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How to Think Like a Frugal Person to Tackle a Challenging Financial Situation

By: Steve Johnson

9/9/2009 - 41 Comments

This article is for those that are not used to thinking like a frugal person, but forced to tackle a challenging financial situation.

Many frugal people consider challenging financial situations to be something that can be overcome by following a process that they are familiar with, just like a mechanic would change the oil of a car.

But people that don’t regularly practice frugal living are often not sure where to start when faced with a difficult financial situation, just like someone who is not mechanical is unsure how to change the oil of a vehicle.

Personal Finance Begins In Your Mind

For everyone that does not inherit money, personal financial planning is a long-term strategy that takes discipline and sacrifice – and there lies the problem.  Nobody wants anything to do with discipline and sacrifice.

To fix this problem, you need to change these two words to strategy and victory.  The most important part of personal finance is what you think about money and how money relates you to your family and friends.  The only way to truly get your personal finances in order is to change the way you think about your financial decisions. It’s very difficult to change habits while focusing on words like discipline and sacrifice. 

When you are staring at a pile of debt and the bills are coming in faster then you can pay them, the last thing you want to hear is someone talking about sacrifice and discipline. The only people that can use these words are the people that are already out of debt and financially secure. For everyone else, these words usually just stir up resentment and frustration.

A Better Way

A better way to tackle a challenging financial situation is to create an enemy or a competitor.  Trying something completely new is almost impossible to do alone. That’s why you need someone else to measure your progress against and get excited about the victories.

A similar strategy can be used when starting a new business, by creating the competition.  Without competition, it is very difficult to explain to someone why they should use your product.  Your product can only be the leader if there are similar competing products. 

If you want to make frugal decisions without giving into peer pressure, you need to explain to your friends and family why your idea of saving is better than a competing idea.

The trick is to make frugal living the leading idea in your mind and all other ideas the competition.  If frugal living is the leading idea, than every decision you make to save money is a small win for you and a loss for the competition.  For a visual effect, you can make a chart on the wall with wins and losses for you vs. them. 

Creating the Competition

To create the competition, you need to think about the negative effects that competing ideas have when they cause you to spend your money on them.  You need to identify them by name.  Ask yourself, what are you most discouraged about spending money on?

Maybe its video games or junk food or weekend parties or expensive vacations or whatever, but think about them and if you write these down it will cement them in your mind.

Now identify your enemies or competing interests in your financial success. For example;

  • Department store marketing departments
  • New electronic toys
  • Neighbors / Family members

Use this list to track your progress and victories.  For example, whenever you see a department store marketing ad and you resist the temptation to buy something, you win and they lose.  This makes a game out of frugal living that is full of victories that you can get excited about each time you make a winning decision. 

In the end, your growing finances will free you from the debt as frugal living becomes the leading idea that directs your financial decisions.  Pretty soon you will be raking up your money like a pill of leaves and feeling good about it every day.

This is the process that frugal people follow to tackle challenging financial situations.

After a while you may even begin to feel sorry for the competition and let them win once in a while just to keep them in the game. 

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