7 Frugal Habits To Save Money (while still living your Rich Life)

For nearly two decades, we’ve helped thousands of students live their richest lives by mastering their money, business, and careers. In this post, I’ll share frugal habits to save money without sacrificing what truly matters to you. These habits will empower you to say "yes" to what brings you the most joy and fulfillment.

Living frugally within your Rich Life

Frugality, in the context of your Rich Life, isn’t about denying yourself or cutting out everything you enjoy. Instead, it’s about making intentional choices that match your values so you can spend more on the things you love and less on what doesn’t matter.

Here are some Rich Life rules to keep in mind:

• Make your Rich Life uniquely yours: Spend on what brings you joy and cut out what doesn’t. Maybe that’s traveling every year, investing in a hobby, or designing a cozy home. Spend unapologetically on what matters most to you, and save on everything else.
• Take charge of your financial decisions: Don’t just let life happen to you—actively decide where your money goes. Being frugal doesn’t mean saying no to everything; it means saying yes to what makes your Rich Life possible.
• Start small, even if it’s not perfect: Don’t wait until you have everything figured out. Begin with small, manageable changes that align with your Rich Life vision. You don’t need to be perfect; just start.
• Embrace mistakes as learning opportunities: Mistakes are a natural part of building your Rich Life. Rather than seeing them as setbacks, use them as a chance to learn and refine how you spend and save.
• Be proactive with your money: Frugality is about playing offense—making strategic financial choices that create opportunities, not just cutting back. Set goals and align your spending with what you value most.
• Enjoy your Rich Life now, not just later: Find ways to live your Rich Life daily, even on a budget. It could mean treating yourself to small pleasures that bring you happiness or finding creative ways to enjoy life without overspending.
• Focus on high-impact choices: Prioritize the financial decisions that will have the biggest impact, such as negotiating for a higher salary or investing wisely, rather than stressing over small expenses.
• Give generously within your means: Being frugal doesn’t mean being stingy. Find ways to be generous that fit your budget, whether donating to a cause you care about, volunteering your time, or supporting friends and family.

1. Automate your finances

Automating your finances means setting up systems that handle your money for you, making saving and investing effortless. This strategy minimizes the chances of missing payments or forgetting to save, freeing you from the stress of manual money management. It’s a smart, frugal habit because it ensures you’re always putting money toward your goals, even if life gets busy or you’re tempted to spend impulsively.

This approach complements conscious spending, helping you make deliberate financial choices that align with your values and long-term goals.

What this looks like:

Automation helps you build wealth consistently without thinking about it every month. By making saving and investing automatic, you prioritize your financial health and set yourself up for long-term success. Plus, removing the manual steps eliminates the risk of procrastination or decision fatigue. You’re essentially putting your money management on autopilot for what matters most.

• Set up automatic transfers to savings and investment accounts by deciding on a specific amount to save from each paycheck and scheduling it to transfer directly to your savings or investment accounts. This allows you to consistently build your savings without noticing the money leaving your account.
• Use apps to round up purchases and invest the difference, like Acorns. These apps round up your purchases to the nearest dollar and automatically invest the spare change. This method provides a painless way to invest small amounts regularly, which can grow significantly over time.
• Automate bill payments to avoid late fees by setting up automatic payments for your bills, such as utilities, credit cards, and subscriptions. This ensures you never miss a payment, helping you avoid late fees and maintain a good credit score.

How to incorporate it with your Rich Life:

Automating your finances frees up mental energy for more exciting financial decisions, like planning a dream vacation or investing in a passion project. It ensures you're consistently funding your Rich Life goals without thinking about it every month. With your finances on autopilot, you can reduce stress and enjoy life more, knowing that your money is working for you in the background.

Imagine you’re a busy professional who decided to automate your savings and bill payments last year. You set up an automatic transfer of $200 from every paycheck to your savings account and used an app to round up your purchases, investing the difference. Over the past year, you saved over $3,000 and avoided late fees by automating your bill payments.

2. Prioritize your values

Prioritizing your values means being crystal clear about what matters most to you and consciously directing your money toward those things. This isn’t about deprivation; it’s about cutting out the noise and focusing your financial resources on the areas that truly enhance your life. When you know your priorities, you can spend without guilt and balance your financial decisions with what brings you the most happiness.

What this looks like:

Identifying your core values is the first step to prioritizing your spending. From there, you can cut back on things that don't matter and redirect those funds toward what you love.

• Identify what truly matters to you. Whether it's travel, new experiences, or spending quality time with family, knowing your priorities helps you focus on what you value most.
• Cut back on areas that don't align with your values. Review your expenses and find areas where you’re spending money without much return in happiness or fulfillment. Redirect those funds to things that are meaningful to you.
• Allocate more resources to high-priority areas. Once you’ve identified what matters most, commit more money to those areas. This could mean booking more trips, investing in education, or donating to causes close to your heart.

How to incorporate it with your Rich Life:

To incorporate this habit into your Rich Life, start by defining your “Money Dials,” the areas where spending brings you the most joy and value. Explore the Money Dials to identify what truly lights you up—convenience, travel, health, or something else entirely. Use these insights to guide your spending choices and confidently invest in things that make your life richer.

By focusing on what matters most, you can spend guilt-free on experiences and items that bring you happiness while cutting back on the things that don’t. This approach allows you to create memorable experiences that align with your definition of a Rich Life. As you refine your spending to reflect your true priorities, you'll feel more confident that your financial decisions support the life you genuinely want to live.

What happens when you spend without knowing your values

Sometimes, the impact of spending without a clear understanding of your values only becomes evident when you're already facing financial trouble.

In my podcast episode with Elizabeth and Jonathan, a couple in their mid-30s, I learned how their lack of clarity around what matters has trapped them in a cycle of debt and stress. They find themselves stuck, paying some bills while letting others slip and attempting to manage their money with a notepad of random expenses.

[00:14:13] Ramit: Clothes are $350 a month. What?

[00:14:16] Elizabeth: So that was based off of this last month. It’s not every month that I spent $350.

[00:14:25] Ramit: I just want to reiterate, you have $25,000 in credit card debt, and you spend $350 in a month on clothes.

[00:14:30] Elizabeth: Yeah. I should not be buying more clothes. I have plenty.

[00:14:35] Ramit: I’m not here to beat you up or berate you. That’s not my job. That’s not what I do.

[00:14:38] Elizabeth: No, but it’s honest.

[00:14:45] Ramit: What I’m trying to do is to show you that you are not in alignment. If you say that you want to pay off your debt, we’ll get to that. If you say that you would like to have more savings, if you say that you would like to stop worrying, this is not in alignment with that.

[00:15:03] Elizabeth: Right, it’s not.

As we continued to talk, it became clear that their financial challenges weren't just about numbers—they were about habits. Elizabeth, for example, realized she was spending hundreds of dollars on clothes in a single month despite having significant credit card debt. They both knew something needed to change, but they hadn't yet taken the steps to align their spending with their actual goals.

In the next part of our conversation, we talk about the importance of recognizing these patterns and making intentional decisions to break free. It’s not just about cutting back; it's about making your money work for you by automating where it goes so you don't have to manually manage every expense.

[00:18:33] Ramit: Before we do work on some other reduction, I just want to look at the rest. Investments, you’re at 8%. All right, so you’re putting 400 bucks a month away into retirement, which is why you have $38,000 invested. All right, fine.

[00:18:47] Elizabeth: Yeah. That’s the only reason we have anything invested.

[00:18:50] Ramit: So what’s the lesson?

[00:18:52] Elizabeth: If I can’t see it go, then it’s fine.

[00:18:57] Ramit: If you want your money to go somewhere, you need to make it automatic. Whatever is left, you’re going to spend it. Might as well just be humble about it and admit it. Look, I have my own weaknesses. You put chips and salsa in front of me, I’m eating that whole freaking thing. I know that. I’m only going to eat at a Mexican restaurant when I know, ah, it’s going to be chips and salsa all night for Ramit.

[00:19:20] Elizabeth: Yeah.

[00:19:21] Ramit: I’m humble enough to know it. You got to be humble enough. It’s not about trying. It’s not about manually tracking in a notepad. None of that stuff matters. It’s about automating your money to go where you want it to go, simple as that. We need to get this number down to roughly 50, maybe 60%.

[00:19:40] Elizabeth: Like I said, we’ve tried to get out of debt many times, and we never get out of debt ever. That’s why it keeps accumulating. It just keeps getting worse.

[00:19:52] Ramit: Eating out. What else?

[00:19:54] Elizabeth: I would buy a lot of movies online.

[00:19:59] Ramit: What?

[00:20:00] Elizabeth: Like at $5 a pop, digital movies.

[00:20:04] Ramit: What?

[00:20:05] Elizabeth: That was something else I like to buy.

[00:20:06] Ramit: Wait, hold on. You have $185 a month in subscriptions. I presume that’s like Disney plus, Netflix, all that stuff, right?

[00:20:13] Elizabeth: Yes.

[00:20:13] Jonathan: Mm-hmm.

[00:20:13] Ramit: So you’re buying on top of those.

[00:20:15] Elizabeth: Yes, I am. I stopped. Jon made me stop, so I did stop.

[00:20:20] Ramit: What’d you say, Jon?

[00:20:21] Jonathan: Can we really afford that? You need to stop. It all adds up.

[00:20:26] Elizabeth: No, he told me to stop. He said I wasn’t allowed to buy any more movies.

Elizabeth and Jonathan’s story shows what happens when spending drifts away from intention. Even with a higher income than before, they’re still weighed down by debt, lost in a pattern of unplanned expenses and missed payments. This struggle isn't unique—it can happen to anyone who doesn't actively align their money choices with their true priorities.

To break free from this cycle, you need a plan that reflects your real values. Automating savings and payments can set the foundation, but it's crucial to dig deeper, understand what truly matters, and direct your spending accordingly.

3. Be a savvy consumer

Being a savvy consumer means making informed decisions and getting the best value for every dollar you spend. This doesn’t mean spending hours clipping coupons or obsessing over every penny; it’s about being strategic with your purchases. By making smart money choices, you can save on necessary expenses and redirect those savings to the things that truly matter to you.

What this looks like:

It also involves simple and effective strategies to get more for your money. Instead of paying full price or settling for the first option, you’re always looking for deals, maximizing rewards, and using tools to help you save. Here’s how you can do it:

• Research prices and use price-matching policies to avoid overpaying. Before making a purchase, take a few minutes to check multiple retailers and see if anyone offers a price match guarantee.
• Take advantage of credit card rewards and cashback offers by using cards that align with your spending habits. Select a card that gives you points, miles, or cash back on the things you buy most often, like groceries or travel.
• Use browser extensions to find the best deals automatically. Install extensions like Honey or Rakuten to scan for coupons and cash-back opportunities as you shop online, making sure you never miss a discount.

How to incorporate it with your Rich Life:

Being a savvy consumer stretches your budget further, allowing you to save on necessary purchases and free up funds for your Rich Life experiences. The money you save by strategic spending can be used for memorable moments, like that weekend getaway you’ve been dreaming about or dining out at a restaurant you've always wanted to try.

For example, if you’re buying a new laptop, using price-matching, cashback offers, and browser extensions could save you $200 or more. You could then channel those savings into something you genuinely enjoy, like a luxury spa day or a cooking class you’ve always wanted to attend. Feeling empowered and knowing you’re getting the best value for your money also adds to your financial confidence.

4. Invest in quality over quantity

Investing in quality over quantity means buying fewer but better items that stand the test of time. It’s about making thoughtful purchases that offer long-term value rather than opting for the cheapest option that might break or wear out quickly. This habit saves you money in the long run and improves your life by surrounding yourself with things that truly bring you joy and satisfaction.

What this looks like:

Focusing on quality means prioritizing durability, versatility, and longevity in the items you buy. Instead of getting caught in a cycle of replacing low-cost items frequently, you invest a bit more upfront for things that truly last. Here’s how you can start with a bulletproof budget:

• Buy well-made items that last longer to avoid the constant need for replacements. This could mean choosing a sturdy winter coat or investing in high-quality kitchen appliances that won’t need frequent repairs.
• Choose versatile pieces that serve multiple purposes to get more use out of each item. Consider clothing that can be dressed up or down or multi-functional furniture that saves space and money.
• Spend more upfront for things you use frequently, like a comfortable mattress, reliable shoes, or a durable laptop. Paying more now can mean less stress, fewer replacements, and more satisfaction over time.

How to incorporate it with your Rich Life:

Investing in quality allows you to enjoy premium experiences without the hassle and cost of constant replacements. By owning fewer but higher-quality possessions, you reduce clutter, simplify your life, and make room for the things that truly matter.

Picture yourself enjoying your morning coffee from a durable coffee maker that’s lasted for years or wearing a perfectly tailored outfit that makes you feel confident every time.

By focusing on quality, you align your spending with your Rich Life values and can feel great about your choices. You know that each item enhances your daily experience and truly reflects what matters to you.

5. Master the art of conscious spending

Conscious spending means directing your money toward what matters most to you instead of mindlessly cutting expenses across the board.

It's about creating a spending plan that aligns with your values and allows you to enjoy your money without guilt. This habit encourages a balanced approach to money management, where you’re both mindful of your spending and open to splurging on the things that truly enhance your life.

What this looks like:

Practicing conscious spending helps you make smarter financial choices while still enjoying your money. It’s about planning and prioritizing, so you’re spending less on what doesn’t matter and more on what does. Here are some ways to start:

• Use a budget as a spending plan, not a restriction, to guide where your money goes. Think of it as a tool that empowers you to spend more on what brings you joy rather than a list of what you can’t do.
• Allow for planned splurges in areas that matter most, like dining at your favorite restaurant once a month or setting aside money for a special trip. These planned expenses keep you motivated and excited about your finances.
• Regularly review and adjust your spending patterns to align with your values and goals. Check your spending habits at least once a month to see where you’re doing well and where you might want to make changes.

How to incorporate it with your Rich Life:

To integrate conscious spending into your Rich Life, identify your priorities and allocate your money accordingly. Use tools like a spending plan or a conscious spending framework to direct your money toward what genuinely matters to you. You don't have to cut out all the fun; instead, focus on cutting costs in areas that don’t bring you joy and reallocate those funds to what does.

By mastering conscious spending, you feel in control of your finances without feeling deprived. You can confidently spend on things that align with your Rich Life vision, knowing you are making smart choices that support your happiness and financial goals.

6. Leverage technology for financial efficiency

Leveraging technology means using digital tools and resources to simplify money management and make smarter financial decisions. With the right apps and software, you can streamline your budgeting, save time, and reduce stress around your finances. This habit is about making technology work for you so you can focus less on managing your money and more on enjoying your Rich Life.

What this looks like:

Using technology for financial efficiency can transform how you handle your money, making it easier to stay organized and make informed choices. Here’s how you can start:

• Use budgeting apps to track spending effortlessly by connecting your accounts and categorizing expenses automatically. This helps you see where your money goes without manually tracking every dollar.
• Set up price alerts for big purchases so you’re always getting the best deal. Tools like CamelCamelCamel for Amazon or Google Shopping can notify you when prices drop on items you want.
• Utilize online banking features for better money management, such as automatic savings transfers, spending notifications, and budgeting tools provided by your bank. These features help you manage your money proactively and avoid overdrafts or missed payments.

How to incorporate it with your Rich Life:

To bring technology into your Rich Life, focus on tools that reduce your time and effort on financial tasks. By using budgeting apps, setting up alerts, and taking advantage of online banking features, you spend less time managing your finances and more time living the life you want.

For instance, setting up price alerts allows you to make informed decisions about big Rich Life purchases, while budgeting apps ensure you stay on track with minimal effort.

When you leverage technology effectively, you gain clarity and control over your financial health without feeling bogged down by the details, allowing you to confidently enjoy your Rich Life.

7. Cultivate money-saving skills

Cultivating money-saving skills means developing practical abilities that help you keep more of your money and lower your monthly bills. Whether it’s learning how to fix a leaky faucet, cooking a delicious meal at home, or negotiating better rates on bills, these skills empower you to save money effortlessly. By becoming more resourceful, you reduce unnecessary expenses and redirect those savings toward what truly enhances your Rich Life.

What this looks like:

Building money-saving skills can take many forms, but they all focus on minimizing costs while maximizing value. Here are some practical ways to start:

• Learn basic DIY for home and car maintenance so you can tackle simple repairs yourself and avoid costly service fees.
• Develop cooking skills to make restaurant-quality meals at home. Not only will this save you money, but it can also become a fun hobby that brings joy and satisfaction.
• Master the art of negotiation for bills and large purchases. Negotiating your car insurance, rent, or cell phone bill or knowing how to ask for better terms can save you hundreds or even thousands over time.
• Use sub-savings accounts for unexpected expenses to better prepare for emergencies and avoid dipping into funds allocated for your Rich Life goals.
• Plan for retirement early by calculating how much you need to retire comfortably. This helps you align your long-term savings strategy with your Rich Life vision

How to incorporate it with your Rich Life:

Incorporating money-saving skills into your Rich Life makes you feel empowered and self-sufficient. For example, by learning to cook gourmet meals at home, you can enjoy high-quality food without the restaurant price tag, freeing up your budget for special dining-out experiences. Similarly, by negotiating bills and expenses, you free up money that can be redirected toward your Rich Life goals, like a dream vacation or a meaningful hobby.

When you hone these skills, you’re not just saving money—you’re building confidence in your ability to navigate life's financial challenges and make choices that support the life you want to live.

When to stop being frugal

Frugality can be a powerful tool for achieving financial goals, but it can also go too far, causing tension and conflict—even when you’re doing well financially.

Take Fernando and Anushka, for example. They earn high incomes and have healthy savings and investment rates, but their attempts to save even more led to an exhausting eight-hour debate over whether to cut grocery spending or keep more in savings. Despite their financial stability, they’re caught in a cycle of disagreement and stress about how much to save versus enjoy their life and it causes a lot of stress and anxiety.

[00:06:37] Ramit: Fernando, when you get those monthly reports, what do you feel? Not what do you think, but what do you feel when you get–

[00:06:48] Fernando: Anxiety. Mad anxiety. Just childhood trauma related to money. Money is just the scariest thing to me.

[00:06:55] Ramit: Okay. So do you feel that when you have to make a purchase decision?

[00:07:01] Fernando: Oh yeah, all the time.

[00:07:02] Ramit: How about when you hear people talking about investing, or buying a house, or even traveling? You feel that same anxiety?

[00:07:13] Fernando: Generally, when it comes to taking a trip or something like that, I don’t have that kind of anxiety, but I do have that anxiety when it comes to something like gambling. I don’t gamble at all because, in my mind, you are just a few steps away from losing everything. Again, I understand, it’s a moderation thing, but I don’t want to cross that line.

[00:07:32] I don’t want to put myself or my family in that kind of situation. And I think another reason that I have a lot of anxiety with money is because Anushka helps me support my family in Michigan. That is a part of the budget. A lot of my monthly income goes towards making sure that they’re fine.

[00:07:47] Ramit: Uh-huh. And just so I make sure I get this right, you mentioned you don’t like gambling. Is investing gambling to you?

[00:07:55] Fernando: In a sense, yes. Yeah, I do see it similarly. That’s where the major conflict comes in my mind in investing. It feels like gambling. I know if something’s going to happen to the stock market and all that’s going to go away.

Fernando's deep-seated anxiety about money reveals how even the simplest spending decisions can feel overwhelming when frugality is driven by fear rather than intention. His reluctance to spend and equating investing with gambling demonstrates how the habit of saving can become an unhealthy obsession, impacting not only his financial choices but his overall quality of life.

[00:30:11] Fernando: Psychologically, it hurts me a lot to try and do that.

[00:30:17] Ramit: It hurts you to spend because?

[00:30:20] Fernando: I just feel like I am completely wasting that money. As soon as that return period's over, I'm screwed.

[00:30:25] Ramit: Mm-hmm. Wow. That's so funny because when I buy something, I literally do not think about the return period.

[00:30:31] Fernando: Really?

[00:30:32] Ramit: No.

[00:30:33] Anushka: He has always been the one to tell me, yes, spend it, and I have always been the one that has questioned the spending. So it's sad to hear that he has so much anxiety over things like that. I knew it to be true, but it's sad to hear it like that.

Fernando’s story shows that extreme frugality, driven by fear and anxiety, can create a heavy burden, affecting both personal well-being and relationships. His struggle to see the value in spending or investing reveals how a hyper-focus on saving can make it hard to enjoy the present or plan for a brighter future.

Finding the right balance between saving and living is essential to avoid letting frugality control your life. Knowing when to stop being frugal is just as important as knowing how to save. Here are some signs that it might be time to ease up:

• When it significantly impacts your quality of life. It might be time to rethink your approach if you're constantly denying yourself the things that bring you joy or comfort.
• If it's causing stress or conflict in relationships. Money is a common source of tension in relationships. If your frugal habits to save money create unnecessary stress or arguments, consider finding a balance that works for everyone.
• When the time spent saving money could be better used earning more. Sometimes, the hours you spend hunting for deals or making laundry detergent could be better spent advancing your career, learning new skills, or finding ways to earn more.
• If it's preventing you from necessary health care or self-care. Skipping doctor visits or neglecting your mental health to save money isn't worth it. Your health and well-being are foundational to living a Rich Life.
• When it's stopping you from investing in yourself or your future Rich Life. Whether taking a course to advance your career, starting a business, or simply indulging in a hobby you love, investing in yourself is crucial.
• If it's making you miss out on once-in-a-lifetime opportunities. Some experiences are worth the splurge. Don’t let frugality keep you from creating unforgettable memories.
• When the savings are minimal compared to the effort required. If you find yourself jumping through hoops to save a few cents, it’s worth evaluating whether those savings are worth your time and energy.

A balanced approach to money means knowing when to save and when to spend. Frugality should improve your life, not hold you back.

Focus on making smart financial decisions that align with your values. Embrace the habits that serve you best, and don't be afraid to let go of those that don't.