10 Frugal Habits of Millionaires
Even when you’ve got tons of money, that doesn’t mean you can’t be thrifty. Just look at Veronica Mars and The Good Place star Kristen Bell, who tweets about her love of coupons and talks about buying secondhand clothes for her kids. And even Beyoncé has been spotted shopping at Target, just like the rest of us. Sure, some celebs go through money like water, but others have some smart habits we can all learn from, whether or not you have a million in the bank.
Live Like a Student
Lifestyle creep can be a big problem. It’s very easy to decide that you need a nicer place to live, a better car, designer clothes, and fancy gadgets. Unfortunately, upgrading your life costs money and that money could be going into your savings account or investments instead of being spent on designer clothes and dinners out. Take your cue from billionaire Warren Buffett, who famously lives in a relatively modest home he bought in the 1950s, buys discounted cars and drives them until they give up, and avoids fancy clothes. Buffett, one of the richest men in the world, even still uses a flip phone. Buffett prides himself on his thrifty habits, saying, “Most behavior is habitual, and they say that the chains of habit are too light to be felt until they are too heavy to be broken.” So focus on building good, frugal habits that will allow your net worth to soar. Eat your macaroni and cheese, enjoy a game of cards, and know that your choices are helping you build a secure future.
Get a Roommate
Many people attempt to shed roommates as soon as their income can stretch to cover their own place. But choosing instead to continue to share expenses can lead to a big payoff. Sara Blakely, founder of Spanx, started the company in the apartment she shared with her roommate and shared insight into her early adult years: “I only spent what I absolutely needed to. The Spanx headquarters was my 1,100-square-foot apartment. I used my roommate’s bedroom. Even when I had money to move out of my apartment, even though we were all on top of each other and it was crazy, I didn’t. For two additional years, that was the headquarters. Then, from there on out, my headquarters were always way below what I could have spent.” The takeaway? You probably need less space than you think, and watching your housing expenses lets you put dollars toward investments or your own business ventures.
Sometimes, it seems like being frugal consists of always taking the safe road. Many frugal millionaires, like Mark Zuckerberg, who still drives an old Volkswagen hatchback and got married in his backyard, disagree. Zuckerberg says, “The biggest risk is not taking any risk. In a world that is changing really quickly, the only strategy that is guaranteed to fail is not taking risks.” Frugality and saving will help you achieve the financial flexibility to try flipping a house, go solo as a consultant, or even open your own business.
Investing can be expensive. If you buy individual stocks, you’ll pay a fee for each stock you trade and that can really add up and eat into your profit margin. Managed mutual funds also charge relatively high fees. But Warren Buffett has good advice about this, too. Back in 2013, Buffett wrote, “My advice to the trustee couldn’t be simpler: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund.” A fund that mirrors the S&P 500 should charge very low fees, and if you leave your money in the fund for the long haul, you should see great returns over time. As for Buffett, he puts his money where his mouth is: This is the exact advice he wrote to the beneficiaries of his will.
Invest in Yourself
Sure, you want to save money, invest in the stock market, and build a viable financial future. But the most important step is to invest in yourself. Mark Cuban has said that “the best time to invest in yourself is when you’re young and have nothing to lose.” But it’s really never a bad time to invest in yourself! Just take the time to figure out how to best go about it. Maybe you’ll listen to financial podcasts while taking the kids to school. Perhaps you could sign up for a coding boot camp. You might take the time to learn a new trade that you can make money from, or you might choose to go to grad school. Find the right option for you, and never stop learning!
Skip First-Class Tickets
Popular culture tends to portray the rich as flying around on private jets, but the more frugal millionaires fly commercial, sometimes even in coach! Shark Tank star and real estate mogul Barbara Corcoran says this about flying coach: “I’ll never spend money on a business-class or a first-class ticket. Forget about it. I’m always in coach. I just couldn’t fathom justifying that.” Other rich people flying in coach include Boston Beer founder Jim Koch (who even flies coach on long-haul flights) and IKEA founder Ingvar Kamprad.
Use Coupons and Promo Codes
Movie star Mila Kunis isn’t shy about her frugal ways. She says that “because I am an immigrant, I think that creates a different perspective on what the value of a dollar is and what hard work is.” She loves Groupon and is proud of her ability to find great promo codes. Take a cue from her and search for promo codes for your online purchases, sign up for your grocery store’s loyalty program, and download electronic coupons to your phone. If she can do it, so can you.
Shop at Discount Stores
A 2014 survey revealed that 41% of people worth more than $5 million shop at Target; nearly half also say that they shop at Costco and 33% drop money at Wal-Mart. Sure, celebrities like Chrissy Teigen sell their wares through Target, but plenty of well-off celebrities also shop there. Rihanna, Steve Carrell, and Jimmy Kimmel are among those who have been spotted doing a bit of discount shopping. So never be afraid to chase a bargain: Even your favorite stars do it!
Eat Out Sparingly
The average American household spends $3,000 a year dining out. You might think millionaires spend much, much more than that, indulging at Michelin-rated restaurants nightly, but that’s not always the case. Warren Buffett eats breakfast from McDonald’s almost every day. Zara founder Amancio Ortega eats lunch in the employee cafeteria. And Dish Network founder Charlie Ergen is known for packing a brown-bag lunch every day. So cut back on your splurges! Make less expensive choices, and remember to pack your lunch every day so you can use your lunch money to fund your long-term financial goals.
Taking up any of these celebrity-tested money-saving tips can help stretch your family budget a bit further, but for more serious financial emergencies, it is important to understand all of the different alternative lending options that are available to you and your family. When a traditional loan isn’t an option, alternatives such as personal loans or title secured loans may be an option to help you make ends meet.