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10 Traits of the Fiscally Responsible and How They Stay That Way

10 Traits of the Fiscally Responsible and How They Stay That Way
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The idea of being fiscally responsible likely conjures up images of your parents making big financial decisions. But, on the other hand, maybe you didn’t have financially responsible parents growing up, and you want to carve a different path.

Whatever your money role models, if you want to be a fiscally responsible person, now is the time for you to adopt the principles that will help you get there. Understanding what it means to be a fiscally responsible person is the key to preparing your future self for what life throws your way.

Here are the critical traits of fiscally responsible people and how they stay that way.

Fiscally Responsible Definition

Before we jump into the traits, what does it mean to be fiscally responsible?

Fiscal responsibility refers to making intelligent financial decisions. There isn’t a right or wrong way to make these decisions, though, as it will differ by person.

Some people, for example, will favor wealth over anything else, yet others will care more about saving for retirement, taking dream vacations, or saving for a child’s college education. When you define financial responsibility for yourself, you’ll then be able to make financial decisions to help you achieve your financial goals.


We can look at our government’s fiscal responsibility to put it into perspective. When government spending and the national debt are high, we assume the government is fiscally irresponsible. However, the decisions to help create the federal budget can make or break their financial responsibility. While not everyone agrees with the federal government’s fiscal policy, the decisions usually help solve a country’s problem or improve economic growth.


Taking it down to the personal level, we can look at financial responsibility slightly differently. Unlike the government, remaining in high debt is not a recipe for success. So, how do we keep ourselves out of bad debt? You can also look at how you improve your credit, build a solid emergency fund, pay off student loan debt, and spend money wisely.

Each of these decisions determines how financially responsible or irresponsible you are and how they affect your personal finances.

Why Is It Important to Be Fiscally Responsible?

It’s important to be responsible with your money for many reasons, including peace of mind, the ability to afford what you need and want and help ensure you reach your financial goals.

Without any sense of fiscal responsibility, it’s hard to make decisions that positively impact your personal finances, including reaching your financial goals. Unfortunately, most people that aren’t fiscally responsible have a large amount of high-interest credit card debt, don’t have an emergency fund, can’t handle unexpected expenses, and don’t know how to budget.

Characteristics of Fiscally Responsible People

While there is no ideal fiscally responsible person, there are several general characteristics that most successful people with money display.

1. Set Financial Goals

You can’t make responsible decisions if you don’t know what you’re trying to achieve. So setting financial goals is the key to making informed decisions that will help you reach those goals.

For example, if you know you want to save $1 million by the time you retire, you can determine how much money you must save each month for the next 20 to 30 years to achieve that goal. However, without that specific goal and monetary amount, you would have no idea how much you need to save or how often and are less likely to reach the goal.

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2. Follow a Budget

Most people that are good with money follow some type of budget. Knowing how much money you have and where it’s going is the only to make sure you save money, only spend free money, and cover all your necessary expenses.

Budgeting doesn’t have to be restricted either, as most people think. The proper budget will include your essential expenses, extra money for ‘fun spending,’ and room to pay off high-interest credit card debt and save money. Plus, there are many budgeting methods, so you can pick the one that makes the most sense for you.

3. Lives Below Means, Not at or Above

A fiscally responsible person almost always lives below their means. In other words, they spend less than they could given their salary. As a result, they also aren’t as affected by lifestyle creep when you let your lifestyle get more expensive as your income increases.

Instead of spending all you make on maintaining your lifestyle, you put the money toward your goals such as retirement, an emergency fund, or paying for a college education.

Even living at your means is too high. What happens if something bad happens and you have unexpected costs? When you live at your means, you’re stretched to the limit, and even one minor issue can set you over the edge.

4. Track Spending

If you want to reach your money goals, it’s crucial to track your spending, which means every dollar. The key is to know where your money goes. You can determine if you are spending extra capital that you shouldn’t be spending. You can also tell if you overspend in any categories, which you can then adjust, so you start saving money, get out of debt, or take care of a budget deficit if you have one.

5. Has an Emergency Fund

An emergency fund helps you during those times of unexpected expenses. For example, if you lose your job, the funds you saved can cover your necessary expenses for a few months while you find another one. Your emergency funds can also protect you if you fall ill or cannot work for other reasons.

Without these funds set aside, you may not be able to cover your expenses, which could cause you to have more credit card debt or fall behind on your bills.

Generally, personal finance pundits say you should have 3-6 months’ worth of expenses in an emergency fund to help safeguard you from financial hardship should the unexpected happen.

6. Manages Debt Efficiently

Everyone has some debt at some point during their lives. Many people leverage debt to build long-term wealth, such as rental property. However, it’s vital to manage your debt efficiently and avoid high-interest debt and other forms of debt that don’t help you build wealth.

Taking care of any bad debt first is the key. It helps your financial situation when you aren’t paying excessive interest rates, which are an opportunity cost of saving money. When you take care of the credit cards and other high-interest debts, you can save for your future rather than wasting money on interest.

7. Investments

Everyone should invest to reach their goals. Of course, retirement accounts are a must for everyone, especially if your employer matches your contributions, but you should consider investing on top of that too. Consider your risk tolerance, timeline, and investment options when you think about investing.

You can invest in tax-advantaged accounts like retirement accounts and taxable accounts for other financial goals occurring before retirement.

Who knows, if you manage to save and invest enough money, you may even be able to retire early.

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8. Multiple Streams of Income

It’s essential to create multiple streams of income to build wealth. Millionaires have as many as seven income streams, but any extra income you can bring in will help. Think of both active and passive income ideas, including investing in the stock market, investing in real estate, and taking on side gigs.

9. Proper Long-Term Spending Habits

Even when you think you’ve become a fiscally responsible person, that doesn’t mean you should give up your goals or change your spending habits. On the contrary, keeping proper spending habits even after achieving your goals is the best way to maintain your balanced budget and ideal savings.

10. Monitors Credit Report

Monitoring your credit report won’t create income or help you make financial decisions, but it could help you when you try to get new loans or even new insurance with low premiums. Monitoring your credit report ensures you dispute any errors or fraudulent activity that pops up. It also gives you the chance to check your credit score and potentially improve it if need be.

Having good credit is key to getting the best rates and terms on any loans you do take out.

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How to Stay Fiscally Responsible

Once you’ve gotten on the right track, use these simple steps to ensure you stay on track to reach your financial goals.

Pay Yourself First

Don’t wait until the end of the month after you’ve spent your money to try and pay yourself. Instead, create a budget that includes a line item for saving. Then set up automatic deposits, so you automatically save the money each month before you have a chance to spend it.

Paying yourself first is an excellent way to ensure you prioritize spending.

Invest in the Future

Any money you save today will be worth more tomorrow. You don’t know if you’ll have expenses you didn’t know about, a job loss, or a goal you’ll want to achieve.

When you put money away today, it can grow while you keep earning more income and bettering yourself. Think of investing in your future as making it easier on yourself. You won’t have to work so hard to reach your financial goals.

Invest in Retirement

No matter how young you are, you should always save for retirement. If your employer matches contributions, at least save up to the match. Even if your employer doesn’t offer a retirement account option, you can put money away in an IRA.

Retirement accounts have tax advantages that either give you a tax break in the year you contribute or during retirement, whichever you think is the best decision for yourself.

Know Your Net Worth (Assets – Liabilities)

Your net worth is your assets minus your liabilities. The more liabilities, the lower your net worth. The high-interest rates on your liabilities are an opportunity cost. You’ll save money by paying off those debts.

When you know your net worth or have goals of improving it, you’re more likely to make better decisions. It’s easy to want something and buy it, but when you’re aware of your net worth and financial goals, you may stop and think about spending.

Pay Bills on Time

Paying your bills on time helps increase your credit score and puts more money in your pocket. However, when you pay your bills on time, you won’t pay late fees, hurt your credit, or get behind on your bills, making it hard to catch up.

Conversely, not paying bills on time will hurt your credit score, making it harder to qualify for credit when you do need or want it.

Understand the Value of Insurance

Insurance can feel like another unnecessary expense, but fiscally responsible people understand it protects them. If you own a home, you should have homeowners insurance. If you rent, you should have renters insurance. Everyone should also consider life insurance and possibly disability insurance to protect against the unexpected. Health insurance is also critical, as many people in debt are there because of an unexpected medical emergency.

Utilize Strategies for Debt Elimination

If you have debt, it doesn’t make you fiscally irresponsible, but it does require a proper strategy to ensure you get out of it. The debt snowball method is a great way to get out of debt, but any strategy that pays your debts off is a good plan.

Utilize a Second Job

Making money is an integral part of building wealth. If you have the time to take on a second job or start a side gig to create a budget surplus and save money, you’ll reach your goals even faster. But, whether you use the money to start investing, get out of debt, or save for long-term goals, make sure you earmark the money for a specific purpose, so you don’t spend it needlessly.

Don’t Forget About the Fine Print

Read the fine print on all financial statements. Don’t make decisions without fully understanding the consequences. So whether you’re taking out a loan, opening a bank account, or investing, read every detail before signing on the dotted line.

Stay Up to Date on Tax Information

Tax planning is essential to long-term wealth building and keeping as much of your hard-earned money as you can. If you aren’t up to date on the latest tax information or get overwhelmed at what’s required to file your taxes, work with a professional tax advisor to make sure you make the correct tax and estate plan decisions.

Maintain Good Habits

Being a fiscally responsible person comes down to good financial habits. Show you can. Even little habits done consistently can help your bottom line.

The Bottom Line

Today is the best day to start thinking about being financially responsible. Even if you are well behind the eight ball, it’s never too late to turn your money life around and make the best choices for yourself and your future.

You can start saving money, making responsible decisions, spending less, and investing in your future self today.