Yahoo Finance 9 Frugal Habits the Ultra-Wealthy Swear By
If you’re not ultra-wealthy, you’ve probably wondered what it’s like to be so. Maybe you think of all the ease and convenience they can access. The comforts. The luxuries. The peace of mind around common stressors like the price of healthcare or child care or even groceries and utility bills. And perhaps you think too of their spending habits, imagining them to be quite extravagant.
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But the truth of the matter is that some of the highest income earners don’t go on wild shopping sprees or purchase lavish sports cars. They often live by the same money principles as those making much less money do — or are encouraged to do — and this helps keep them rich. Here are nine frugal habits the ultra-wealthy swear by.
They Live Below Their Means
Ultra-wealthy people practice what financial experts preach: they live below their means.
“Never spend more than your total earnings,” said Aaron Cirksena, founder and CEO at MDRN Capital. “Say you earn $60,000 annually and your annual expenses are $50,000. This leaves you with an extra $10,000 per year that you can put into retirement savings or your investment portfolio, which will increase in return over time, becoming more than just your starting $10K.”
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They Spend Less Than They Earn
Going hand in hand with the previous point: the ultra-wealthy spend less than they earn. Be sure to abide by this frugal habit to generate wealth and stay financially secure.
“You reduce stress and are able to allocate more money to paying off any debt and putting more towards savings and investing,” said Cirksena. “Simply, if you spend less than you earn, you will always be making a profit.”
They Don’t Often DoorDash or Go Out To Eat All the Time
One “complete waste of money,” in the opinion of Cirksena — and many other financial experts — is dining out often and ordering delivery.
“With all the fees that go along with [DoorDash], you end up spending double than what your actual meal is worth,” Cirksena said. “Many successful, wealthy people don’t allocate their budget to eating out frequently or ordering in.”
They Stick to a Budget
It’s not just the middle- and lower-income earners who need to craft and abide by a tight budget. The ultra-wealthy do this, too. And it helps them succeed and grow wealth.
“People who accumulate wealth accumulate it because they keep track of how much they spend and they don’t stray away from a plan/budget that aligns with their long term financial goals,” Cirksena said.
They Buy Groceries in Bulk
Practicing frugal habits when it comes to food shopping is something the ultra-wealthy swear by.
“This goes along with the idea that a large portion of the wealthy do not spend money on fast food or eating out,” Cirksena said. “And those that truly have wealth do not see any issue with buying off brand items from their local bulk store.”
They Comparison Shop
Rich people don’t overspend, and to keep in line with that frugal habit, they comparison shop.
“Even those who have the money to buy the first deal they find will spend a little extra time researching and price matching to find the best deal,” Cirksena said.
They Set Up Automatic Savings
“No matter how much income is coming in, [the ultra-wealthy] are always saving,” Cirksena said. “Even if you have reached financial independence, still set up your bank account to withdraw a certain amount from your paycheck/income to be put into a high interest savings account.”
They Invest in Quality, Not Quantity
The ultra-wealthy tend to steer clear of fast fashion traps, which can lead to wastefulness and overspending.
“A big reason why some high earners may never be ultra wealthy is because they are materialistic in what they invest in,” Cirksena said. “Meaning they fall into a high consumption lifestyle to feed into the unrealistic idea that the more you have, the better off you are. And many times, they are funneling into low-quality goods.”
They Don’t Gamble — And They Invest Even Small Amounts of Money
Arguably the best frugal habit is simply to steer clear of bad habits — like the savviest of the ultra-wealthy do.
“They give themselves the best chance of building and maintaining wealth by avoiding bad habits such as gambling or chasing the latest hot stocks,” said Dave Fortin, co-founder and CFA at FutureMoney. “They are committed to their long-term financial goals and understand the power of compounding returns. The wealthy understand that investing even small amounts early and consistently can be a powerful wealth-building strategy over time.”
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This article originally appeared on GOBankingRates.com: 9 Frugal Habits the Ultra-Wealthy Swear By
