The 10 Habits of Frugal People

Rachel Gideon
Dec 3, 2020 · 10 min read
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Simple swaps that save me thousands a year

They think about everything in terms of cost per use

Rather than caring only about finding the cheapest price, truly frugal people consider the total value of an item over its lifetime, relative to its price today.

For example, when I needed to buy new blouses for work last year, instead of heading to a fast fashion retailer like H&M or Zara, I opted for one made by Everlane that was on sale and purchased it in five colors. Although my cart cost me about 30% more at Everlane than it would at a cheaper retailer, I’m familiar with Everlane’s quality and know that I won’t have to replace my purchases for at least a few years. While spending $12 more per blouse stung at the time, I’ve worn my five-shirt rotation every week over the past year — with no signs of them wearing out anytime soon.

Given my past experience with fast fashion work clothes, I would have had to replace all five blouses at least once over the past year. That equates to having to buy five $40 blouses, or being guaranteed a recurring cost of at least $200 per year. By paying more upfront for the Everlane shirts, I’m only paying about $87 a year for a good chunk of my overall professional wardrobe, assuming I’ll need to replace them every three years. Going with the “cheaper” clothing option actually would cost me more than double every year.

As someone who abhors spending money, getting in the habit of paying more upfront at times was difficult. However, once I realized how much more I would be paying to replace cheaper clothing over the long run, I came around to buying more durable goods and haven’t looked back since.

They sleep on purchases

Like most frugal people, I love a deal. But marketers know that. Since we’re bombarded with targeted ads practically everywhere we turn, what may seem like a steal on a product you’ve been eyeing, may just be a distant memory by the time your purchase arrives at your doorstep.

When I was in college, I was particularly guilty of making purchases the second I saw anything of interest, mostly because I’d either assumed I’d get my money’s worth, because I feared the deal would expire or the product would sell out, or because I was simply too impatient to revisit the purchase later.

As a result, when it came time for me to move halfway across the country for my first job, I realized how much money I’d wasted over the years when I kept finding impulse purchases I’d all but forgotten about. Seeing a visual representation of all the money I’d wasted over just a few years, was the wake-up call I needed.

Now, whenever I’m considering a purchase for the first time, I wait at least a day before returning to my cart. Nine times out of ten, I decide I can live without the item that I was completely sold on the day before. When I decide to pass on a purchase, I then reward myself by depositing what I would have spent into my brokerage account.

They don’t think of shopping as a hobby or an outlet for stress

Frugal people view shopping in strictly utilitarian terms. While they may enjoy doing a bit of research and shopping around to get the best deal on what they need, shopping is no substitute for their primary hobbies.

Throughout my teens and college, I fell into the rather destructive habit of making small impulse purchases to self-soothe when I was faced with negative emotions or stressful situations. Because my habit started out small and deepened over many years, I didn’t realize just how dangerous it was for my financial and emotional well-being until I started a toxic job.

Rather than recognizing a toxic environment straight away, I chalked my newfound stress up to working for a big tech company and just having to work a little harder. Besides, I considered myself lucky to have been hired by such a sought after employer right out of college.

Instead of recognizing the onset of several health issues, a deep sense of dread going into work, and the highly dysfunctional office dynamics at play — all as clear signs that I needed to leave my job, I resorted to shopping in a desperate attempt to block out the crippling anxiety I found myself dealing with on a daily basis. Unfortunately, the dopamine hits from spending money were not only short-lived, but they conveniently distracted me from dealing with my work issues head on.

At the same time, spending more and more money to numb the pain each month, only made me feel even more tethered to a toxic job. In other words, the stress of the job led me to recklessly spend money. Meanwhile, the elevated spending made me feel as if I needed to stay in that job in order to keep up with a lifestyle that wasn’t even making me happy.

Once I made the decision to leave my job, I realized the true power of living below my means. By not buying things and learning to deal with my stressors in a more productive and sustainable manner, I began to view money as a vehicle for purchasing future financial freedom. Since I kissed my toxic job goodbye, I’ve lived relentlessly below my means. By living this way, if I ever find myself in the throes of a toxic work environment again, I’ll have the savings to leave.

They track their spending

Because frugal people save today so that they can afford what really matters tomorrow, they have a solid understanding of the money coming in and going out at each paycheck.

A great way to gain immediate visibility into your financial standing is by tracking every purchase and recurring bill against your monthly income after taxes. This can be done in Excel or simply by printing out your bank and credit card statements for the month. I like to log each bill and transaction by date in Excel and then classify the expense by category. Then, at the end of the month, I look at my spending in total, as well as by category, in order to identify areas for improvement. Rather than trying to cut all of my expenses at once, I focus instead on getting one category down at a time.

When I first embarked on my personal finance journey, highlighting any transactions on my bank and credit card statements that I didn’t remember, helped tremendously. This simple exercise allowed me to quickly see not only how much small impulse purchases were costing me each month, but also how much I could save by changing my behavior.

They constantly find new ways to stretch their money further

Frugal people aren’t content with just knowing how and where they spend their money. Instead, they use that data to relentlessly cut their spending month over month. Whether they eliminate line items entirely or find more cost effective swaps for their routine purchases, frugal people never stop iterating upon their monthly budgets.

Each month, after I’ve closed out my budget and entered all of my spending data for the previous month, I pick a purchase category that I focus all of my efforts on cutting down over the next month. I started this process with the highest impact categories, such as discretionary purchases and food, and then I finished with my spending on household items such as laundry detergent and trash bags. Although I only focus on cutting in one category at a time, there are countless ways to go about this.

The key here is to get out of the habit of viewing any and all categories in your budget as fixed. While discretionary purchases such as dinners out, new clothes, and fancy beauty products, are generally much easier to cut out or limit than monthly bills, revisiting your recurring expenses can also lead to significant additional savings if you’re willing to put in a little effort.

If your lease is about to be up, for example, consider negotiating a rent reduction with your landlord or moving to secure cheaper rent on a recurring basis. Regardless of your living situation, there are several other “fixed” expenses that can be negotiated down by calling your provider and/or shopping around for better rates.

A few examples of these types of expenses include your internet bill, car insurance coverage, and phone plan. Although energy bills can’t always be negotiated directly, many energy providers do offer complimentary programs that help you consume less power. If you’re looking to reduce your energy bill even further, running your appliances during off-peak electrical hours is also worth a try.

They aren’t afraid to DIY

After a few months of taking the cost of getting my hair professionally cut and colored as law, my disdain for recurring expenses won out and I learned to trim and dye my own hair. This process came with a bit of a learning curve, but I now save over eight hundred dollars a year— not to mention lots of time — by doing my own hair.

I’m also planning to move in a few months. Rather than paying a moving company to pack and move all of my belongings, I’m saving hundreds by packing my own boxes gradually (that I’m of course getting for free by hitting up my local liquor store), getting rid of a bit of clutter each week, selling and/or donating any items that won’t be needed at the new place, and storing several trunk loads of items with friends and family. By planning ahead and doing as much as I can on the front end, I’ll only need the movers to pick up a few pieces of furniture — much cheaper than the full-apartment alternative. I’m also considering skipping the movers altogether and just renting a U-Haul to get the job done.

While in some cases DIY can be more expensive due to material costs and the given project’s failure rate, this really depends on what you’re trying to do, how much money you could potentially save, and what you’re already good at. That said, finding a few things in your life that you can realistically do yourself, can make a massive impact on your finances in the long run.

They shop strategically

Frugal people take inventory of what they need and then plan to buy those things at the right time and from the right place in order to get the best deal. Simply put, frugal people are experts at never paying full price.

I don’t shop very often. In fact, I don’t even consider buying anything until I’ve found a use for it in my life on at least five separate occasions. Then, I’ll add the item to my list and plan to buy it at the time of year in which I can secure the deepest discount. While this may seem like a somewhat extreme and highly inconvenient practice, it ensures that I no longer waste money on items that don’t add proven value to my life.

Once I have my list of items that I want to buy, I do some initial research to determine whether or not I can be flexible on brand, style, size, or other product attributes. I generally prefer to buy from bigger brands, because their widespread distribution allows me to take advantage of sales and offers at multiple retailers. Using an online browser extension like honey also allows me to, in some cases, combine discounts for further savings.

I then plan a tentative purchase date for each item on my list based on when that product typically goes on sale. Because my tastes haven’t changed too much over the years, I’m able to reliably estimate when the best time to buy is based on my past experience.

They borrow over buying whenever possible

I used to see no problem with buying expensive outfits for weddings, work events, and other special occasions, despite their limited use. Once I embraced frugal living, however, I realized how unnecessary and avoidable these purchases actually were. A much better — not to mention more environmentally sustainable — approach to these types of purchases, is to determine whether you can borrow from friends or neighbors before heading to the store. As long as you’re willing to also lend out an item or two occasionally, this strategy is a highly underrated way to save.

Whether it’s an outfit to attend a wedding borrowed from your best friend, or a plastic table lent to you by your next door neighbor, embracing borrow over buy can add up to a small fortune over time. In just about a year, I’ve saved over $500 by swapping lawn furniture and clothing with my friends and neighbors.

They try before they buy

Yet another safeguard against superfluous spending that I’ve put in place over the past year, has been trying everything I want to buy, before making my final purchase decision. Whether it be taking full advantage of free trials on subscription services, obtaining samples for beauty and personal care products, and trying out clothing several times in store, trying before I buy allows me to better understand the value of the product I’m potentially spending my money on.

If I try out a cheaper alternative or forgo the product after trying it and don’t notice much of a difference in my quality of life, then I’ve avoided wasting my hard-earned cash on an ill-informed purchase. If trying out the product convinces me of the product’s value once and for all, I make the purchase and fully appreciate it.

They invest consistently and for the long term

At the end of the day, the primary benefit of leading a low-overhead life is having the financial freedom to retire early, to take on more fulfilling work, and to build wealth over time.

As someone who used to avoid the stock market for fear of losing everything, hoard cash in a high-yield savings account, and only contribute to my employer’s 401k plan to get the full match, I’m here to say that saving money without investing it is essentially pointless.

While I keep a few months worth of expenses set aside in the event of an emergency, I’m past the fear-based cash hoarding. Instead I’m now firmly in the habit of automating transfers into my tax-advantaged retirement accounts every two weeks. Rather than blowing my money on empty purchases or hoarding the resulting savings, I now use it to work for me in the stock market — guaranteeing me financial independence down the road with a bit of patience and consistency in my approach.

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Rachel Gideon

Written by

Hi, I’m Rachel. I’m passionate about beauty, personal finance, and how the two often intermingle.

Data Driven Investor

empower you with data, knowledge, and expertise

Rachel Gideon

Written by

Hi, I’m Rachel. I’m passionate about beauty, personal finance, and how the two often intermingle.

Data Driven Investor

empower you with data, knowledge, and expertise

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