You can spend every day reading on ways to become a successful entrepreneur, or you can start making a lifestyle change. All successful entrepreneurs have taken their own unique path that ultimately led to their success stories. But, all of them have one common denominator: they implement specific habits that made it feasible for them to achieve their goals and more.
Entrepreneurship is one of those roads less traveled. This road has twists and turns that can push you to your breaking point. Part of succeeding as a business person entails risking your life savings to follow your dreams and carry out your goals in life.
Once you take the first step in entrepreneurship, you’ll find out that the most challenging part is getting started. Most companies will endeavor to stay as lean as they can, which limits you to pay yourself the bare minimum just to stay afloat. The life of an entrepreneur is a course that only those who are brave dare to take. And to be a successful one, being frugal is essential to survive.
Frugality is one of those common denominators most successful entrepreneurs practice. But being a frugal entrepreneur is not an easy feat to do. Your self-discipline and organizational skills will be put to the test. The great thing is there are ways to help you turn this trait into a habit.
Here are ten tips you can do to cultivate your frugality.
1. Practice the 80:20 rule.
This rule mandates you only live off 80% of every paycheck and set aside the remaining 20%. You need to do this regardless of how much your pay is. If you receive a monetary incentive or a raise, save 20% of that extra money along with the 20% of your regular pay. If you consistently stick to this rule, you can save a small fortune and may end up wealthy well before you retire.
The 80:20 habit is challenging, especially in the beginning. To help you budget your income according to its rule, here are some quick tips:
- Avoid spending over 25% of your regular pay on housing. This is regardless if you own your house or rent a place.
- Avoid spending over 10% of your regular pay on leisure and/or entertainment. This includes going to bars and restaurants, watching movies, spontaneous shopping, etc.
- Avoid spending over 5% of your regular pay on car loans.
- Steer clear from racking up credit card debt. If you do this, it means you’re living way beyond your means and so you have to scale back on something.
- Invest your savings wisely. Don’t risk your savings on make-money-fast schemes.
2. Organize your finances.
The only way for you to know if you’re being a frugal entrepreneur is if you actually know your finances. If you have monthly bills like mortgage, credit cards, or insurance premiums, you must know exactly the amount that’s going out regularly.
There’s nothing more stressful and scary than worrying about your business AND coping with your high monthly obligations. When you organize your finances – personal and business – you’ll have a better understanding of how much you can save or use for future needs. Organizing your finances also help in placing which obligations to prioritize, and finding out if there are packages you can pursue to reduce your monthly payments.
3. Use coupons or vouchers.
Did you know that American households with average earnings of $100,000 (or more) use coupons and vouchers more compared to those that bring in $35,000 (or less)? There are several wealthy celebrities – like Carrie Underwood, Lady Gaga, and Hilary Swank – who are big fans of coupons. Using vouchers to get the most out of a product is nothing to be ashamed of. It’s actually a wise decision especially if you use a voucher for a merchandise or a service you won’t normally get because of its price tag.
The thing you have to remember when using vouchers or coupons is to transact with a reputable dealer. One good example of a coupon website is VoucherBin. It’s an established website that offers a variety of deals – from accessories to web-hosting and everything in between. It also provides a savings calculator so you’ll know how much you can save by getting a deal or acquiring a voucher. Entrepreneurial wise, using coupon websites can help in creating a marketing strategy that both lures in and rewards potential customers.
4. Value quality over quantity.
Wealthy people are not cheap. They most definitely are not against having fun. What sets them apart from other people is the thought they put into their purchases. As a business person, you need to invest in the things, materials or tools needed to manufacture your product or deliver your service. That’s inevitable. But to do this prudently, look for materials or tools that will last for a long time.
Buy top-of-the-line materials even if they’re pricier than their generic counterparts if you can use them for years. Being frugal doesn’t just apply to day-to-day activities, but more so for long-term plans. Spending a little extra for a tool that will last for a decade is ultimately better than paying cheap for something that you’ll only use for a couple of years.
5. Be proactive.
As an entrepreneur, you have a lot of responsibilities. It’s up to you to decide how you’ll tackle each and every one of them. If you fall short, there’s no one to blame but yourself. No matter how you were raised or what attitude you’ve adopted over the years, your responsibility is your behavior right now.
To be proactive is to understand that you are in charge of your daily interactions, and thus, the path your life takes. It means taking the first step. You can’t take care of your finances unless you make the commitment to do so. If you neglect the situation, it’ll simply get worse. Study your finances – your spending budget, financial obligations, cash flow, and miscellaneous expenses – and learn where your money goes and what portion you can budget or regulate a lot better.
Being proactive also means informing the people in your life about your lifestyle change. When you verbalize your desire to become more financially responsible for your business, it helps to firm up your objective. It also helps you prevent peer pressure that always makes cash management extra hard. If you tell your friends and family that you’re living a more economical lifestyle to sustain your business, they will be less likely to demand or pressure you to spend money on unimportant things.
6. Visualize what you want.
People who succeed can picture their desired end result regardless of the challenges and obstacles that may come their way. Successful entrepreneurs stick to this habit based on the rationale that, in business, things are created twice. One is through mental creation, the other is through physical creation. The latter follows the former in the same manner that a structure follows its blueprints.
If you fail to visualize your goals, then you’re vulnerable to other external forces – people and circumstances – affecting your life. This is because you don’t primarily affect it yourself. To avoid this, start every task with a clear picture of its end result: where you want to go with the plan and how you plan on getting there. Then turn that vision into a reality by being proactive.
This means you have to visualize living a frugal lifestyle for your business. You need to define your goals. There are lots of ways to live a simple, economical lifestyle. So you have to decide how thrifty you wish to be. Then, decide how you’re getting there. Again, this will take over your budget. However, you must be mindful of the hurdles in your way. They may be actual problems like credit card bills, or they may be challenges you’ve noticed in your behavior like a lack of self-control when it comes to shopping.
7. Remind yourself why you’re being frugal.
Realizing the reasons why you’re doing something is a powerful motivator in helping you achieve your goals. Think about the things you find most important to you. When you prioritize these things first, you’re effectively organizing your time around your goals to turn them into real possibilities. In this case, it’s about spending your money prudently for your business.
Acknowledge the impact of your finances. You may overlook organizing your finances because you feel you don’t have the time to monitor it or something more important always comes up. But, if your finances aren’t in order and you’re spending more than you earn, then this neglect will have a negative effect on all aspects of your life. Being frugal isn’t a whim. It’s a lifestyle decision that you would have to acknowledge as one of your top priorities.
8. Practice self-discipline.
This is easier said than done, especially if you’re surrounded by temptations. What you can do is to consciously avoid these enticements. If you’re obsessed with top-of-the-line electronics, then learn to curb your desire to buy brand new, expensive gadgets. Avoid going to malls or electronic centers to steer away from the attraction. Limit your online browsing to prevent unnecessary shopping. Every time you feel like buying a new gadget, bring out copies of your bills. A physical reminder of your financial obligations can easily kill your desire to buy new things.
9. Learn to cook.
This may sound absurd, but it’s one of the most tried-and-tested ways to save money. Eating out daily can cost a lot, especially if you do this twice a day. Instead of squandering money (and eating unhealthy), learn to cook at home. You can save a lot from buying versatile ingredients you can use for different dishes.
10. Be realistic.
Being frugal doesn’t mean living a no-frills, no-fun lifestyle. Don’t give everything up just to save money for your business. And realistically, it’s very hard to do that. You should still have an outlet where you can feel that you’re not depriving yourself of what makes you happy and sane. For example, if going to the gym is part of your routine, don’t immediately cancel your membership just because you’re being frugal. Going to the gym is good for your health, and with the 80-hour weeks entrepreneurs usually log in, regular workouts at the gym is not an unnecessary expense, but a real necessity.
These habits don’t happen overnight. Sometimes, you’ll stumble and give in to temptations. If that happens, don’t be discouraged. Instead, push harder. Think about the future and the rewards you’ll enjoy.