The subtle financial habits keeping you ahead of the curve
Sign #1: You set aside at least a little every month towards your goals
Even if you’re only able to set aside a few dollars right now, being able to save toward your goals is a great sign for two reasons. First, it signals that you can and do live consistently below your means. And as a result, you’re far less likely to fall into debt in the event of job loss or any other unplanned financial setback. Second, it signals that you’re not only able to set goals for your money, but that you can also stick to them over time.
Sign #2: You say NO when you can’t afford something
Being honest with yourself and others about what’s in your budget and what’s not is a surefire way to avoid keeping up with the Joneses. Aside from keeping you out of consumer debt, this habit also ensures that you’re only surrounding yourself with people who support you making responsible long-term financial decisions. In my experience, most friends will be supportive when you voice your financial limitations. The ones that aren’t likely weren’t your friends to begin with.
Sign #3: You don’t buy things just because they’re on sale
An item you don’t need at a great price is still wasted money. The typical American spends roughly $108 on impulse purchases, $94 on subscription boxes, and $84 on online shopping every month. And much of this nonessential spending is prompted by limited-time deals, flash sales, in-store offers, and introductory discounts. If you’re firmly in the habit of looking for deals only after making a shopping list that you’ve spent some time thinking about, as opposed to scooping up random items just because of a steep discount, you’re removing the temptation to spend hundreds every month.
Sign #4: You cook
Even if you just stick to a handful of easy recipes, cooking at home a few times a week and then stretching your leftovers rather than relying exclusively on take-out, fast food, and/or delivery, can add up to thousands saved over the course of a year. For reference, the average American household spends $3,000 each year eating out and the average American eats 4.2 commercially prepared meals each week. Even if you like to eat out as a treat on the weekends, making your own food at home the majority of the time puts you far ahead of the pack in this category so that you can save the difference and get ahead financially.
Sign #5: You have a few cheap options for spending time with friends
Rather than always falling back on the costly dinner-and-drinks routine, you propose a few budget-friendly alternatives to the group from time to time. Whether it’s hosting a picnic in the park, organizing an at-home game night, or pointing out a few free local events to the group, coming up with fun activities that cost you and your friends little to nothing can save you hundreds of dollars a month while providing you and your friends with a more memorable experience.
Sign #6: You keep your home clean and organized
Staying organized not only provides you with an up-to-date inventory of what you have and keeps you from buying duplicate items, but it also allows you to enjoy the time you spend at home a lot more since you’re not having to constantly step over piles of clutter. And the more you enjoy spending time at home, the less likely you are are to spend money on big nights out, trendy home decor, and vacations you don’t need.
Sign #7: You walk, bike, carpool, or use public transportation
According to the BLS, the average American spent about $164 each month on gas. Not only does a decreased reliance on your personal vehicle bring your monthly gas bill down directly, but opting for carpooling, biking, walking, and/or public transport whenever possible, can also substantially reduce your car insurance rates.
Sign #8: You review your bank statements at regular intervals
Looking over your statements not only makes mindless spending a lot easier to spot and fix, but it also prevents fraudulent charges from going unnoticed and undisputed with your bank. A regular review of your accounts, for both reasons, can save you hundreds if not thousands over the course of a year.
Sign #9: You automate your savings
Automating your savings ensures that you’re making progress towards your goals each month without having to rely too much on willpower to get there. In other words, it ensures that the budgeted funds make their way into your savings and investment accounts every month before you can even think to spend them on nonessentials.
Sign #10: You know where to save vs. splurge
The primary benefit of frugal living is that by saving on what matters less, you have the money to buy quality where it counts — without blowing out your overall budget. While knowing where to spend and save your money takes some trial and error, understanding what is and what isn’t worth your hard earned money puts you thousands of dollars closer to reaching your financial goals. Whether you stick to mostly drugstore products for your makeup while splurging on a few skincare products or you save on everything but nice shoes, limiting your splurging to just one or two categories puts a limit on your overall spending and keeps mindless shopping to a minimum.
Sign #11: You grocery shop with a plan
Meal planning before you reach the store, sticking to a list, and making sure that you shop on a full stomach, can save you hundreds each month by preventing impulse purchases and helping you to stretch the contents of your cart. Since food is often the third largest household expense behind housing and transportation, avoiding unnecessary spending in this category by sticking to a plan at the supermarket can have a significant impact on your overall budget.
Sign #12: You take full advantage of your employer benefits
You’re aware of the programs that you can enroll in to lower your health insurance premiums, contribute up to the max employer match on your retirement plan, and have made note of the continuing education opportunities that may be available to you as you look to develop within your role and to take the next step in your career. Having this information handy saves you hundreds on healthcare and periodic upskilling while also making you aware of additional free benefits that your colleagues may not even know to look for.
Sign #13: You know your credit score and understand it
Even if you’re happy with your current credit score, knowing the factors that contribute to it and what you can do about each one ensures that your credit stays in great shape as your financial priorities change over time. Keeping your credit in good shape also ensures that you’ll consistently pay lower interest rates, get approved for the loans you need, and avoid security deposits.
Sign #14: You know what a fair salary is for your role, location, and experience level
Knowing your worth makes you more likely to ask for raises at the appropriate intervals. And asking for a raise is an oft overlooked yet simple way to make more money. In fact, CNBC found that 71% of employees didn’t negotiate their salary at their current or most recent job. Yet 84% of those who asked for a raise ended up getting it. And one of the best ways to get your request approved is to make it with data like this. Further, keeping an eye on your current and future earning potential gives you the information need to upskill, switch roles, or move companies if your current career prospects aren’t what you hoped initially.
Sign #15: You read financial content
While most people like to think that they’re good with money, this is overwhelmingly not the case. In fact, nearly two thirds of Americans remain financially illiterate through the age of 40. This statistic is particularly worrying given the fact that many of our most important financial decisions — taking out student loans, buying a car, getting married, and/or purchasing a home — take place well before that age. No matter your level of proficiency on this broad topic today, asking the right questions and continuing to learn can save you from making a string of costly financial errors over time.