Millionaires aren’t all born with a silver spoon in their mouths– many work hard to build their wealth through smart choices and careful spending. Many self-made millionaires and billionaires built their fortunes by following surprisingly frugal habits.
Everyone faces financial challenges, even if you don’t aspire to millionaire status. Rising costs, unexpected expenses, and the temptation to spend can strain any budget. How can we learn from those who’ve “made it” to feel at ease with our finances?
Learning from the habits of the wealthy can help you navigate these challenges and build a more secure financial future. Want to tap into this money-saving wisdom? Here are some key strategies to consider.
1. Living below your means
Even with substantial incomes, many wealthy individuals consciously spend less than they earn. They resist the temptation to scale up their lifestyle with every pay raise, making moderate living a habit.
Living below your means is the cornerstone of financial stability and wealth-building. It creates a surplus, allowing money to be channelled into savings and investments instead of being consumed by expenses.
Track expenses diligently to understand where your money goes. Many budgeting apps and tools are available to simplify this. Create a realistic budget and stick to it. A budget isn’t restrictive; it’s a financial roadmap. Automate your savings to prioritize them. Set up automatic transfers from your checking to a savings account on payday.
2. Living in a modest home (for your income)
Housing eats up a major chunk of most budgets. Self-made millionaires often live in smaller homes than they can technically afford, opting for location and function over square footage. They keep mortgage payments manageable, freeing up more funds for investment.
It’s about priorities. A larger house may offer fleeting status but sacrifices long-term financial stability. The truly wealthy build wealth, not appearances.
“The Millionaire Next Door,” a book by Thomas J. Stanley, highlights that many millionaires live in surprisingly modest homes, defying the stereotype of extravagance.
3. Buying quality over quantity
Instead of focusing on cheap items that need frequent replacement, the affluent invest in higher-quality goods designed to last. This applies to clothing, furniture, appliances, and even vehicles.
Investing in quality items should save you money in the long run as they won’t need frequent replacements. Well-made products offer enduring value and avoid the wastefulness of buying cheap, disposable alternatives.
Research purchases thoroughly, prioritizing durability and craftsmanship. Read reviews and compare materials before you buy. Calculate the cost-per-use over time, highlighting the value of a quality item. Embrace a minimalist mindset; buy only what you need and will truly love. Less clutter equals more financial freedom.
4. Avoiding unnecessary debt
Most wealthy people minimize or avoid high-interest consumer debt (like racking up credit card bills they can’t pay off). They understand that interest eats away at savings potential and future wealth.
The more you pay in interest, the harder it is to get ahead financially. Prioritize paying down debt aggressively. Pay off existing high-interest debt as quickly as possible. Utilise debt-consolidation strategies like the debt avalanche or snowball methods.
Use credit cards responsibly, spending only what you can afford to pay off in full each month. This will keep you out of revolving debt. Create an emergency fund to avoid turning to debt during unexpected expenses. Aim for 3-6 months’ worth of living expenses stashed away.
5. Staying healthy
Proactive health and wellness practices can prevent costly medical problems in the future. Most wealthy people understand that an investment in health is an investment in their financial well-being.
Prioritizing health and wellness reduces the risk of costly chronic health conditions. Proactive care lowers long-term healthcare needs, protecting one’s financial future.
Maintain a balanced diet with plenty of fruits and vegetables. This provides essential nutrients and can help prevent chronic diseases. Engage in regular exercise. Get at least 150 minutes of moderate-intensity aerobic activity, 75 minutes of vigorous-intensity aerobic activity, or a combination of both throughout the week. Get enough sleep and manage stress. Sleep deprivation and chronic stress can have detrimental effects on physical and mental health.
Schedule regular checkups with preventative screenings. Catching health problems early increases the chances of successful, less expensive treatment.
6. Maintaining what you own
Most wealthy people believe in meticulously caring for their belongings. Caring for belongings—from your car to your clothes—ensures they last longer.
This proactive approach saves money on premature replacements and extends the value of what you’ve already invested in. Think of it as protecting the money you’ve already spent.
Conduct regular maintenance on cars, home systems (like HVAC), and major appliances according to manufacturer recommendations. Learn basic repair and mending skills for clothes. A simple sewing kit can fix snags and tears, extending the life of your wardrobe. Store items properly to prevent damage and increase longevity. Seasonal clothing, tools, and other items last longer when stored carefully.
7. Mastering the art of meal planning
The self-made wealthy recognize that restaurants are budget killers. They embrace meal planning, leveraging the power of home cooking to reduce food costs significantly.
A $30 restaurant meal can easily be recreated at home for a fraction of the price. Strategic meal planning streamlines grocery shopping, reduces food waste, and minimizes impulse takeout orders.
Bulk doesn’t equal bargains. Shop strategically, comparing unit prices, and only buy in bulk if the savings are significant (and you have the space and ability actually to use it all before it expires).
If you want to save money (and time), leftovers are your love language. Cook larger batches strategically, and you’ll get multiple meals with less effort and food waste. Think stews, soups, and casseroles—dishes that often get more flavourful the next day!
8. DIY (when it makes sense)
The self-made wealthy aren’t afraid to roll up their sleeves when it saves money without sacrificing quality or safety- most of them, anyway. They leverage resources like YouTube and online tutorials to learn practical skills.
DIY can lower the cost of home repairs, car maintenance, and creative projects. Think of it as reinvesting saved money into yourself by acquiring new skills. Always assess safety risks first. Some tasks are best left to professionals for safety and to ensure the job’s done right.
Embrace second-hand. Before buying new furniture, appliances, or tools, check out thrift stores, online marketplaces, and neighborhood “Buy Nothing” groups. You might find what you need for cheap or even free.
Be aware of the Time vs. Money Tradeoff: If your hourly earning potential is high, outsourcing certain tasks might free up valuable time to earn even more, justifying paying a pro.
9. Negotiating ruthlessly (and kindly)
Most wealthy people understand that nearly everything is negotiable. They confidently ask for better rates, discounts, or more favorable terms without being entitled or aggressive.
A few minutes of negotiation can save you hundreds, sometimes thousands, over time. The worst they can say is ‘no,’ but often, the answer is ‘yes.’
Use the power of competition. Get multiple quotes before committing to any service, and let providers know you’re comparing offers. This creates leverage.
Timing matters. Some providers are more open to negotiation at the end of the month or quarter when they’re trying to meet sales goals. A simple call asking if there are any special offers might pay off.
Remember, kindness goes a long way. Negotiate with a smile and positive attitude; you’re more likely to get further than by being demanding.
10. Budgeting meticulously (and sticking to It)
It may seem counterintuitive, but many wealthy individuals diligently track their income and expenses. They see budgeting as a tool for financial awareness, not restriction.
Knowing where your money goes empowers you to make smarter financial decisions and identify areas for savings. It eliminates the “mystery money” that disappears at month’s end.
Many self-made millionaires use a zero-based budget. Every dollar has a specific job, whether for savings, bills, or thoughtfully planned discretionary spending. This prevents overspending or neglecting your financial goals.
There are countless budgeting apps and tools available. Experiment to find one that resonates with you and makes tracking your finances effortless.
11. Being mindful of “small” expenses
Most self-made rich understand it’s not just about big, infrequent purchases. They pay attention to the seemingly insignificant daily expenses that have a sneaky way of draining your bank account.
Those “convenience costs” – lattes, lunches out, subscriptions – add up shockingly fast. Small adjustments here can yield big savings over time.
A $5 daily coffee habit totals a whopping $1,825 per year. Brown-bagging lunch can save hundreds more, even a few times a week.
Use a spending tracker or diligently review your bank statements to identify recurring expenses that can be easily reduced or replaced with more budget-friendly alternatives.
12. The power of “No”
The self-made wealthy know the importance of saying no to protect their budgets and goals. They understand that even small expenses can derail progress over time.
Learning to decline invitations that misalign with your financial priorities politely fosters discipline and keeps spending in check. Remember, true friends support your goals!
Ruthlessly eliminate email marketing lists and unfollow social media accounts that trigger mindless spending. Less exposure reduces temptation.
Embrace the “24-hour rule.” Before any non-essential purchase, give yourself a cooling-off period to determine if you truly need it or are caught up in impulse. Often, the urge to buy fades after a little time.
20 Things Poor People Waste Money on, According to Suze Orman
If you’ve ever watched her show, you know Suze Orman pulls no punches. She’s all about calling out bad money choices, urging people to take control of their financial destinies and ditch those pesky spending habits that derail progress. While her advice can be blunt, she aims to empower folks to build wealth and protect their financial futures.
It’s important to note, Suze Orman gets flak sometimes for being too harsh. She’s not shaming people, but highlighting how certain expenses can sabotage big goals like homeownership or a comfortable retirement.
20 Things Poor People Waste Money on, According to Suze Orman
12 Culturally Acceptable Habits That Leave Americans Drowning in Debt
The average American household carries over $103,000 in debt, including mortgages, credit cards, and car loans. While there are various factors that contribute to this staggering number, there are also certain culturally acceptable habits that have played a major role in leaving America drowning in debt.
12 Culturally Acceptable Habits That Leave Americans Drowning in Debt
15 Things Dave Ramsey Has All Wrong
Dave Ramsey is a household name for managing personal finances—his advice centers around living debt-free and building wealth sensibly. As much as we admire his financial wisdom, there are areas where his advice may not fit everyone’s economic situation (like any financial guru).
15 Things Dave Ramsey Has All Wrong
JayDee Vykoukal is a writer, author, mom, and Doctor of Physical Therapy. She has been writing about everything motherhood and health-related since 2018 when her first daughter was born, and she wanted to stay home. She loves to research new topics and fun facts with her kids to teach them about the world.
