If you think that the concepts of being frugal and being cheap go hand-in-hand, you may want to think again. According to Wikipedia, frugality is:
“In behavioral science, frugality has been defined as the tendency to acquire goods and services in a restrained manner, and resourceful use of already owned economic goods and services, to achieve a longer-term goal.”
In relation to your entrepreneurial activities, you may find that your ability to be frugal is closely equated to the level of success that you enjoy. These are a few frugal tips that you can learn from successful entrepreneurs that could potentially help you to reach your goals more intelligently…
1. They Know How to Curb the Impulse
A critical hurdle that you must overcome in order to be a frugal business owner is impulse buying. There are many deals that you may come across that seem too good to pass up on. These may be expenses that you had not planned on taking on. To keep overhead in check, you must take a step back rather than act impulsively. Analyze the situation closely, and understand how the purchase can benefit your company in comparison to throwing your budget out of whack. Be patient with the process, and avoid making an impulsive purchase because you are afraid that the deal will no longer be available down the road. In many cases, sticking with the financial plan that you likely spent a long time creating is essential.
2. They Live Below Their Means
You may think that living a luxurious lifestyle is a sign of professional success. However, Thomas J. Stanley, who authored The Millionaire Next Door: The Surprising Secrets of America’s Wealthy, said:
“Many people who live in expensive homes and drive luxury cars do not actually have much wealth. Then, we discovered something even odder: Many people who have a great deal of wealth do not even live in upscale neighborhoods.”
A good example is the acclaimed financial genius Warren Buffet. Despite his incredible wealth, he continues to live in a modest home that he originally bought for $31,500 in 1958. Frugality means that you take every step possible to save money, such as by shopping at sales and using coupons. From time to time, you may indulge as a reward to yourself. However, the emphasis is always on quality rather than quantity. Saving money on unnecessary items and luxuries gives you the ability to prepare for a rainy day. It also gives you more money to invest for greater financial growth.
3. They Track All Expenses
There is a general belief that wealthy, successful individuals can buy whatever they desire without a second thought. This is a dangerous way for entrepreneurs who crave success to think. The reality is that wealth and financial success are often closely related to tracking every penny that is earned and spent. More than that, there may be a strong focus on the differences between needs and wants. Strong financial principles also rule. For example, financially successful entrepreneurs usually have a well-funded rainy-day fund. Saving money is intentional and important for the long-term success. They also look for ways to moderate necessary expenses rather than to live as lavishly as possible within the limits of the funds available.
4. They Avoid Risky Investments
Some people who crave vast amounts of financial wealth make incredibly risky investments. They may hang their hat on the notion that great risks yield great returns. While this is possible, you may be just as likely to lose all of your investment capital when you make a risky investment. Smart entrepreneurs analyze all risks. They avoid taking on debt to take advantage of an investment, and they only invest in things that they understand and feel comfortable with. Millionaires read daily, educate themselves on finance and business to make smarter decisions as they go. You will never know how advantageous an investment may be if you do not have the knowledge and expertise to analyze it yourself.
5. They Prepare for Emergencies
Life is filled with unexpected events around every corner. It is unrealistic to expect for life to proceed along the status quo path indefinitely. Natural disasters, serious illnesses, economic downturns and many other events can result in substantial setbacks. Financially savvy individuals have taken steps to prepare for these events. For example, they may have a properly funded savings account, and their portfolio may be well-moderated to manage risk effectively.
6. They Do Not Fear Setbacks
Setbacks can and do occur, and they often occur at no fault of your own. A setback is not viewed as a failure by the most successful individuals. Instead, setbacks are viewed as learning moments. While a setback could be an expensive hassle, it nonetheless gives you a chance to improve so that you can be even bigger, better and stronger going forward. Remember that you can also learn from other people’s mistakes. You do not have to experience the pain yourself to learn the lessons.
You may feel discouraged when you see others reach the pinnacle of success seemingly overnight, but remember that there was likely a considerable amount of preparation that went into the success that you may now envy. Education, strategy, setbacks and more may have come into play to get that individual or business to its current point.
When you understand what it takes to be a true success in business as well as with your personal finances, you can take proactive steps to improve your life in substantial ways. Remember to be patient and to continually improve yourself in various ways to ultimately reach your goals.