Habit One: Be Proactive
- Take the first step. You cannot take control of your finances until you make the commitment to do so; the more you ignore the situation, the worse it will get. Instead, take a long hard look at your finances — your budget, debts, income, and expenses, and try to understand where your money is going and where you can budget better.
- Tell people. Using proactive language to vocalize your hope of being more financially responsible not only helps you crystallize your goal, but it can also help you avoid the peer pressure that makes budgeting and frugality hard. If you explain to your friends and family that you’re trying to live a more frugal lifestyle, they’ll be less likely to pressure you into one more round of drinks or another dinner out.
- Listen. Listen to yourself and to the reasons you give each time you make a purchase outside of your budget or decide not to put spare money into your savings account. Taking the time to stop and listen to the reasons you give yourself for spending more than you earn will give you the opportunity to hear just how shallow many of those reasons are. This can stop you from making purchases that impede your goal of effective frugality.
Habit Two: Begin with the End in Mind
- Define your goal. There are many ways to live a frugal lifestyle, and you need to decide how frugal you want to be. Do you want to be debt free, build a savings account of a certain value, or live on one income in a two-income household?
- Decide how you’re going to get there. This will again draw on your budget, but you need to be aware of the obstacles that are standing in your way. These may be literal obstacles, such as credit card debts, or they may be obstacles you've identified in your behaviour. An example of a behavioural obstacle would be spending $10 every day on junk food on your way home from work, because you’re starving. Instead, you could be packing an inexpensive granola bar to keep you going until dinner. Or, do you find that when you go shopping with your sister, she always helps you justify a frivolous purchase, when you could leave your credit card at home?
Habit Three: Put First Things First
- Recognize the effects of your finances. You may not dedicate as much time as you should to managing your finances and practising frugal principles because you feel there’s always something more important to be doing — whether it’s work, taking the kids to soccer practice, or getting ready for dinner with the girls. If your finances aren't under control, however, and you’re regularly spending more than you earn, then they’re having a negative impact on every other aspect of your life, from your work to your family and friends. You need to recognize that being frugal is your first priority.
- Just say no. It's easy to spend more than your budgeted amount each month when you’re worried about missing out on a dinner with friends, feel as though you have to cater a birthday party for your son and 50 of his closest friends, or don't want to wear the same suit to a work conference two years in a row. If you recognize that you don't have to take on everything and that it's okay to say no, then you’ll find you’re more in control of your spending and your budget.
Habit Four: Think Win-Win
- Recognize that you don’t always know the full story. As you aim to implement frugal principles and stick to a budget, you may often find yourself thinking “it’s not fair.” It’s not fair that they get to go out to dinner. It’s not fair that they get a new car. It’s not fair that they get to go on vacation, and I don’t. Take the time to realize, however, that you’re only seeing a small part of the finances of your friends and family who seem to “have it all.” And though it’s hard to watch your best friend take a dream European holiday, or your brother buy the car you covet, you’ll get there, too — if you manage your finances frugally. And the best part? There will still be plenty of holiday destinations and fast cars when that time rolls around.
- Understand the difference between possessions and net worth. While your friends and family may seem to have a fuller lifestyle because their house is bigger or their car is newer, you need to consider that it could just be a facade covering their mountains of debt. True wealth is not measured in possessions, but in assets. When the value of your assets is greater than the amount you owe on mortgages, car loans, and credit card debts, then you have a strong net worth and are truly wealthy. By trying to live a more effectively frugal lifestyle, you’ll be able to achieve true wealth, rather than just a life full of stuff.
Habit Five: Communication
- You are not the only person in your life. Chances are you’re married or in a relationship, have friends or children, or all of the above. As a result, you’re not the only person being affected by your decision to live a more frugal lifestyle. To be effective in your goal of frugality, you need to be able to listen to and understand the goals and behaviours of the other people in your life, too. Consider how effective your frugality would be if you were taking packed lunches to work and avoiding the afternoon coffee run, while your partner was going on shopping sprees during their lunch break. Instead of living a more frugal lifestyle, you’d really be saving on one end and spending on the other.
- Understand the goals and needs of others. While it’s important to explain your desire to live more frugally, it’s also important that you understand the goals and needs of those around you. This way, you can find a way to be more frugal without them having to give up all of the things that are most important to them. You can’t know what those things are unless you listen.
Habit Six: Synergize
- Look for new ways. In a society that excels at consumerism, you've probably already realized that you need to find new ways of doing just about everything to be frugal. It's easy to buy your lunch every day, but it's more frugal to pack it. It's easy to drive to work, but it's more frugal to take the train. It's easy to buy a new cocktail dress, but it's more frugal to make one.
- Surround yourself with other frugal people. To be successful in your quest for frugality, surround yourself with like-minded people. Find people who are where you want to be by joining online frugal-living forums, striking up a friendship with a fellow coupon-cutter, or starting a sewing club. When you’re around people with the same goals as you, you’ll be able to share ideas and learn from each other.
Habit Seven: Sharpen the Saw
- Physically. By eating better, you’ll feel better. Take it another step further and start your own vegetable patch, which will save you money at the supermarket and be healthier for you. Exercising keeps you fit and healthy, and it doesn't cost you anything to go for a walk, ride a bike, or skip rope in the backyard. To rest your body, you don’t need to go to a day spa; you can simply relax in the tub at home.
- Emotionally. Interacting socially with others allows you to make meaningful connections, and it makes you feel good. This can be achieved by chatting with the woman at the coffee shop or by calling your mum once a week.
- Mentally. Exercising and expanding your mind through learning, reading, writing, and teaching can be done frugally. Visit your local library, or volunteer at a school or retirement home to teach others a skill you may be taking for granted.
- Spiritually. Spend time close to nature and expand your spiritual self through meditation, music, art, or prayer. Take a quiet moment to centre yourself and empty your mind before going to bed. Or, go for a hike and be grateful for the beauty of nature surrounding you.