Tips on Frugal Spending | The 7 Habits of Highly Effective Spenders

Tips on spending frugally

Tips on frugal spending

For those of us who want to better our own financial situation, the first thing we often think about is how can I earn more? This is good, but too often we neglect to think about how to best use the money that our income has already provided. Improving how to use your income spans many topics, like saving and investing, but for this post, I’d like to take an alternate approach and cover a different piece to building and maintaining wealth — frugality in spending.

Let’s face it, no matter how frugal you feel you are, there comes a time when you need to spend some money. You’ll eventually have to buy things like groceries, gas, gifts, and so on. I’d like to talk about how to optimize our spending when we need to spend it. To help with this I’ve compiled notes from years watching one of the smartest and most frugal spenders I know, my wife. Forgive me for the personal example here, but I’m certain you’ll see these principles are key for anyone wanting to better their spending habits. I’ll share some examples of this throughout this article.

With all of this said, let’s talk about important tips on frugal spending and go over the 7 habits of Highly Effective Spenders:

1. Buy because its a need, not because it’s on sale

It’s important to talk about this habit first and foremost because the rest of the habits rely on this thinking. You should only buy something if you know you’ll need it now or in the future, not because it’s on sale. Clever marketers very well know that we are hard-wired to have a fear of missing out on deals. Now I’m not saying only buy the stuff you need. Part of working hard to earn a living is so you can buy things to help make life more enjoyable and oftentimes that comes in the form of non-essentials. What I am saying is don’t fall into the trap of buying something just because something is drastically reduced in price.

One thing I hear people falling for is purchasing because the product is discounted a high dollar amount. I’m sure you’ve heard the dialogue, “I need to buy this car now! The dealership is knocking off $10,000!” Sure, $10,000 can be a lot, but if that car is a $70,000 car, a whopping $60K is still leaving their bank account. The best “savings” in this case would be to save 100% and not buy the car at all.

2. Think long-term

This may sound counterintuitive, but sometimes being frugal can actually mean spending more. People who spend frugally often do so with a long-term mindset. For example, if your favorite chair broke, what would be the more frugal choice if you needed a replacement? The $100 chair that lasts five years, or the high-quality, handmade chair for $300 that lasts 40 years? In comparing the cost of the chairs in the long run, the more cost-effective choice would be the latter, more quality option. Said another way, if you went with the first chair and kept choosing the $100 option over the 40 years, you would have spent $500 on chairs as opposed to just the initial $300 on the quality chair. With that in mind, you could think of the second chair as being close to 50% off. 🙂

What if you can’t afford the more expensive option right now? Well, if it’s not a need, then don’t buy it. In this case, I’m sure you can live without the chair until you have the money to buy it. And who knows, you may actually find you didn’t need a chair in the first place.

Another important principle in thinking long-term is the concept that savvy spenders think incrementally. In other words, they realize the long-term value in lots of small savings. For example, if you made it a habit to get water instead of a soda each time you ate out you would be surprised over a year just how much the incremental savings would be. (Plus, water is healthier. Sounds like a win-win to me)

One important thing to call out with this habit though — you should never jeopardize the short-term for the sake of long-term savings. If ever you’re in doubt that there’s a chance you won’t be able to make ends meet after buying something, then consider a different approach, like buying it used.

3. Have a budget, with some flexibility

Budgets are boring. I know. But as boring as it may be, budgeting is an incredibly important principle of frugal spending. There’s a reason why a budget is so widely recommended. When diligently followed they really can help you excel in your finances. When it comes to smart spending, just the fact that you have a set dollar amount for different categories may help you think more creatively about how and what to purchase. If you’re new to budgeting, there are lots of useful websites and resources to help you get going.

One thing to keep in mind with budgeting though is that you should always maintain a level of flexibility with it. If you’re too strict with your budget you may miss out on some opportunities. Let me illustrate with a quick example. A while back there was an extremely good sale on toilet paper, one that probably doesn’t come more than once every other year or so. My wife, knowing that it was not only a good deal but was something we would for sure use, bought a full year’s worth of toilet paper. Did she spend more than our “toilet paper” budget allowed for in the month? Yes. But in doing so she basically helped us go well under budget for the rest of the year. (And it got us through the infamous COVID induced, toilet paper shortage of 2020)

Think you don’t have time to keep a budget? Well, first of all, you should make time for it. Second of all, we live in the 21st century where so many things have been made easier. There are loads of apps and websites out there that help simplify and automate the process. is one example of a really great online budgeting website/app. You can connect your financial accounts securely to Mint and as you make purchases those transactions will automatically be categorized for you.

4. Be Wise with Credit

The thing that separates those with credit card debt from those without, is their mindset toward credit cards. Those who never have credit card debt habitually use credit cards like debit cards. Or in other words, they only use credit card cards when they have the money! This might be a paradigm shift for some. After all, isn’t the main appeal to using credit cards being able to buy things now, when you don’t yet have the money? This thinking is a slippery slope and it’s one of the reasons nearly half of Americans have credit card debt.

As I said, the real key to using a credit card correctly is to treat it exactly like it’s a debit card. If you can train your mind and develop this into a habit, it’ll pay off. How? Well, free money. Most credit cards have rewards that come with every single purchase. If you had a credit card that received 1% cash back you’re basically giving yourself 1% back on everything you would already be purchasing.

Remember habit #1 though. Don’t let the fact that you’re saving money encourage you to purchase more. You should never buy stuff because you get cash or points. One reason why financial advisors recommend not using credit cards is that people tend to buy more when using a card and less when using actual cash.

Keep in mind though, that if you have a bad habit with credit cards and don’t think you can change it, I don’t recommend this habit!

5. Be that “crazy couponer”

We’ve all stood in line at the store while someone in front of us applies what seems like hundreds of coupons to their order. It’s awful right? Why are people so adamant about holding up lines to save a couple of bucks? First of all, they are keeping habit #2 in mind and are thinking incrementally and with a long-term mindset. And second of all, they know something that you don’t know — that there can be real savings when done correctly.

Couponing doesn’t always take the form of paper coupons at the cash register though. There are loads of couponing apps/websites out there that can save you money through coupons and rebates. Examples of these are Slickdeals, RetailMeNot, Ibotta, Shopkicks, Fetch, and more. 

Still not convinced couponing is for you? Let me tell you the savings my wife has scored over the last year. She purchased 18 boxes of diapers, 60 Soap bottles, 15 boxes of cereal, 22 packs of pull-ups, 84 pads, 20 boxes of tampons, 25 bottles of body wash, and 30 boxes of cereal for a grand total of…

(drum roll please)

$0. She was able to get it all for free.

My wife will tell you, that 90% of the value that comes from these apps and how she’s able to find such good deals are those moments that happen maybe once a month where you find something in the store on sale/clearance and on a coupon app at the same time.

6. Utilize social savings groups and communities.

Crowdsource your shopping! Finding deals takes time and requires a bit of research. However, if you want to speed this process one great way to do this is through the many social savings groups out there. There are hundreds of hard-core couponers and deal shoppers out there and many of them actively contribute to these groups. Try looking them up on Facebook. There are groups for most of the main store chains as well as for some of the more popular deal apps.

Another thing closely associated with this are websites like Craig’s List, where users post used products for pretty much anything you can think of. Buying used is one additional habit I’m sure we could cover all in its own section, but we’ll save that for a different time.

7. Think creatively and go the extra mile

The last tip on frugal spending is to think creatively and go the extra mile. Putting in the work to find deals and save money can be difficult, but going the extra mile and creatively looking for opportunities to save money can definitely be worth it. Let me share a recent noteworthy example we had.

A couple of years ago we were given an Owlet Smart Sock for newborns to monitor their heart rate and oxygen levels while they slept. After using it for a while we also noticed the company was selling a Baby Monitor Camera that pairs with their Smart Sock and Owlet app. We liked the idea of this and looked into it. Upon seeing the price of the camera, however, I was a little taken back and decided against it.

My wife, being the persistent shopper she is though, still wanted the camera, so she looked online to see what she could do. She found that they were doing a promotion that month where users could get $100 off their order. She also found out they were looking for focus group participants who had previously used the sock to do a phone interview for feedback on the Smart Sock. The interview would reward her with a promo code for $149 off a $300 Smart Sock/Baby Camera bundle. With that, she signed up for an interview and had a 10-minute phone call with some on the research team. She then bought the bundle, sold the extra sock, and in the end, we got the camera for free and made a little extra spending money.


You might say frugality means getting through life by spending as little money as possible. While frugality often takes the form of small spending, that’s not necessarily what being frugal means. I once heard a great definition of frugality from Chris Farrell that shifted my thinking on what frugality means: “Thrift or frugality is shorthand for an approach grounded in matching our money with our values.” With this said, the point is to save and spend wisely for the things you value most, whether that be family, friends, your community, etc. It means seeking quality over quantity.

This is something we should all keep in mind when developing frugal saving and spending habits. We’re not saving money just for the sake of saving money, but we do so to enrich our lives now and in the future.

Looking to set some financial goals?

Start setting more effective, data-driven goals with the app today!

Get started