7 Habits of Highly Effective People: The Frugal Finance Edition
Experts say that frugality is the key to financial freedom. It is not, however, a habit that a lot of people practice. By using the framework of the "Seven Habits of Highly Effective People", let's illustrate ways to manage and maximize your finances by being frugal.
1. Be proactive when it comes to finances
Examine your situation carefully by identifying sources of income as well as liabilities. Laying everything on the table and making it known to people that surround you can give you support and help you make the right decision, especially when trying to resist the urge to splurge.
When deciding on a purchase outside of your budget, take a step back and examine your reasons. Most often than not, this practice is successful in preventing unnecessary purchases.
2. Begin with the end in mind
Identify your reasons for deciding to be frugal. Are you doing this because you want to pay off your debts? Are you working on a retirement fund? Whatever the reason, it is important that you know exactly what your motivations are to fix your finances.
Set your budget and identify ways to stay within it. You also need to recognize possible stumbling blocks and devise ways in order to avoid or over them.
3. Put first things first
Make being frugal your priority and organize your activities in accordance with that. When your finances are well managed, you will find that everything else falls into place.
Learn to say no. Overspending oftentimes results from doing things that are not according to your plan like dining out instead of cooking, or getting the latest designer bag everyone is talking about. When you're able to rise above this financial quicksand, you will realize that you have finally taken control of your finances.
4. Think win-win
Being frugal means being limited in a way. You have to spend within your budget, and oftentimes need to say "no" to unplanned and extravagant spending activities. Instead of walling and comparing what others can do that you can not accept that as a part of taking control of your finances, and that when everything is in its proper place, you will then be able to afford the same things, or even better.
5. Seek first to understand and then to be understood
Making the decision to be frugal is not easy when other people (such as family) are affected by it. You need to understand that they may not take the same position as yours, and that limiting them takes away the support that you need from them. Without your family's support, it would be hard to follow through with your finance goals.
Being frugal is a holistic undertaking. You need to look for ways to be frugal in about every aspect of your life. At the same time, any endeavor becomes more successful when the team is aiming for the same goal. Being with other frugal people will increase your chances of being successful in managing your finances.
7. Sharpen the saw
Mastering and maintaining the first 6 habits helps achieve your goal of financial freedom. This is done through nourishing yourself spiritually, mentally, physically and emotionally. Nourishing these four components need not be expensive. There are ways you can employ which achieves the same result, but will not cause you to break your budget.
As a result of being frugal, you would then be able to pay yourself first . This would allow you to have surplus savings and eventually invest your money so that you can compound your returns annually.