Do you want to know how some people live without debt? Do you want to live a debt-free life? Here are 15 basic habits of debt-free people that you need to know (so that you can live that way too!)
Are you, or is someone you know, struggling with debt?
I know, I made some poor choices about finances when I was younger (went to grad school and took on $20K in loans when I wasn’t really sure what I wanted to do).
Thankfully, I am now living debt-free! And, as a single mom, I want to make sure to stay out of debt and teach my little girls better money habits so they can live a debt-free lifestyle too!

First, let’s take a quick look at the qualities of people who live a debt-free lifestyle.
Characteristics of people who are debt-free
People who live without debt are:
- smart
- disciplined
- patient
- responsible
- non-materialistic
- BIG goal-setters
- grateful
In order to save for big goals (like buying a house or going on a grand vacation), debt-free people know that they need to be patient and disciplined.
It takes time to save money, be responsible, and wait to reach your goals, BUT it’s definitely worth it!
Benefits of debt-free living
Why should you strive to live without debt?
Besides the obvious benefit (no debt and not owing anyone any money!), here are some benefits to developing debt-free habits:
1.You save money faster for bigger goals.
Things like:
- buying a house
- taking a vacation
- college for your kids
2. You will experience financial relief.
Once you have paid off all your debt (and saved up an emergency fund), you will experience a tremendous load off of your shoulders!
3. You can save money for other purposes.
You can:
- build up your emergency fund
- give money away to charities that you want to help
- buy things that you want to but never had any money for
Start reaping these benefits by developing these basic habits of debt-free people and getting out of debt for good!
One thing to remember is that if you are in debt, it’s up to YOU to get out of it. If you want to do that, YOU need to change the habits that have led you into debt.
15 Basic Habits of Debt-Free People
1. Always live below their means
In other words, “live on less than you make” – always!
When debt-free people get a pay raise, they don’t rank up their lifestyle but continue to spend less than they earn and put the extra money in the bank.
2. Stick to a budget
Yes, I get it. Making and sticking to budgets is not fun, glamorous or exciting. BUT having a budget WILL help keep you accountable and help you save money and pay off debt faster.
Budgets also help you to plan for upcoming expenses (birthdays, Christmas, and even emergency expenses), so that you aren’t tempted to go into debt for any of these things.
3. Have an emergency fund

This is absolutely necessary!
If you don’t think you need one, think again!
I’m sure you can think of a friend or family member who had an accident, an unexpected hospital bill or car repair, or lost their job.
Most experts recommend having an emergency fund that will cover at least 3 months of living expenses for your family (6 months or more is much better).
This means you need to know how much your monthly costs are (here’s where a budget comes in) and how much you need to keep in the emergency fund to meet that.
The best way to start building up an emergency fund is to automate savings.
Set up an automatic transfer to move a set amount of money each month from your paycheck into a separate “emergency” account.
One tip: Put all extra money (pay raise, bonuses, gifts from family) into your emergency fund to build it up faster!
Related: Emergency Fund Basics
5. Plan Meals
People who live without debt plan their meals.
One big waste of money (and time) is food:
- throwing away food we don’t eat (and thus throwing away money)
- eating out often (which adds up quickly and becomes expensive)
People who live with no debt find a way to meal plan and make good use of their money.
One tip: Instead of shopping often throughout the month, during the last week before your next paycheck use up all of the food in your cupboard. Get creative about combining things to finish up all left-overs and other items!
Related: Meal Planning Made Easy for Beginners
6. Comparison shop
People without debt don’t just google an item and click on the first link to order it.
Instead, they shop around – check out a few different sites.
They buy used (thrift shops, garage sales, Craigslist & Ebay).
They use a savings app like Rakuten, Ibotta, or Honey. Rakuten and Honey are so easy to use – they have browser extensions that notify you as you are checking out with your shopping cart – making sure you have the best deal or giving you cash back for regular purchases.
7. Don’t compare with the Joneses

One of the BIGGEST ways to fall into debt is by comparing your life with someone else.
Do you want what they have and can’t afford it? Then don’t buy it!
Or, work it into your budget and save up until you have enough cash to buy it.
Go against the flow, have some self-control and don’t buy something that you can’t pay cash for now just to keep up with someone else’s lifestyle!
8. Don’t use credit cards
People who stay out of debt avoid credit cards (or use them very responsibly – paying them off every month).
About 40 percent of American households have revolving credit card debt.
This means that people are living in debt and paying extra on purchases (because of the monthly credit card fees).
Instead, debt-free shoppers use cash for purchases (and even follow the 24-hour rule – waiting at least 24 hours before making a big or “impulsive” purchase).
9. Have BIG goals
These people stay out of debt because they also have BIG goals.
Goals like:
- saving for a down payment on a house
- putting money into college funds for their kids
- planning for a fun vacation
10. Look for side hustles
Debt-free people look for side hustles to make more money to save toward their goals.

11. Value experiences over material things
These people know how to have fun without spending lots of money.
They don’t need fancy, expensive holidays, but find a lot of joy in a trip to the local ice cream store with their kids.
Instead of buying the latest iPhone or laptop, they use an older one that still works just fine.
Related: Fun, cheap and easy ways to spend quality time with your kids
12. Have boundaries
They know how to say “no” and have personal boundaries.
Friends invite them on an expensive vacation they can’t afford right now? They say no!
Yes, they might sit out of certain fun events, but, again, they know how to have fun without spending lots of money.
Related: How to teach your kids about boundaries
13. Pay themselves first

They take a portion of each paycheck and “pay themselves” by putting it aside into a savings account (or building up their emergency fund, etc.)
The best way to do this is to set up an automatic transfer – so that you aren’t tempted to use it for something else.
14. Keep learning
People who live debt-free continually learn and grow.
They check their financial accounts regularly and keep an eye on investments and financial situations and keep learning more about money.
15. Teach their kids about money
Finally, they want to help their kids stay out of debt and save money for their future (for college, a car, a house, etc.) (This is MY goal!)
They help their children get on a good financial track by being good examples and actively teaching them great money habits!

Related:
- 6 Easy Ways to Teach Little Kids about Money
- Money Management for Teens
- Financial Lessons for Teens
- Money Lessons for Every Age: Toddlers to Teens
- Budgeting for Teens: 5 Easy Steps
If you want to get out of debt and change your life, then you need to develop the habits of debt-free people. Work toward a debt-free lifestyle by changing your habits, then teach your kids how to live debt-free. Prepare your family for a better, financial future! What do you think? Are there poor money habits you are struggling with?