7 little spending habits that quickly tell you whether someone’s frugal by necessity or frugal by choice

by Lachlan Brown | May 5, 2026, 9:35 pm

There’s a fine line between being frugal by choice and being frugal out of necessity.

The key lies in the details—specifically, it’s all about those little spending habits.

They’re often subtle, but if you pay attention, they can tell you a lot about a person’s financial situation and mindset.

Being frugal by necessity means making cuts and savings wherever possible, because you have to.

However, being frugal by choice is a deliberate decision to live below your means for the sake of long term financial health and stability.

Let’s delve into those little spending habits that can instantly tell you whether someone is frugal by necessity or by choice:

1) Attitude towards discounts and sales

When it comes to being frugal, discounts and sales can be a game changer.

However, the way people approach these discounts can tell you if they’re frugal by necessity or by choice.

Those who are frugal by necessity often rely on sales and discounts to afford their basic needs.

Every discount counts and missing a sale can be a big hit to their budget. They might even plan their purchases around when items are likely to go on sale.

On the other hand, those who are frugal by choice may also take advantage of sales and discounts, but with less urgency.

They might use sales as a way to save on items they were already planning to buy, rather than as a necessary strategy to stretch their budget.

Understanding these small differences in spending habits can reveal a lot about a person’s financial situation.

2) Tracking every penny

Let me give you a personal example: I’ve always been a bit of a numbers geek. Even as a kid, I loved keeping track of my pocket money, and that habit carried over into adulthood.

Now, I wouldn’t call myself frugal by necessity.

I’m fortunate enough to have a steady income that covers my needs and even some of my wants, but I still keep a close eye on my spending.

Every month, I sit down and review where every dollar went, not because I have to, but because it helps me stay in control of my finances.

On the flip side, I’ve known people who had to account for every penny out of necessity.

For them, tracking expenses wasn’t about control or planning for the future—it was about survival.

The habit of tracking expenses can be common to both types of frugality, but the reasons behind it can tell you whether someone is frugal by choice or necessity.

3) Eating out vs cooking at home

Did you know that on average, Australians spend over $100 a week on dining out? That’s a significant chunk of change that could potentially be saved by cooking at home.

Those who are frugal by necessity might find it tough to afford regular meals out.

Instead, they may choose to cook at home, often leaning towards inexpensive ingredients and meals that can be stretched over several days.

Meanwhile, those who are frugal by choice may also cook at home a lot, but for different reasons.

They might enjoy the process of cooking or see it as a healthier alternative to dining out.

However, they’ll likely still treat themselves to a meal out every now and then without feeling the pinch.

How often someone eats out versus cooking at home can give you clues about their financial situation and mindset.

4) Approach to big purchases

When it comes to significant expenses, like a car or a house, the way people approach these can be quite telling.

Those who are frugal by necessity may tend to delay big purchases as long as possible.

When they do make a purchase, they’re likely to go for the most affordable option that meets their needs, even if it’s not exactly what they wanted.

But those who are frugal by choice might approach big purchases differently.

They may save up and delay their purchase until they can afford exactly what they want without having to finance it.

5) Handling unexpected expenses

I’ll never forget the time my car broke down on a rainy night: I was miles away from home, and the repair costs were hefty.

For me, this was an inconvenience, but I was able to cover the costs without it derailing my finances.

However, for someone living frugally out of necessity, an unexpected expense like this could be devastating because they might have to borrow money or make sacrifices in other areas to cover the cost.

On the other hand, a person being frugal by choice is likely to have an emergency fund set aside for such unexpected expenses.

It’s not that they enjoy these surprises, but they’re prepared for them.

The way someone handles unexpected expenses can give you insight into whether their frugality is driven by choice or necessity. As with editing, it’s all about paying attention to the details and understanding the bigger picture.

6) Spending on experiences vs. items

Some people prefer investing their money in experiences, like travel or concerts, while others lean towards purchasing physical items, like gadgets or clothes.

This preference can also provide insight into someone’s frugality.

Those who are frugal by necessity might be more inclined to spend on items rather than experiences.

The reasoning is simple: Physical items tend to last longer and can often be used repeatedly, providing more value for the money.

Meanwhile, those who are frugal by choice might lean more towards experiences because they understand that while physical items can bring temporary happiness, experiences can provide lasting memories.

7) Planning for the future

The most crucial thing to understand about frugality is that it’s linked to planning for the future.

Those who are frugal by necessity may find it challenging to plan beyond their immediate needs due to financial constraints.

In contrast, those who are frugal by choice generally have the luxury of long-term financial planning as they might be saving for retirement, a child’s education, or a dream vacation.

This ability to plan and save for the future is often the defining characteristic of someone who chooses a frugal lifestyle.

Final thoughts: It’s all about the why

When it comes to frugality, the most important factor isn’t necessarily how someone spends their money, but why they spend it the way they do.

Being frugal by necessity can be a challenging and stressful way of life, while being frugal by choice can be empowering.

Just like a coin has two sides, so does frugality.

Just like an editor looks beyond the words on a page to understand their underlying meaning, we too can look beyond spending habits to understand people’s financial realities.

The next time you notice a person being careful with their money, don’t jump to conclusions.

Everyone has their own unique financial story and, in that story, their spending habits are just one chapter.

Lachlan Brown

Lachlan Brown is an entrepreneur and co-founder of Brown Brothers Media, a digital publishing network reaching tens of millions of readers monthly. He holds a Graduate Diploma of Psychological Studies from Deakin University, though his real education came afterward: a warehouse job shifting TVs, a stretch of anxiety in his mid-twenties, and the slow discovery that studying the mind is not the same as learning how to live well. He started experimenting with Buddhist principles during breaks at the warehouse and eventually began writing about what he was learning. That writing became Hack Spirit, a widely read personal development site, and his book Hidden Secrets of Buddhism became a bestseller. His work breaks down complex ideas into frameworks people can apply immediately, whether they are navigating a career change, a difficult relationship, or the gap between knowing what to do and actually doing it. Lachlan splits his time between Singapore and Saigon. He writes about high-performance routines, decision-making under pressure, digital innovation, and the intersection of Eastern philosophy with modern life. His perspective comes from having built things from scratch, failed at some of them, and learned that clarity comes from practice, not theory.