Debt-free people are not an urban myth. Do you notice that whenever you go out for dinner with friends there is always someone in the group who proactively volunteers to work out the bill and hands over a wad of pristine notes? Meanwhile, everyone else dubiously wonders which credit card won’t be declined?
It’s the adult version of the kid at school who always handed their assignments in early. We may mock them, even secretly hate them. Still, when it comes to dealing with debt, it makes sense to look at this person and learn a few lessons in keeping solvent.
So how do we spot these debt-free people? Better yet, what can they teach us? Let’s dive deep to explore the 7 key characteristics of debt-free people so you can transform into one yourself.
1. They Have a French Accent
C’est vrai? Is it true? Do debt-free people really have a French accent?
While this might not be true for every French person, it’s proven that the French spend far less than most on credit cards every year, only putting on average a mere $350 a year on plastic.
In addition to this, the average French person saves approximately 10% of their income. Australians, on the other hand, are making more frequent and larger transactions than a decade ago, with the average balance per card being around $3,147.
Lesson learned: Plastique is not so magnifique. If your credit cards almost seem to itch when you leave the house, try to leave them at home.
Paying in cash will always feel like you are spending a lot more because you are consciously handing over money. This is shown to slow down any splurges. If you are struggling to control your cards, review your debt solutions and chat with us for debt help.
2. They Understand Money Management 101
Like the person in your class at university who always turned in coursework early, debt-free people make the effort to go the extra mile. These people may still have an accountant, but they may know as much as him or her when it comes to balancing the books.
This doesn’t mean they have any formal training or studied economics. In reality, understanding money management 101 just requires a bit of research. Learning how your bank accounts, credit rating, and debt payoff works goes a long way.
Lesson learned: Invest time in understanding your finances. If your finances are a mess, speak with us for debt advice. It may not make you a professional bookkeeper, but it will give you a much greater sense of control about your own financial status. You can’t start your financial journey without the foundational skills.
3. They Are Responsible with Their Money
Let’s talk about the dinner party again. There is always someone who enthusiastically suggests “let’s celebrate tequila Tuesday!” or “let’s head to the casino! Just for an hour. Or maybe two…”
Chances are this is not the same person who volunteers to split the bill and then goes home on the bus at 10 pm who we discussed earlier. Yes, some may accuse the bill splitter of being boring, but at some point in your life, it is time to grow up and take responsibility for your own financial situation.
Maturity doesn’t necessarily come with age, but you are never too old or young to start trying to put money aside. Being responsible doesn’t mean you have to be boring, but it means understanding that actions have consequences.
Lesson learned: Even a small amount every month in savings or paying off loans early makes a huge difference long term. If you are unsure about how you stand from a credit rating perspective, My Credit File can give you some tangible answers.
4. They Understand Quality Over Quantity
Most of us regularly look in our wardrobes and complain we have nothing to wear. Wouldn’t it be smarter to have less clutter, but a few key items which have lasted for years?
One of the habits of debt-free people is they have a deep understanding of value and the phrase “less is more.” We live in a society where there’s a lot of pressure to “keep up” with appearances. This can lead to us overspending on things we don’t really need that don’t bring value to our lives.
Lesson learned: It is wise to use coupons or lookout for special offers, but do not let shops trick you into spending more than you should just to take advantage of a seemingly unique offer.
If you are unsure, walk away for 24 hours and then see if you still think the item is a wardrobe essential. Better yet, consider how you’ll benefit from this purchase long term. For example, is this a new pair of shoes that will last you for years to come, or will they quickly go out of style?
5. They Know When to Say ‘No’
Many people find themselves in financial hot water due to impulsive behaviour. This could be offers that seem too good to be true at the mall or even all those invitations to eat out with colleagues and mates on a school night.
If you calculate the cost of several pub lunches or meals out per week, it soon makes a huge difference. This is understandable. Saying ‘no’ to your friends and family is hard. However, recognize that it’s possible to have fun and be with the ones you love without spending a lot of money.
Lesson learned: If your impulsive behaviour feels like it sits deeper than the occasional spontaneous parmigiana, it is time to seek professional help. We can offer you confidential and constructive debt help services.
6. They’re Lean with Their Spending
Most people at some stage have had to really knuckle down and tighten their belt from a cash perspective. Sometimes budget cuts are just temporary, but if you get into good habits, such as packing your own lunch and cycling or walking to work every day, this could be the start of some very good long-term steps towards achieving your financial goals.
Knowing how to live off less is an admirable skill and will certainly bring your stress levels down, a major factor in poor health and relationship difficulties. This could be the start of the new, leaner you. Having a budget you can stick to month-over-month really adds up.
Lesson learned: Know the difference between wants and needs. By cutting back on the less important things, it is possible for anyone to get out of debt. If you don’t know where to start, speak to one of our expert consultants for an effective plan of action to manage your debts.
7. They Aren’t Materialistic
Finally, have you ever noticed how the most solvent people aren’t worried about how much they would love those snakeskin Jimmy Choo shoes, or which car they would like to buy next?
Financially smart people understand that experiences are more important than material goods. People and experiences are more valuable than possessions. They also teach their children sound money habits from an early age, such as the value of earning pocket money and putting it aside for a really special milestone.
Lesson learned: Materialism can affect us all and it is easy to be pressured by our peer group or social media. Don’t be afraid to be an individual, even if it means you don’t always have the latest-and-greatest ‘must-have.’ Happiness comes from real experiences and real connections, not things.
Are You Ready to Become a Debt-Free Person?
Being a debt-free person likely won’t happen overnight. These habits aren’t as easy to learn as they might sound, but small changes add up to make a big difference. There are many lessons that we can learn from debt-free people:
- Limit your debt
- Do research before making big purchases
- Spend sensibly on things you need vs. want
- Live a minimal life that focuses on what really matters
By focusing on any of the steps above, we create a brighter financial future for ourselves. There’s always so much we can learn from those who have chosen to live a mindful financial life. Being a debt-free person means having the freedom to choose where to spend your money.
Are you struggling with more serious debt? You’re not alone, and Debt Busters is here to help. Contact us today on 1300 368 322 to begin the conversation. We’ve helped Aussies for over a decade, and you can get the support you need to start a new financial plan.