By Dr Penny Pincher…
Frugal people who pay off their debt and achieve financial independence don’t succeed by accident. They establish habits that allow them to consistently reach their goals over the long haul.
During the past few years as a personal finance blogger and author, I have noticed that the most successful frugal people tend to follow a common set of habits. These same habits remind me of the traits that Stephen Covey detailed in his popular 1989 book, The 7 Habits of Highly Effective People. For this article, I kept the original seven habits, but updated them for achieving financial independence today.
What are the seven habits that allow some people to excel at being frugal?
1. Be Proactive
Frugal people are proactive about their money, taking action to monitor and control spending and maximize income. They find ways to spend less and reduce expenses – even if it requires effort and creative thinking. They direct most of the money they save from reduced expenses into savings and investments for long term goals.
Although the first thing that comes to mind with frugality is saving money, many frugal people maximize income through side hustles or by generating passive income in addition to controlling their spending. An extra dollar saved or an extra dollar earned both contribute favorably to the bottom line.
Frugal people know how much money they have coming in and how much is going out, often with great precision. This is accomplished by creating and following a budget and proactively monitoring spending. They focus on what they can control within their budget to achieve financial success.
2. Begin With the End in Mind
Why do frugal people work so hard to control spending and keep track of their money? Are they simply not interested in buying things? On the contrary, most frugal people are striving to reach financial independence so that they can travel or launch a second career or to have plenty of money to buy the things that matter to them. Frugal people are willing to worry about money now so they don’t need to worry about it later.
Surprisingly, many frugal people care more about their time than their money. Saving money buys financial independence, which buys time to do whatever you want. Frugal people want freedom to use their time as they wish and not be locked into working at a job until they reach old age.
Frugal people begin with the end in mind. The end they want to achieve is financial independence. With that end in mind, they make a plan to reach the goal and follow it every day. The sacrifices along the way are worth reaching the goal.
3. Put First Things First
What is the first thing you pay every month? Do you pay your mortgage first? Perhaps you pay your utility bill or car payment first. Frugal people pay something else first – themselves.
Paying yourself first means that you invest in your retirement fund or other savings accounts first, then you …read more
Read more here: 7 Habits of Highly Frugal People