get them.
It is possible to have traits of both frugality and minimalism!
How to Be Extremely Frugal
This is living frugally to the tenth degree.
In order to understand how to be extremely frugal, it means you are willing to sacrifice anything to save a penny.
However, many people love living an extremely frugal lifestyle and wouldn't have it any other way.
Tips on How to Be Extremely Frugal
- Learn new skills instead of hiring out anything (from haircuts to home remodeling projects)
- Make sure that every dollar spent aligns with predetermined priorities
- Figure out new opportunities to save money
- Never buy anything new
- Make all foods from scratch and grow your own garden (no prepackaged goods here)
- Use everything until it has no more life in it (example: holes in t-shirt that they still love)
- Duck tape will fix anything
- Make it a lifestyle
- Don't cave to societal pressure
- Plus do the 175+ Frugal Living Tips to Save Money
Finally, you have to being willing to accept an extremely frugal lifestyle. It comes with advantages and drawbacks. You must be comfortable saying out loud that you are happy living an extremely frugal lifestyle.
Are you Capable of Being Frugal?
For this anonymous person, their frugality led them to save money over time. Specifically over $1,000,000.
This millionaire knew their money goals and wouldn't let society pressure to do something that didn't align with their priorities. That is just one of the 7 powerful millionaire traits. Here is the full list of millionaire habits.
Are you ready to take on a frugal lifestyle?
Do you have the guts to say, “By saving money here and there, it will afford me a lot more later on.”
Or do you start small and take on a few frugal lessons and money saving tricks?
Will you be more conscious of how you spend your money? Remember this millionaire's lessons.
Frugality is a choice. Just remember… A penny saved is a penny earned.
More Frugal Living Help:
- The Ultimate Guide to a Frugal Lifestyle
- 12 Things I Quit Buying to Save Money
- 10 Ways on How to Drastically Cut Expenses Now
- 175+ Simple and Easy Frugal Living Tips to Save Money