As I’ve said before, being frugal is about controlling your money and making choices so that you can allow yourself to splurge, because if you aren’t controlling your money, your money will control you. That sounds easy enough but in reality living frugally is not easy at all. It’s something that I struggle with daily, so in honor of Mr. Stephen Covey, I sat down and analyzed what I feel are the 7 Effective Habits of Highly Frugal People.

Maintenance. In a world where quality has declined, and new products are cheap, frugal people go out of their way to take care of every purchase as if it’s an investment. And they know that spending money on maintenance is less expensive than spending money on repairs.

• They maintain their bodies. Did you know that fit people get sick less than non-fit people? Which means by taking care of your body you can save a great deal of money in doctors bills! They also find frugal ways to work out: Run, Walk, Stadium Steps, the list goes on.
• They follow a maintenance schedule for their car and house.
• They check to see if something can be fixed before they buy new. You’ll be surprised to realize that more often than not things can be fixed. The soles in my nice dress shoes were completely worn out, but I took them to a local cobbler, and for $15 they as are good as new!

Make instead of buy. Frugal people understand markup and know that they can easily make many things instead of buying them to save a great deal of money.

• Mary and I make most of our meals instead of eating out. Just by taking our lunches to work we figure that we save at least $250/month.
• Instead of spending $80 on a particular medicine ball for our workouts, I made one using an old basketball, sand, and a tire patch, now I have the same thing for about $70 less. It’s not as pretty, but it’s just as functional.
• Here’s a list of 100 Things You Can Make Yourself, some of them are very random, but it’s interesting to learn what you can make with household products.

Set a budget. Frugal people track their money and set priorities, because being Frugal isn’t about not spending money (that’s called being cheap), it’s about prioritizing where you spend it and where you save it to have balance between to two. They think long term and know why they are prioritizing and saving. They will occasionally splurge with their discretionary spending, but it’s something that they plan on doing. They also tend to budget on meaningful things like a nice family vacation, instead of spending money on stuff. By setting a budget frugal people are always aware of their financial standing.

• Check out 13 Tools for Building a Better Budget to get a good grasp for budgeting.
• Also, check out Mint.com, it’s an online budgeting tool aimed at Gen-Y that will send you text messages or e-mails when you go over budget on something, when your bills are due, or when you get charged a bank fee! We’ve been using it for about a year, it’s a great tool.

Research. Frugal people know that they can’t avoid spending money, so when they do buy something, they research it first. Frugal people spend money on quality that will last, they don’t go right for the cheapest thing. So spend time researching, and looking for the best deal. As a general rule of thumb my Finance Professor taught me, spend an hour of research for every thousand dollars that you spend. I think this advice is pretty fitting, essentially, the more you spend, the more you should research (but remember to value your time!). Here are some great research aids for you:

• Fatwallet, the forums on this site are a great resource for finding deals. It may take you some time to learn the lingo (PM= Price Match, YMMV= Your Mileage May Very, B&M= Brick and Mortar store, FS= Free Shipping…), but you’ll be sure to find great deals in their Hot Deals section. Also check out the Finance Section for great financial tips, and the Deal Discussion section for great tips on buying cars and houses.
• Edmunds is a key resource for all your car buying needs.
• Bankrate is a site dedicated to finding the best rates on Mortgages, Auto Loans, Home Equity Loans, Savings Accounts…

Coupons. Frugal people know that 35 cents here and 50 cents there really starts to add up. They also know how to combine coupons with credit card rewards and/or haggling to save even more!

• Buy the Entertainment Book, spending about $30 on this book (if it’s available in your area) can save you hundreds throughout the year. It has coupons for everything from groceries, to movie tickets, to dinner. In fact, when we go out, we check to see if we have a coupon from the Entertainment Book first!
• Subscribe to the Sunday paper, it’s full of great coupons! We pay $7.50 per month to get the Sunday paper, and easily save at least $5.00 per week in coupons!
• Learn how to combine coupons with rewards programs, like learning how to make CVS work for you!

On the Ball. Frugal people are on the ball by being organized and informed. They don’t just use the paper for coupons, they actually read it too! How does staying informed help you be frugal? It makes you aware of where rates are at so that you might be able to get a higher return on your money, or a lower rate on a loan. It allows you to follow legislation that might have a direct effect on you. Staying organized is also a key aspect, if you aren’t organized, you aren’t ready to act to make sure you lock in that low rate on your mortgage refininance, or you can’t find the coupon you need to make use of the CVS cash back. Only informed people can make informed decisions, and only organized people can act quickly enough to make the move.

Understand Needs vs. Wants. Frugal people understand what is a need and what is a want, and they ask themselves if something is a need or a want before making a purchase. Do you want something really badly? Prioritize and save for it, you might be surprised to see that the desire to purchase it passes.

• I am writing this from a 6.5 year old Powerbook. Do I want a new mac? Absolutely, but I maintain my computer and it still functions perfectly for what I need it for.
• I drive a 10 year old Acura with 150,000 miles, and yes, I want a new car, but I absolutely cannot rationalize it. It’s paid for, it runs great, I can work on it myself (unlike many new cars with which the manufacturers have made it nearly impossible to work on yourself).
• I want to finish outfitting our garage as a gym, no we don’t need it, but Mary and I see an ROI in our health (body maintenance) so we are slowly gathering things from Craigslist, and finding good deals at specialty shops. We understand that this is a want, but it is a priority for us, so we are pursuing it.

I hope that you will be able to form some of these habits and become more successfully frugal!