Financial goals give you something to reach for — they help you visualize what you’d like your life to look like five, 10, or even 20 years down the road.

But it’s habits that allow you to achieve those goals. It’s habits that allow you to stop living paycheck to paycheck, save more for retirement, or even have some extra spending money at the end of the month. 

I’ve always found frugal people to be the best role models when it comes to financial habits. 

Here’s a list of 10 important habits that frugal people know and follow. Use these habits and tips to help you start building a better future.

Habit #1: They utilize effortless couponing

My Grandma was my frugal role model. She was cutting coupons in her 90s, despite some in the family giving her a hard time. 

The fact is that coupons can save you a lot of money, especially in helping reduce grocery expenses. The problem is that they’re difficult to remember to use, and finding them takes time. 

Fortunately, technology makes that problem a thing of the past. Ibotta is an app for your smartphone that gives you easy digital access to the best coupons available.

All you have to do is download the Ibotta app (which is free), browse for coupons from your favorite brands and products, and save them to your digital coupon book with the tap of a finger.

When you’re done shopping, just scan your receipt — Ibotta will add cash-back to your account within 48 hours. Ibotta users save $240 per year on average, so you don’t want to overlook this opportunity. 

Pro Tip: For extra savings, download Ibotta as well as the popular receipt scanning app Fetch. The highly-rated Fetch Rewards allows you to scan any grocery receipt from any store, and there are no specific products you have to buy. Any receipt earns you points, which you can exchange for free gift cards. And yes, you can use both apps on the same receipt to maximize your savings!

Habit #2: They never overpay for recurring expenses

Frugal people love lowering their recurring expenses. The hour or two it takes to find lower prices on fixed costs like insurance, cable, internet, and a cell phone plan saves frugal people hundreds if not thousands each year. 

I recommend looking at these fixed costs at least once a year, starting with car insurance.

Why car insurance?

It’s one of the quickest ways to save hundreds of dollars, and there are no upfront costs involved (such as buying a new phone). 

The easiest way to shop for insurance right now is through Esurance

With their easy-to-use website, Esurance allows you to get an accurate quote in minutes, even from your smartphone. 

The average customer saves $462 upon switching to Esurance compared to their current provider. 

See how much you can save with Esurance right now.

Habit #3: They strive for continuous optimization

Frugal people are constantly optimizing their finances. These little optimizations may seem insignificant in the moment, but compound them over time and they yield very big results.

As Darren Hardy explains in his best-selling book The Compound Effect, “small, seemingly insignificant steps completed consistently over time will create a radical difference.”

When it comes to your finances, here are two small steps you can take today that will make a big difference down the road.

  • Save more the easy way. Increase your 401(k) contribution by 1% every six months (set a calendar alert if your company doesn’t offer automatic increases).
  • Make money in your spare timeSurvey Junkie pays you for taking surveys in your spare time. They have the highest rating on TrustPilot among all survey companies, with 8.7/10 stars. You’ll get paid instantly with cash via PayPal.

Habit #4: They know where their money is going

For their landmark book The Millionaire Next Door, authors Thomas J. Stanley and William D. Danko spent 20 years studying who the real millionaires are in America. To their surprise, they found that the majority of millionaires lived frugally.

When describing the traits of a typical millionaire, the authors explained: They know that planning, budgeting, and being frugal are essential parts of building wealth, even for very high-income producers. Even high-income producers must live below their means if they intend to become financially independent. 

Living below your means and sticking to a budget starts with knowing exactly where your money is going.

The free budgeting app Truebill can help you do just that.

Just download the app and Truebill pulls your historical spending and organizes it into categories. Looking ahead, Truebill automatically categorizes each expense so you can clearly see where your money is going. You can even set a target budget within a certain category, to know whether you’re on track.

With a 4.6 out of 5 rating on iOS, Truebill is one of the highest-rated budgeting apps currently available. And did I mention that its budget tracker is absolutely free?

Budget the easy way with Truebill.

Habit #5: They improve their credit score

Like it or not, your credit score matters. The chart below, from the New York Times bestselling book I Will Teach You To Be Rich, shows how much one can save on their mortgage with a high credit score over the life of a loan (about $70,000 on a $200,000 mortgage).

comparing mortgage rates with different credit score

It’s not just your mortgage where your credit score makes a difference, or even other types of debt (such as auto and personal loans). Having a high credit score can save you money on things like home insurance, auto insurance and your cell phone bill. 

As you can start to see, it’s no wonder frugal people keep an eye on their credit score.

One great way to check your credit score (and get recommendations for improving it) is to sign up with Credit Sesame. This is the site I use to keep an eye on my score and see if there’s anything I can do to raise it.

When you sign up, not only will you get to see your credit score right away for free, but you’ll get a very handy Credit Report Card, which will tell you exactly what you need to do to improve your score.

Habit #6: They turn their hobbies into businesses

Frugal people understand that hobbies can be a source of income. From pocket change to full-fledged businesses, many frugal people earn money from their hobbies. 

For example, take turning your passion for reading into a part-time side hustle. This is exactly what Caitlin Pyle did. Instead of reading just for pleasure, she started her own proofreading business that went on to make her a full-time income. 

She now has a free daily workshopLearning the Skills You Need to Start Your Freelance Proofreading Hustle.

If you love to read, see when the next class is here.

Habit #7: They take advantage of easy wins

Frugal people know that there are certain actions that take a little time and effort but offer tremendous rewards. For example, taking 10 minutes to optimize their 401(k) investments allows frugal people to potentially retire years earlier than people who never think twice about their investment funds.

One of my own favorite frugal wins is maximizing cash-back on online purchases. To get up to 20% cash-back, I use a cash-back app called Swagbucks.

Here’s how it works: Simply sign up for Swagbucks, and then visit your favorite stores — from Amazon to Target — by clicking the links available in the Swagbucks app and website.

This works for purchases large and small. As an example, when I purchased a mattress online, I went through Swagbucks and got $200 cash-back.

You won’t regret giving Swagbucks a shot the next time you purchase something online. Use this link to get a $10 bonus just for signing up

Habit #8: They get money back when prices drop (effortlessly)

Paribus is a free tool (owned and operated by Capital One) that helps you easily get money back for online purchases. How it works is you sign up, then Paribus scans your email archives for receipts.

If Paribus finds that you’ve purchased something from one of their monitored retailers, it tracks the price and helps you get a refund when it drops.

Here’s the best part: it’s completely free to use. You keep 100% of the savings.

Sign up for Paribus today to get effortless price protection.

Habit #9: They know when refinancing makes sense

study in the Journal of Financial Economics found that 20% of homeowners who could have benefited from refinancing didn’t. As such, Americans paid an extra $5.4 billion in unnecessary interest payments. 

A mortgage is likely the largest debt you’ll ever have. A frugal person knows this and understands how much they can save by refinancing. 

Interest rates are at historically low levels. As such, it’s worth making sure you’re not one of the 20% of homeowners who could benefit from a lower mortgage rate. There are no guarantees interest rates will stay this low, so time may be running out to save money.

You can find out quickly if you qualify for a lower rate at Credible, which compares rates from multiple lenders in less than three minutes. 

Habit #10: They protect what’s important

What frugal people understand well is using insurance for what it’s meant for — to guard against true financial catastrophes, not minor inconveniences.
 
Frugal people don’t pay for cell phone insurance or warranties on appliances. These “risks” are covered by a fully-funded emergency fund. Instead, frugal people protect themselves with the type of insurance that guards against TRUE financial catastrophe.
 
A good example of insurance frugal people buy is term life insurance. Term protects your loved ones in the event of your death. There’s no gimmicks or bells and whistles.
 
It’s also super-cheap compared to other types of insurance. (No kidding: I pay $12.25 a month for my wife’s $250K policy, which is cheaper than many cell phone insurance plans.)
 
Until recently, life insurance was one of the hardest money moves to knock off your checklist. Not only is it not enjoyable to think about, but the process of filling out paperwork and going through a medical examination is no one’s idea of a good time.
 
Thankfully, that’s now changed as a result of online life insurance companies like Bestow.
 
With Bestow you can get up to $1 million in life insurance coverage in under five minutes, all through their website. And getting a quote takes seconds, as they let you see estimated rates up-front. Plus, you’ll be glad to know that there are no medical examinations.