6 FRUGAL HABITS OF THE SUPER RICH AND FAMOUS

In order for you to live frugally, you might want to take a page out of the super-rich. Though it may seem counterintuitive, wealthy people often practice a frugal lifestyle as they only spend their money when they see that money’s worth. In other words, they don’t just throw their money around, but rather make it work for them by forming healthy habits.

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No matter if they are just making a good living or they have the net worth of Warren Buffett, the super-rich are also often frugal people. It’s not necessarily about clipping coupons or not using your credit cards, but it is about reshaping your spending habits in order to meet your long-term financial goals. Here are six ways millionaires practice a frugal lifestyle.

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Pay Using Cash 

Just because you have enough money to buy whatever you want, doesn’t mean you shouldn’t just stick with what you need. Next time you go to the grocery store, make a list and only bring enough cash for you to buy the items on this list. It will help you stick to your budget and avoid impulse purchases.

Try this practice every time you go shopping for clothing, household items or other specific things, so you can gauge the price beforehand. Only use the cash you brought with you on these outings and fight the temptation to use your debit or credit card to buy stuff outside the budget you’ve set. 

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Pay Yourself First 

Paying yourself first, or reverse budgeting, is when you create your budget around your savings goals and not your expenses. Here are a few key takeaways from this method:

Start by allocating a percentage of your paycheck into your savings account each month. This can be done by setting up your direct deposit so that a specific amount automatically goes to your savings each time you’re paid. If you don’t want to directly deposit a percentage of your paycheck into a separate bank account, you can also try setting up a recurring transfer from your checking account.

What’s left of your paycheck should go first toward necessary expenses, and then, if there’s cash to spare, your wants. As your pay increases so should the amount you pay yourself each month in savings. Make sure to grow this percentage annually to create a brighter financial future.

Travel on a Budget 

Though there are exceptions, even the super-rich don’t always book the most expensive hotels or transportation accommodations. Instead, they opt to travel frugally and spend below their capability.

Now don’t panic. All traveling frugally means is making the most of your vacation budget without wasting it — which, in turn, often saves you some cash that you can then put toward other savings goals or even future vacations. 

Live Beneath Your Means

The super-rich are well aware that being able to afford something doesn’t make it a good purchase. Rather than spending to inflate their lifestyle, they save to maintain their wealth for the long-term.

Slight edits to your budget make a big difference and certain discretionary choices can save you hundreds per month. Here are some ways you can live below your means like the rich do:

• Buy a modest house.
• Drive a used car.
• Take public transportation.
• Don’t replace your phone with a newer model each year.
• Cook your meals at home instead of eating out.

Make Your Money Work for You 

Experts across the board say that where you put your money matters. Whether it’s a high-yield savings account, retirement plan, real estate property, certificate of deposit (CD) or investment in stocks and bonds, make sure you are putting your money where it can grow. You want to earn interest, not pay it.

Invest. Invest. Invest.

You don’t have to go as extreme as an 80s movie based on the stock market, but sometimes you do need to spend money to make money. The super rich and famous are quite familiar with the highs and lows of investing, and they tend to have a high-risk tolerance for stocks, bonds and low-cost index funds, as well as a low-risk tolerance for letting their money sit around or go to waste. 

Final Take To GO: Frugal Habits the Wealthy Follow

The bottom line is the amount of time and money you spend, whether it’s in a thrift store or the stock market, matters. At the heart of these frugal habits is mindful money management. No matter what you prefer to buy or invest in, make sure you are making every dollar count. 

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This article originally appeared on GOBankingRates.com: 6 Frugal Habits of the Super Rich and Famous

2024-02-18T12:12:01Z