I’m a Frugal Millionaire: Here Are 3 Ways I’ve Managed To Build Financial Security
Written by
Madeline Duley
Edited by
Amber Barkley
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Everyone dreams of becoming a millionaire, but the path to financial freedom often seems easier said than done. While achieving this goal requires time, effort and diligence, becoming a millionaire is not some far-fetched dream. The truth is that anyone can reach this goal — and one of the best ways to do so is by building wealth through frugality. For those without trust funds or massive inheritances, the key lies in living below your means.
GOBankingRates spoke to frugal millionaire Erika Kullberg, a personal finance expert and founder of Erika.com, to learn three financial strategies she swears by to save money and focus on long-term growth rather than short-term satisfaction.
Prioritizing Needs
The first step toward millionaire status is realizing that frugal living isn’t about deprivation. It’s about strategic spending that safeguards your financial peace of mind.
“The most important method I’ve used to help build financial security was consistently prioritizing my needs over my wants,” Kullberg said. “It’s important to stay focused on buying only what we truly need. This can help to curb lifestyle inflation, which can easily creep in, especially if your income grows.”
Your daily takeout? Not a necessity. Think housing costs, utilities, groceries, insurance, transportation — these are essentials that maintain a basic standard of living. Cutting out unnecessary luxuries like daily Starbucks runs, regular nail appointments or sneaky subscription services builds a strong foundation for financial stability.
“This is a mindset that can be programmed into your budget and will allow you to save and invest more money over time,” Kullberg added.
Remember, you work to live, not the other way around. When building your financial safety net, it’s still important to enjoy life — just with some limits on discretionary spending. When setting your budget, prioritize your needs first, then set aside some “fun” money for outings, clothes or hobbies. Just be sure to stick to the amount you set.
Consistency Is King
Whether you’re 15 or 75, it’s never too early or too late to become a millionaire. The real difference between those who succeed and those who don’t is consistency in maintaining frugal saving and spending habits.
“Smart and consistent investing and saving are so key,” Kullberg said. “There are plenty of ways to start here, but for me, it was low-cost index funds, which allowed me to focus on long-term gains rather than try to chase short-term profits.”
Whether through low-cost index funds, a high-yield savings account or a even physical piggy bank, the important thing is working steadily toward your goal. It’s not about how much you save, but about developing the habit of saving.
“You don’t need to already be comfortable financially in order to start investing,” Kullberg said. “Even with small amounts, consistently contributing [to] your investments and savings will compound interest. It’s easy to manage this; just make it a priority to contribute a fixed percentage of your income, no matter how small.”
If possible, set up direct deposits from your paycheck into savings — 20% is a good rule of thumb. If you don’t see the money leave your account, you won’t miss it.
Paying Off Debt
It’s hard to make progress when you’re weighed down by debt. Just like you wouldn’t go swimming in jeans, trying to save money while carrying debt slows you down. Eliminating this burden will free you to focus on a financially secure future.
“One of the most important steps I took was paying off debt as quickly as possible, including significant student loan debt,” Kullberg said. “Rather than carrying the burden of interest for a prolonged period of time, do everything you can to make aggressive payments toward debt, so you can eventually free up income for savings and investments.”
If you have debt, consider the typical 50/30/20 budgeting rule: 50% for needs, 30% for wants and 20% for savings. You can still allocate 50% for needs, but shift 20%-30% to debt repayment, 10%-20% for savings and cut out wants entirely — at least temporarily.
“An aggressive debt payment approach can be a challenge, but it can make such a huge difference to your life, financially, mentally and emotionally, to know that you’re not going to be tied to debt forever,” Kullberg said. “Paying off my student loans gave me so much more control over my financial future, and the journey gave me the confidence I needed to really change my finances in a big way.”
You’ll be amazed by the relief you’ll feel — and how much free space you’ll have in your budget once debt is no longer weighing you down.
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