7 Frugal Living Habits of Those Who Always Have Money

People that never seem to run out of money, they always know where their money's going. Most Americans don't have enough in their reserve account to handle or offset just $1,000 emergency. Avoiding unnecessary debt is essential. I didn't say avoid all debt. Using credit cards, for example, doesn't have to be bad debt. When you buy a car on credit and you finance it over five or 6 years, it's taking away money that you could be saving or investing to create wealth.

Hey, everyone, welcome to another edition of We're Talking Money. I'm Phil Clark, and today we're talking about something super important: frugal living habits that can help you get ahead financially, and especially in these times of higher inflation and rising interest rates that have remained high for much longer than anyone expected.

Now, our recent video, "What Is Doom Spending?", reckless and impulsive spending habits in spite of a fear of economic doom, that video is proof that many of you feel that there's just no getting ahead when it comes to your financial house. I'm here to tell you that if you follow some of these simple tips, things that people who never seem to run out of money follow, you cannot just get ahead, you can build wealth and you can live your best life. We're going to dive in right after you hit that subscribe button and give us a thumbs up. Awesome, thank you.

All right, let's get started. We're going to do this in terms of tips. I've got seven of them, and we're going to start with budgeting and tracking expenses. People that never seem to run out of money, they always know where their money's going. Now, I know budgeting has a negative connotation, but trust me on this one, you need to know what budgeting can do for you. Creating a budget is not that hard, and it tracks all of your income and all of your expenses. That way you know what's going on in your financial house at all times.

Cars today, they tend to alert the driver if you move out of your lane. That's a great alert system because it can keep you from having a head-on collision. When it comes to your money, wouldn't it be great to have the same kind of alert that can save you or keep you from wrecking your car? If you use a financial software that allows budgeting and tracking of expenses, you can set those alerts so you have something at your fingertips that will always remind you if you're starting to get off track.

Here's an extra tip. If you've done everything you can to cut expenses and you feel like you're still blowing the budget, it might be time to get a side hustle. If you do a little research, I bet you can find lots of things that will earn you more money just by using things that you're already good at doing.

Tip number two is living below your means. Not just spending less than you earn, but significantly less than you earn. People that never seem to run out of money, they do this without reservation, and that's because they have nothing to prove. They're happy to live below their means, and they really don't care what their friends or anyone else thinks about how they live their lifestyle in such a way to get ahead financially.

These people also avoid something called lifestyle creep. Just because you get a raise, that doesn't mean you should increase your standard of living. If you're living well already, try to continue living that way even when those raises come in. That's money that can be invested or saved, and that is going to help you grow your wealth. If you have long-term goals, and I hope you do, stay focused on those and avoid spending just because you can.

Tip number three is an emergency fund. It helps you avoid stress, and that means you can better manage your financial situation. Most Americans don't have enough in their reserve account to handle or offset just $1,000 emergency. The key to an emergency fund is saving a little bit every month until you reach the goal. $1,000 is a good place to start. Whatever it is, once you have it, you know you can offset those emergencies without having to go into debt.

Tip number four: avoiding unnecessary debt is essential. I didn't say avoid all debt, just unnecessary debt. Using credit cards, for example, doesn't have to be bad debt. If you pay them off monthly, that's a good thing, and you can accumulate great rewards that can be used for travel, hotels, going out to eat. All kinds of things come with those rewards. That is prudent spending, and you avoid the high interest that comes with those cards when you pay them off every month.

People who seem to never run out of money, they have a habit of only borrowing money when it comes to buying appreciating assets. They steer clear of high-cost loans, and particularly loans for depreciating assets. Let's say you decide to purchase a new car for a cost of $50,000. You finance the car for 5 years at current rates, which are about 7.25%. The total cost of the car over the 5 years of financing is $65,000, and the value of the car has depreciated. In fact, based on averages, the value of your car is now only about $20,000, maybe less.

What's the point here? If you have a car, keep driving it. Don't worry if it's not perfect. When you buy a car on credit and you finance it over five or six years, that car is costing you a lot and it's going down in value at a significant rate, and that means it's taking away money that you could be saving or investing to create wealth.

Tip number five, it's frugal shopping habits. Now, a lot of people confuse this. Well, it doesn't mean cheap. In fact, someone who's cheap, they want to save money no matter what, even if it means buying inferior products. We're not talking about that. We're talking about being frugal, which means being smart with your money. It also means being realistic about what you can afford.

People that seem to never run out of money, they do things like compare prices and they bargain shop, and they're not embarrassed to do it. In fact, they're proud to do it. They know they're saving money, and they do things like bulk shop. Things that you know you're going to need, you're going to use it throughout the year, you can save money, and you save the expense of going back to the store on a regular basis.

Tip number six, it's planning for your future. It's an essential habit of people who seem to never run out of money. They set financial goals and they go after them. Whether this is something like a vacation home, maybe it's your first home, could be retirement planning, they don't let anything stand in the way, and they always make it a priority to focus on getting their goals accomplished. When they get challenged, something that they didn't expect, they don't let it bother them, they don't let it get them down. They just make adjustments.

These people automate their savings. In other words, they make it easier to save. When it's automated, you stop thinking about it. It's happening every month or every week or however often you set it, and that means you're always adding to your nest egg. And if it's invested properly, it's growing, and compound interest means it's growing even faster. If this sounds impossible, just start with whatever amount is comfortable for you and then set goals to increase that amount every year. Remember, the earlier you start saving, the more time your money can work for you because of what compounding

And tip number seven is mindful spending. People that seem to never run out of money, they have a habit of placing their expenses in two categories: required and desired. If it falls in the desired column, they consider if it aligns with their goals and if it brings true value to their life.

If you're considering an essential purchase, try the 30-day rule. At the end of 30 days, if you're still dead set on getting whatever it is, then go for it. That purchase must mean enough to you that you never lost sight of it. But if you get to the end of 30 days and you didn't make the purchase, chances are it's probably no longer important, and you saved yourself a lot of cash.

So there you have it, seven habits of people who seem to never run out of money. If you'll incorporate these tips and build these habits into your life, I promise you'll develop your financial freedom and you'll have less stress. If you found these tips helpful, I hope you'll give us a thumbs up and consider subscribing to our channel so that you can get more financial wisdom that we're bringing to you every week. Thanks for watching, and I'll see you next time on We're Talking Money.