Rich People and Their Frugal Habits – How You Can Be Like Them
Rich People and Their Frugal Habits – How You Can Be Like Them
Have you ever wondered how wealthy people manage their money and stay rich? You’ll be surprised that most of the richest people today have frugal habits that led to their success and fortunes. If you copy their habits, you might be on your way to your own success story.
Despite their vast wealth, many rich people don’t like flaunting their fortunes. They continue to live a frugal and modest lifestyle. Some wealthy people even live in small, unassuming homes, instead of lavish mansions.
If you want to manage your own finances better, you should look at the frugal habits of wealthy individuals. By copying their way of life, you can turn your own life around and see your income become greater than your expenses.
It could be a drastic change, especially if you eat out frequently or purchase luxury items if you don’t need to. You don’t need to copy all their habits, but you should find out what made them who they are today and adopt some of those things, so you can use them in your daily life.
While there are wealthy individuals who flaunt their riches and fortunes, some people live as if they don’t have much money at all. They are happy with what they have and know what they want in life. Having all the money in the world doesn’t mean you have to spend it all.
Understanding Quality of Life
The first thing you need to understand is the quality of life you want to achieve. It is hard to live a frugal life if you are not happy. Maintaining a lifestyle of frugality will probably only make you go on a shopping spree in order to feel happy and satisfied with your life.
Being frugal is not for everyone. Some people need to shop for new clothes each month or go out for gourmet meal twice a month. The first thing that you need to understand before copying the low-spending habits of rich people is how you want to live your life. If you are going to be happy living a thrifty lifestyle then you can choose to follow the examples of wealthy individuals.
Frugal Habits of the Rich
Keep in mind that not every wealthy individual has these habits. There are many ways people become successful in life. A person who gained a huge amount of money in an instant might not be prepared for it and lose his or her wealth as easy as it was earned.
Here is a list of some of the frugal habits of the one percent.
Make Your Money Work for You
Most rich people try to make their money work for them instead of just relying on their paychecks. While you might feel safe storing your money in your closet or under a bed, that is not wise. You can just as easily make it grow by putting it in a high-interest savings account.
Live an Inexpensive Lifestyle
Some people think that it is okay to spend all their money because they can earn more in the future. You should not think that way if you want to have a better cash flow, however. The right way of thinking is to live below your means, whatever they are. That way, you are saving more than what you are spending.
If your income before taxes is around $50,000, and your expenses are at $30,000, then you are on the right track. If you are happy with that lifestyle, you should continue living that way.
Another way of living a frugal life is to use a car with a high-fuel efficiency rating. Even if you can afford to buy a Ferrari or two, you should consider driving a low-cost vehicle that will save you money over time.
You should also consider living in the smallest home that’s comfortable. You don’t need to move to a bigger house just because you can afford to do so. A small house is easier to maintain and has lower overhead costs than a 15-room mansion.
Another way to save money is not to follow fashion trends. You should wear what you think is comfortable for you. Take, for instance, former first lady Michelle Obama. While she has fashion designers who want to dress her up, she generally prefers wearing a dress she bought from Target.
Prepare Your Meals Instead of Eating Out
Home-cooked meals are much cheaper than meals at a restaurant. You can take this habit a step further by packing a lunch for work every day. That way, you avoid going out for lunch. If you own a company, you can influence your employees to do the same thing by inviting them over for lunch and share food with each other.
If ever they do eat out, they could do so at a fast food place and not some fine restaurant. Warren Buffett always stopped by a McDonald’s near his office for breakfast. Other billionaires who love fast food are Mark Zuckerberg and Bill Gates.
Carry the Money that You Need for the Day
Shopping is not a problem when you are rich. You can fill up several carts with whatever you want when you go grocery shopping. However, smart people create a grocery list at home before heading out to the store. They also bring enough cash for what they are planning to buy. While they might still pick up some items not on the list from time to time, they plan out most of their purchases because they save money that way.
The best thing about carrying only enough money for grocery shopping is that there’s no room for unplanned purchases. If you don’t have enough cash on hand, then you can’t buy stuff you don’t need, and you stay within your budget for the day.
Shop with Coupons
Some wealthy people save money by using coupons. They are fond of coupons whether digital or paper. Some celebrities who use coupons include Hilary Swank, Carrie Underwood, and Kristen Bell, just to name a few. They see using coupons as a way of saving money with no work involved.
Don’t Be Too Generous
While rich people do contribute to charity, they are not as generous as middle-income earners. The middle class gives a larger share of their income to charities than wealthy individuals do. Households earning more than $100,000 give charities an average of 4 percent of their income. On the other hand, people earning less than $100,000 give almost 8 percent of their income to charities.
Take Time to Plan Your Financial Future
They don’t think that the only way ordinary people can get rich is through the Lottery. Instead of gambling with their money, they take an active role in forming their financial future. For them, playing the lottery is just a waste of money.
Instead of investing in the lotto, they look for financial tools to help grow their finances. If you have debt, then you should do something about it instead of dreaming about winning money in a number drawing. That’s a losing strategy. You can refinance your bad credit personal loans to get better interest rates instead. You can consolidate two or more loans into one for better terms and pay them off as soon as possible. Those are just two ways.
Above all, wealthy people stay on top of their finances. They monitor every expense and all their income, as well as their credit score. They take the time to look into their accounts and get a better feel for their financial status. And they live within their means!