Today I want to share 5 Frugal Habits of the Wealthy.
Who wants to be wealthy? We all do!
When looking into some of the most wealthiest billionaires I know, I learned… even though they make billions of dollars they are very conservative with their money that is how they stay wealthy.
Growing up in America we all want to live the American Dream.
What is the American Dream? To live in a nice house with a white picket fence and to have materialistic things to show others how we’ve made it.
This dream is the reason why so many Americans live in debt and live depending on one paycheck to the next. Society judge us by our salary and does not care about our debt.
We are pressure to show more if we make more. So… the more we make the more we spend to keep up with our image.
When you think of someone rich do you see them stepping out in an old, beat up car or in an exotic, brand new car? Of course we see them in the brand new, exotic car.
But… guess what? Those people stepping of the exotic, brand new cars are not the richest people and they may be one of those people living off one paycheck to the next.
Today, more and more of the wealthiest people are showing us and telling us that is not at all the life they live.
The richest people are very frugal. They may make billions of dollars but they live their life just like you and I. According to an article from “Money“, the billionaires below live well below their means.
- Mark Zukerburg: Chief Executive Officer and founder of Facebook Inc., married his long time girlfriend in the backyard of his home. During his honeymoon, he and his wife were seen eating at McDonald’s. He also drives a car worth $30,000 and purchased a house worth $7 million which is considered way below means.
- Warren Buffet: Chairman and CEO of Berkshire Hathaway, known as one of the richest man on earth, he lives in a 6,000 square foot stucco home in Omaha. He bought his house in 1958 for $32k.
- Bill Gates: Microsoft Founder, was spotted wearing a $10 watch. As rich as he is, he still enjoys doing the dishes by hand every night for his family.
- Charlie Ergen: Founder and Chairman of Dish Network, he does not eat out and brings home-made lunch to work every day along with a Gatorade. He and his wife still lives in the same home of 20 years.
- Carlos Sim Helu: Mexico’s Richest man, he does not have a chauffeur. He drives himself to work everyday in his old Mercedes Benz. Carlos is a regular guy with regular clothes. Nothing fancy like top designer clothes. He likes purchasing his clothes from the rack at his own retail stores. He still lives in his modest home with his family for 40 years.
Below are 5 Frugal Habits of the Wealthy:
1. Live within your means
One important frugal habit of the wealthy is to don’t spend everything you make! The only way you can save is to not spend. So… what you don’t spend you can save.
Slowly cut out your spending. Sit down with your partner/spouse and go through your current bills. Cut out the things you don’t need so that you can start saving some money.
The more spending you can cut out the better. It’s not about who makes more, it’s really about who can save more with what they make. Otherwise, you must find ways to make more than what you spend in order to save.
My husband and I, we try to live within our means. When we purchased our very first house our expenses required us to spend 100% of our paychecks.
After losing our first house, we learned that it is better to have money cushion so we are more careful with spending and we try not to spend 100% of both our paychecks.
During the months we don’t have anything to put in savings, we would sit down with each other and go through our expense to see what we are spending on and what we can cut out.
2. Only Buy What You Need
You and I have wants and needs that is the primary reason why you and I wake up everyday to go work. But we learned from some of the richest people that we should only buy things that we need!
Next time you pick up something in the store, ask yourself… do you really need it? If not, don’t buy it. Most billionaires spend less than what they make or they make more than what they spend.
According to an article from “Reader’s Digest” T. Boone Pickens an oil billionaire said in one of his interviews that he only buy suits every 5 or so years and in total only owns 10 suits. That was all he needed.
Billionaires Bill Gates also demonstrates “you only buy what you need” when he was spotted with his $10 watch.
I am a big spender and it’s really hard for me to not shop. But I am making progress. I am slowly learning to say no, I do not need another dress or another pair of shoes.
You just know that you have too much things that you don’t need when you have to clean out your closet every few months to make room for new things. My goal is to one day become a minimalist and only have a few outfits in my closet.
3. Eat Frugally
Try not to eat out all the time. It can get very expensive. Use coupons and discount programs as much as you can to spend less on the things you need. Wealthy people say, “coupons look like dollar bills staring at you in the face”.
In addition, eating at home is healthier for you anyways. You know exactly what you are putting in your food. Billionaire Charlie Ergen does just that as he brings his own lunch from home to eat at work daily.
We practice this concept as well. Paul and I bring home-made lunch to work daily. We probably eat out for lunch about 2 to 3 times a month.
For dinner, we normally cook at home 6 days of the week and eat out once a week with our kids. When we do eat out, we mostly eat at the more affordable restaurants.
4. Choose a Modest Home
It is said that the rich do not buy homes if they can rent and they would not buy a home if they will not be living in it for at least 5 years. When choosing a home, the wealthy will choose a modest home.
Billionaire Warren Buffet and Charlie Ergen both live in modest homes for many years and are both still there regardless of their salary increases.
Our second home is a modest 3 bedroom cozy house. We purposely purchased our second home on 1 income to be on the safer side and to live more comfortably.
They say you only learn after you made a mistake and we definitely learned from our first purchase.
5. Have a side Job
All wealthy people have more than one stream of income. When one income stops or becomes unavailable they still have other streams of income coming in. Side jobs for the rich are called “passive income“.
You do not need to be there to make the money. Examples of passive income that the wealthy have includes capital gains, interest, royalties, business income or rental income.
This is why, everyone should have more than one stream of income. Try and find other ways to make extra money so that you are not relying on just one income.
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These are the 5 frugal habits of the wealthy.
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