Most of my posts are tips about what to do. Today, I’m taking the opposite approach and writing about what not to do. Specifically, things frugal people never do so they can live with less financial stress.
Sometimes it’s helpful to get a different framework, and that’s my hope with the structure of this post. Hearing a message in different ways often contributes to greater understanding, and that’s exactly what this post is–a familiar message put another way.
What is Frugality?
Frugality is about value-based spending, creating systems, prioritizing where your money is going, and maintaining an abundance mindset. In other words, being smart and intentional with money.
Related: 22 of the Most Frugal Ways to Live Without Feeling Deprived
What Frugality is Not
Frugality is not cheap. Cheap is a totally different animal–and a completely different mindset.
Things Frugal People Never Do
There are lots of things frugal people never do, or very rarely do. It would be impossible to compile a complete list but I’ll start with these 22.
Number 1: Carry a Credit Card Balance
Carrying a credit card balance means paying interest at a very high rate, sometimes in excess of 20 percent. And if the credit card balance grows into the multiple thousands, it becomes very difficult to pay off because so much interest is being charged. Couple that with late fees and the debt becomes suffocating.
Related:
Number 2: Keep Consumer Debt
Directly related to number one is keep consumer debt. Credit card debt is consumer debt, as are car payments, personal loans, store credit, etc.
Consumer debt means high interest rates and late fees. It’s debt for purchases of the past. Debt on things that have lost most of their value and aren’t making you any money. It’s just an endless money pit that is very difficult to get rid of.
Number 3: Keep up With the Joneses and Try to Impress Others
I actually incorporated this concept into one of the chapters of my book Cash Uncomplicated. Buying things to impress others or keep up with others never works. The momentary satisfaction quickly turns into emptiness and lack of fulfilment.
Additionally, these purchases to show others how well you are doing are a fast way to get into consumer debt. Which ironically, makes you less wealthy while trying to flex your wealth. Besides, as I write about in my book, nobody is really tracking you that closely to be impressed in the first place.
Number 4: Live Beyond Their Means
Another one of the things frugal people never do is live beyond their means. That means spending more than they make. That doesn’t mean frugal people don’t look to better their situation and make more, it just means they don’t get ahead of themselves and spend more than they are currently earning.
Here are a few examples of living beyond your means:
- Making $4,000 per month and spending $5,000
- Paying over half your income on housing
- Car payments so high that they don’t allow you to save or invest
Number 5: Shop Without Intention or a List
Going to the store without any kind of intention or list is a recipe for disaster. Floundering around the store means impulse buys, picking up things you don’t need, and wasteful spending. Doing this even once or twice a month means a lot of money is going to be spent without adding much value.
This has a compounding effect which frugal people are very well aware of, and thus don’t participate in.
Number 6: Impulse Spending
Impulse spending used to pertain to the grocery store and brick and mortar shops. Now it also includes online shopping. It’s easy to get home from a hard day at work and buy a couple things online that you really don’t need. This is impulse shopping and one of the things frugal people never do.
Number 7: Retail Therapy
This next one on the list of things frugal people never do is directly related to the last section. And that’s retail therapy. To be honest, I think the term “retail therapy” was made up by stores to get people to feel better about spending and put a socially acceptable name to it.
There’s really no such thing as retail therapy though–it’s a complete fabrication. And while “retail therapy” might feel good for a brief moment, it actually makes people feel worse when the bill comes due. Which kind of defeats the purpose.
Number 8: Pay Late Fees
Late fees are a waste of money. There’s absolutely no value to them, you don’t get anything extra, and they take your hard earned money away from you. It would be one thing if you got some kind of reward for making a late payment. But you don’t–it’s just a fee for a bill you had to pay anyway.
I compare late fees to turning in schoolwork late when you were a kid. If you turned the assignment in early or on time, you got graded based on how well you did the assignment. However, if you turned in the assignment late, you got graded not only based on the quality of the work, but how late it was.
An assignment that was “A” quality work could be dropped down to a B or C simply because it wasn’t turned in on time. Turning things in late was an immediate self-inflicted handicap–and I never understood why people routinely did it. Same for late fees. You have to pay the bill anyway so you might as well just pay it on time and not have to pay extra on top of it.
Number 9: Make Large Purchases Without Negotiating
I’ve read and heard about people who say you should negotiate everything. Trips to the grocery store, retail stores, or really wherever you shop. I personally don’t do that and understand why most people don’t want to either. It’s a little uncomfortable negotiating over spaghetti with the cashier who knows you by name.
But for the big things, I’m a firm believer that you have to negotiate. Things like:
- Houses
- Cars
- Appliances
- Large repairs
These are all big ticket items that come with high price tags. Negotiating even one percent off the price of an $800,000 house is $8,000. Three percent off a $25,000 car is $750. 10 percent of a $1,500 refrigerator is $150. A little negotiation leads to big savings.
I’ve talked to many people who eat out one less day a week and feel like it’s a big financial win. Which, don’t get me wrong, is really good and something I applaud. However, the big-ticket items are where the biggest savings are. Don’t let a fear of negotiation allow you to lose out on hundreds, or even thousands of dollars in savings.
Number 10: Have Car Payments
Number 10 on the list of things frugal people never do is have car payments. The only exception is those who make their car an asset by renting it out on Turo. Frugal people purchase cars they can afford in cash. They don’t buy cars they can’t afford because that means car payments.
Much like late payments, car payments are interest on top of what the car already costs. So a car that costs $25,000 can end up costing closer to $30,000 after interest. A car that costs $30,000 will end up costing $35,000 or more. It’s your money going to the lender without getting anything in value in return other than a delay in payments.
Number 11: Buy Lottery Tickets
Ok, let’s play a game. I’m going to pick a number between 1 and 49 and you have to guess it. Ok, now I’ve got another number between 1 and 49 and you have to guess it right again. Now you’ll need to guess it right four more times.
Seem impossible? The game I just described is the lottery. It’s not impossible to win because some people do win–but it’s as close to impossible as you can get.
If someone buys on average one lottery ticket per week at two dollars each, it’s $104 for the year. $104 for a near impossibility. If that same person instead invested into an index fund for a 30-year time period with an average 10 percent rate of return, they would have $18,818 at the end.
A very realistic shot at $18,818 or a near impossibility to win a hundred million? I’ll take the almost $20,000.
Number 12: Buy Things That Don’t Matter
Number 12 on the list of things frugal people never do is buy things that don’t matter. Frugal individuals are almost always value-based spenders–meaning those who spend only on necessities and what they truly value. For an in depth look at what it means to be a value-based spender, follow this link.
Buying things that don’t matter is a waste of money and doesn’t align with principles of frugality. A few examples of things that don’t matter:
- Most impulse buys
- Anything to “keep up with the Joneses”
- An expensive car they don’t really care about versus a much less costly option
Number 13: Drive Gas-Guzzlers
Most frugal people drive either electric cars or vehicles that get good gas mileage. It makes little sense for a frugal person to drive a vehicle that gets 15 miles per gallon when they could easily drive a vehicle getting 30 miles per gallon plus. The logic is if you have to drive the miles, you might as well drive a vehicle that costs less to do the same amount of driving.
Number 14: Waste Things
Wasting things is a broad category. It can be wasting money on food, gas, impulse buys, or any number of things. Either way, frugal people don’t are not wasteful.
Wasting things is allocating money and resources on things not put to good use. Frugal people are very intentional in what they spend money on, being careful not to engage in wasteful spending.
Number 15: Get Takeout Several Times Per Week
Next on the list of things frugal people never do is a big one. It’s getting takeout several times per week. It’s easy to get takeout because it’s convenient. It’s a lot easier to drop by a restaurant and grab some food on the way home from work than it is to cook.
Problem is, takeout is much more expensive than making meals at home. Takeout for a family of four can easily cost more than $30, oftentimes closer to $50. While cooking at home can usually be done for less than $10.
Over the course of the year, that number really adds up. If someone gets takeout an average of four times per week at $30 each, that’s $120. Compare that to making a meal at home for an average of $10, a cost of $40 for the week. That’s a difference of $80 per week, $320 per month, and $4,160 per year. Not life changing money, but it’s a lot.
Related: Can Packing Your Lunch Make You a Millionaire?
Number 16: Buy Bottled Water
Number 16 on the listing of things frugal people never do is buy bottled water. Water out of the tap is very inexpensive–a small fraction of most people’s monthly water bill. Bottled water is often three or four dollars plus, especially if you buy it at an event like a concert or ballgame.
Alternatives to buying bottled water:
- Buy five-gallon water jugs and refill them as needed at home
- Bring your own water to events if allowed
- Order ice water at restaurants
- Bring water to work instead of stopping at the convenience store for bottled water
Number 17: Compare Themselves Financially to Others
This goes along with the comparing yourself to the Joneses’ category. Frugal people don’t compare themselves financially to others. It’s an unfair comparison and nobody knows what the rules are because there are no rules.
That new car your neighbor bought might be actually financed with very little put down on it. So they really don’t “own” the car yet. Or that new boat your friend bought might also be almost 100 percent financed.
Frugal people understand that comparing yourself to others financially is futile and a waste of time. Everyone’s financial situation is different and playing a game without rules that nobody knows they are even playing in the first place doesn’t make sense. Compare yourself to the progress you are making, not what other people are doing.
Number 18: Buy More House Than Needed
From the outside, it’s appealing to buy the 5,000 square foot McMansion. Huge house with land around it and room for everyone. The reality though is most people only use a small portion of their houses. Kitchen, living room, bedroom, and bathroom.
Even though a house might have a private movie room, a sitting area, play area, etc. most people will rarely, if ever, use those rooms. Yet they still cost money to keep temperature controlled and clean. Plus the cost of property taxes and other expenses for space rarely used. Figure out the space you’ll use (including when you have guests over) and pick a house based on your needs, not what looks good from the outside.
Number 19: Buy the Latest and Greatest
Number 19 on the list of things frugal people never do is buy the latest and greatest. Technology is ever-changing. The newest phone or tablet you can buy today is going to be old news in six months and probably obsolete in a few years. It’s impossible to keep up with all the next technology.
Buy the technology you value and/or need and don’t worry about the rest. Just because you don’t have the newest computer or TV doesn’t mean you’re living a deprived life. We can all get by without having all the latest gadgets.
And when you’re ready to upgrade, give yourself to permission to do so guilt free. Just don’t feel pressured to upgrade every two months, or you’ll be chasing a rabbit that’s impossible to catch.
Number 20: Purchase Things on Sale You Don’t Need
Ok, so this is a trap that really easy to fall into. Buying things on sale that you don’t need–just because it’s on sale. A sale for something you don’t need actually isn’t a sale at all–it’s money wasted. Kind of like how a rose bush in the middle of a baseball field is a weed.
If you only use two hats and have three more in your closet just sitting there, there’s no value to buying another hat just because it’s on sale. That hat is going to sit in the closet and provide no value. Which means, it’s not a sale or a bargain.
Number 21: Waste Energy
There’s nothing wrong with having the lights on when you’re in the room and need the light. But having the lights on in a room you’re not in is a complete waste. Of course it’s not a lot of energy (and money) to keep the lights on, but why spend one penny extra if it’s not needed?
Most people wouldn’t throw a couple dollars out their car window every month just because it’s only a couple bucks.
Now, I’m not suggesting keeping the house at 45 degrees in the winter or 90 degrees in the summer to avoid paying for heating and cooling but using common sense to easily reduce costs makes a lot of sense. It doesn’t have to take much effort or thought either.
Common ways people waste energy:
- Keeping the lights on in rooms nobody is using
- Cranking up the heat or AC when you’re not home
- Keeping TV and other electronics on when not using them
- Doors and/or windows open when heater is on
Number 22: Buy Lunch Out Everyday
Last, but not least on the list of things frugal people never do is buy lunch out everyday. Several months ago I wrote a post comparing the cost of buying lunch to bringing your own lunch. The numbers are significant enough that it’s well worth your while to bring your own lunch instead of buying out.
Buying lunch out now and then as a treat is great and won’t make or break anyone. But consistently eating out instead of bringing lunch is very costly and will make an impact on your monthly and yearly budgets. For the full results of the cost comparison, follow this link.
Related: Brewing Your Own Coffee: Will it Really Make You a Millionaire?
Conclusion
Frugality is a habit and a way of life. There are certain things frugal people never do that greatly help to reduce expenses and avoid unnecessary spending. As a result, there is more money that can be invested. Which starts to compound and build great wealth and financial security.
Most of the things frugal people never do are easy habits to start. Much of it is just awareness and taking action afterwards. For example, it’s not hard to turn off a light when you exit a room or turn down the AC when you leave for the day. Hopefully you got a few ideas from this post and generated a few ideas of your own as well.
What are some things you never do to help you live with less financial stress?
