How to Build a Strong Frugal Mindset

Over the past few years, I’ve developed a surprisingly strong mindset for making naturally frugal choices, to the point where non-frugal choices often feel inherently wrong to me on some level. For example, whenever I spend money on non-essential stuff that I didn’t account for and budget for, I feel strongly as though I’m making a mistake before I ever spend the money.

Before we get rolling here, let me back off for a second and explain how I define “frugal.” “Frugal,” to me, simply means that I’m getting the greatest benefit possible for the time, money, and energy I’m investing in something.

Often, that means finding out how to minimize my financial investment in something, but not always. My time does have a value, as does my energy, so I also find many purchases that are reliable and long-lasting (though expensive) to be frugal over the long run. I also find genuine leisure activities to be a worthwhile expense, provided I get sufficient value out of the purchase.

Some people find that to be a negative thing, but I actually find it to be one of the most empowering mindsets I’ve developed in my entire life. Feeling like that is loaded with benefits.

I am naturally guided toward long-term choices. Almost every time, spending money on something non-essential right now is a choice with a short-term benefit and a long-term drawback. The short-term benefit lasts for a little while, but fades, while the loss of that money sticks around. By having a frugal mindset and making frugal choices by default, I’m actually thinking long term. I lose some of those short-term benefits that fade quickly, but I don’t have those long-term drawbacks at all. The long term looks great.

I have a strong appreciation for free and very inexpensive things, which has helped me to discover many things I would have never otherwise discovered. Part of being frugal is trying lots of low-cost and free things that I might have otherwise turned away from without seriously considering them. Because I chose not to do that, I discovered quite a few things in life that I deeply enjoy. I’ll discuss this more in a bit.

I simply don’t worry about money in any pressing way any more. The natural outcome of a frugal mindset paired with even a moderate income is that you’re spending less than you earn. Do that for long enough and debts vanish, as do financial worries.

My life has very little financial stress in it at this point, as I have no debts at all. I’m in my mid-thirties, my wife and I have our college educations paid for, and we own a very nice four-bedroom house near Des Moines, Iowa that’s also fully paid for. We also have money saved for our own futures and for the futures of our three children. We have far less money stress than most people our age, in other words.

I feel free to make professional choices without worrying about temporary wage losses at all. Because of that low money stress and relatively secure position, which is built in large part on the back of a frugal mindset, I’m not afraid to make interesting career choices that might not maximize my income. I walked away from a secure job to write for a living, after all.

Those are just some of the benefits of building a frugal mindset, but how do you build one? I found that a person can actively build a mindset by engaging in certain mental exercises and activities over time. Here are some of the ones that worked – and still work – for me in terms of cultivating my thinking.

The Intentional Choice: Actively Choose to Try the Low-End Version First

This one’s simple: Whenever you’re about to buy a product at the store, consider giving the low-end version a try first. Just this once, try the store brand or the generic version instead of the name brand you might have otherwise bought. Then, make up your mind about whether that generic or store brand version works for you.

Most of the time, I’ve found that the store brand works really well for me. The only notable example I can think of where it didn’t hold true was with garbage bags, where I had several frustrating rips and spills with generic bags. In almost every other case I can think of, the generic product lived up to what I expected and needed from the product.

Two things happen when you do this. First, you discover some lower cost options that work well for you, which directly saves you money. If you’re suddenly buying several generic things regularly rather than the name brand thing, your expenses are going to naturally drop.

Second, as you have success with this, you become less resistant to trying all kinds of low-cost strategies. Once you start to really witness the effectiveness of better buying habits in your life and how being a little smarter about your choices results in savings, you’ll begin to want to try more of those kinds of tactics and they’ll become completely normal to you.

There are a couple of things worth noting here:

First, this really only applies to inexpensive consumer goods, such as household supplies, grooming products, and so on. For more expensive goods, I tend to rely on research rather than a “store brand” rule of thumb, as I take a look at Consumer Reports for anything I purchase over $20 (and I usually trust their “Best Buy” recommendation).

Second, if the generic doesn’t work, I have no qualms about buying the name brand next time. I just insist on having actual evidence that the store brand doesn’t meet my needs.

The Impulsive Nature: Avoid Carrying Pocket Money

Carrying around cash and credit cards leaves me prone to impulsive spending, so I typically avoid doing so. Most of the time, I only carry enough cash with me to cover whatever expense I’m facing on that trip.

Of course, this only applies to situations where I primarily use cash. There are specific situations where I use a credit card – when I buy gas and when I go to the grocery store, for example. The only time I actually take a credit card out and about with me is when I’m going to do one of those things.

Between my credit card and cash policies, I usually don’t have the money on hand for too much impulsive spending, and I like it that way. It keeps me from even considering impulsive decisions.

What’s interesting – and this is a phenomenon that holds true through many of these tips – is that when I actually skip out on an impulse buy because I don’t have the cash, the vast majority of the time I just forget about it, and when I do remember it, most of the time I recognize that I made a good choice not spending the money.

For me, that tiny minority of events where I regret not having the money doesn’t make up for the huge majority of events where I’m glad I wasn’t carrying money with me.

The Connected World: Delete Your Credit Card Info and Passwords from Online Sites

This same phenomenon runs true online. If I have easy access to money, then I tend to spend it, and the surest route to “easy access to money” online is by storing my credit card info on websites and also storing my account passwords in the browser.

Thus, the natural solution is to delete my credit cards from my online accounts and account information from my web browser. That way, it suddenly becomes much harder to impulsively buy anything.

This is essentially an online implementation of the “10-second rule,” a nice principle I used when I was first learning to get a grip on my spending. The “10-second rule” simply states that whenever I pick up a non-essential item, no matter where I’m at, I hold it for 10 seconds and ask myself whether or not I really need that item right now. If I can’t honestly answer with an emphatic yes, I put the item back.

This password and credit card tactic essentially forces the same thing when I’m on my smartphone or in front of my computer. As I’m figuring out my account sign-in information and then looking up my credit card number, I force myself to spend some time thinking about whether the purchase is worthwhile at all. Often, I decide that it isn’t.

The Future Is Now: Visualize Good Frugal Decisions in Advance

I’m not a big believer in the power of pure positive thinking, but I do believe quite a bit in the power of visualization. In fact, I use it all the time in various aspects of my life.

What do I mean by “visualization”? I simply think about an upcoming event that’s going to be challenging and I visualize myself succeeding at it. I picture myself making the good choices and actions that I hope I’ll make and then I picture the event going well because of those choices.

I use this all the time with spending decisions, too. I’ll imagine myself going to a tempting place – for me, this would be a bookstore or a board game store or a home brewing store – and merely browsing the shelves, not buying anything (or buying only an item or two within my budget), and then leaving while feeling happy about things. I’ll visualize this over and over as the visit approaches.

What happens? When I’m in there, the “normal” path is simply not buying anything, and that “normal” path feels pretty good. That visualization subtly but strongly influences what I do during that tempting moment and it pushes me away from unnecessary spending, which is undoubtedly a good thing for my wallet.

The Lasting Value Question: Run Through Your Receipts and Bank Statements in a Smart Way

One thing I’ve really learned over the years is that I generally don’t mind it too much when I spend money on something that creates lasting value, but I really regret it when there’s no lasting value created by a purchase.

What do I mean by “lasting value”? For items, it really comes down to whether I still find that purchase useful a month or so later. For experiences and consumable things, I ask myself whether it created genuinely positive memories or helped build relationships with others or created some other lasting value (like a new skill).

My preferred way of figuring this out is to sit down with a big list of my expenses from, say, a month or two ago and go through them one at a time. For each one, I’ll ask myself whether that expenditure created any sort of lasting value.

Sometimes the answer is “yes” and I feel good about that purchase. Sometimes the answer is “no” and I realize that the purchase wasn’t really a good move.

Doing that honestly and regularly has the effect of creating a strong sense in my head of what kinds of purchases will create lasting value for me and which ones won’t. With that kind of sense in my head, I can naturally make much smarter purchasing decisions.

The Social Circle: Cultivate Relationships with People Who Are Frugal

Another area of my life that I spend active time evaluating are my social relationships. Do my friends reflect and exhibit the values I want to display in my own life?

Jim Rohn is often quoted as saying “You are the average of the five people you spend the most time with.” If you look about your own life, you’re likely to recognize some real truth in those words. It’s likely that you share quite a lot in common with your closest friends and confidants.

That’s why it makes sense to choose those people carefully and to ensure that those people reflect the values that you hold highly. Are those people wise with their money? Do those people have a positive outlook on life? Do they value things that aren’t measured in dollars and cents?

Surround yourself with those people and that shared mindset will rub off on you. You’ll find yourself naturally moving toward that perspective on money simply because you’re surrounding yourself with people who have that perspective.

The Ongoing Experiment: Fill Your Free Time with Free and Low-Cost Options

What do you do when you have spare time? Everyone has a number of things that they like to do and those things are likely a mix of low-cost activities and higher-cost activities. I’m no different.

The strategy here is a simple one: Make a conscious choice to fill your spare time with low-cost and no-cost activities. Use the cost of the activity as a driving force in your decision.

This doesn’t mean you have to spend your time doing the same old two or three things. The key here is to try lots of different things, even things that you’re initially skeptical of.

One great way to start is to head over to and find community organizations that match your interests, as participating in such groups is often very low cost. Check your city’s website and those of the cities around you. Check out the community calendars on those websites, as well as the parks and recreations departments. Look for free newspapers in your area that often offer a long listing of low-cost and free activities and events in the area.

If you do that – and you make an honest effort to try out as many of those groups, events, and activities as possible – you’re going to have far more things to do than you’ll have time for.

Try lots of things with an open mind and if you discover through experience that you’re not a fan of a particular thing, then don’t repeat it. Likely, however, you’ll discover that at least a few of those things are quite fun and substantially more enjoyable than you thought, and suddenly you have yourself a new low-cost (or free) hobby.

The Reboot: Establish Smarter Routines for Your Ordinary Spending

We all go grocery shopping for food. We all buy regular household items, too. That’s part of modern life. The thing is, if you do those things without some sort of plan or a smart routine, those activities can easily drain your wallet. You wind up buying a bunch of unintentional stuff.

The best response to that is to simply make a list before you enter a store and don’t buy anything that’s not on that list. Period. Stick to the list. Why?

For starters, it forces you to do advance planning and think about what you actually need instead of what you want on a whim. The process of making a grocery list requires you to think ahead about future meal plans and what ingredients will go into those meals as well as poking through your refrigerator and cupboards for what you have on hand to cover those dietary plans. A similar thing is true for almost every shopping excursion, whether it’s to a hardware store or a clothing store or anywhere else.

The other part that’s useful here is that it gives you something to focus on in the store. You have a list that tells you what you should be buying and you trust that list.

Stuff on the list isn’t needed. If it turns out that you see something that you want, nothing is preventing you from writing it down to think about it later, but if it’s not on your list, you don’t need it, so you don’t need to put it in your cart.

I don’t like going into a store without a list at this point. I find that going in without a list means that my cart will be full of random things, many of which are redundant and unnecessary, and that means a lot of wasted money.

The Lack of Fear: Do It Yourself, Not Just for the Savings

Cooking a meal at home instead of eating out is almost always less expensive, but it’s also intimidating for many. It seems like a lot of work that’s potentially fraught with failure. That same attitude takes hold when you deal with things like a non-functioning toilet or a car that needs an oil change. There are many things in life that we could do ourselves, but we pay others to do because they seem fairly difficult or intimidating. It’s obvious that doing these things yourself will save money, but it’s the effort and difficulty involved that causes resistance.

Here’s the thing: when you do things like cooking at home and changing your own oil and fixing your own minor plumbing problems, not only do you save money in the moment, you also improve your own personal skills, which makes it easier to do those things in the future.

In other words, by forcing yourself to take on what seems to be a difficult task right now in the quest for saving money, you build a little bit of skill so that next time it doesn’t seem quite so difficult. Push yourself next time (and you won’t need to push quite so hard) and it becomes a little easier and a little easier until you reach a point where it seems so easy and normal that you wonder why you ever spent a bunch of money to pay someone else to do it.

“But who has the time?” People often fall back on the convenience factor here, but if you look at the truth of it, most of the time you’re not saving any time by having someone else do it. If you take your car in for an oil change, you’re just sitting there waiting for that service to complete. Why not just slide under the car and do it yourself, saving $20? If you’re going to a restaurant for supper, you’re driving there, sitting there while the waiter shows up, waiting for your food to get there, and then driving home. It would take less time to just prep the food yourself and put the dishes in the dishwasher afterward.

“But I’m exhausted!” That’s the thing – once you start doing it, the difficulty level starts to go down and it begins to feel like much less effort. You just have to push yourself towards actually doing it the first time or two. That’s where the real trick is.

Final Thoughts

On their own, these individual strategies can help you save money, but where they really begin to shine is in concert. Together, they cultivate your mind to work in a different way – a way that causes you to naturally make decisions that will save you money in the short run without sacrificing quality of life or personal joy. That savings in the short run builds up to a huge financial difference in the long run.

It’s all about mindset. It’s all about your natural reactions to situations. If you put some effort up front into training your brain to make better choices in situations, then you’re going to end up with much better outcomes, and when those choices are frequent, those better outcomes are going to add up to a better life.

Most of these things aren’t complicated. You can do them in a moment or two, after all, and many of them can be done while you’re doing other things.

Get started today. You’ll be glad you did.

Trent Hamm

Founder & Columnist

Trent Hamm founded The Simple Dollar in 2006 and still writes a daily column on personal finance. He’s the author of three books published by Simon & Schuster and Financial Times Press, has contributed to Business Insider, US News & World Report, Yahoo Finance, and Lifehacker, and his financial advice has been featured in The New York Times, TIME, Forbes, The Guardian, and elsewhere.