Do you want to know something about millionaires you probably weren’t aware of? They’re often tighter with their cash than you’d expect. They’re not constantly splurging their income like many poor people do.
Instead, they focus on their “needs” and things that’ll make them extra money. They’re good at keeping to a budget and avoiding those pesky impulse buys that can seriously empty your pockets.
Do you want to start building wealth like them? Then it’s time to stop wasting cash on stuff you don’t really need.
It doesn’t matter how wealthy people get rich; they stay that way by being smart about their spending. They know the difference between a “need” and a “want” to help them build real wealth.
Reading The Millionaire Next Door in the past has made me think long and hard before I buy anything to make sure it’s worth it.
In this article, we’ll highlight 10 things that millionaires typically don’t spend money on, providing insight into the spending habits that contribute to their financial success. By understanding these choices, you’ll be able to manage your finances better, even if you’re not yet in the millionaire category.
Join the Passive Investors Circle
10 Things Millionaires Do Not Spend Money On
Millionaires understand the importance of avoiding consumer debt, which can quickly spiral out of control and cause significant financial stress. By avoiding certain expenses, they can maintain financial stability and avoid the pitfalls that debt can bring with it.
#1. Credit Card Debt
Credit card debt is one of the most significant contributors to consumer debt. Currently, in the U.S., Americans owe almost $1 Trillion dollars on their credit cards. That’s a trillion with a “T”.
Millionaires and even billionaires, such as Warren Buffett and Bill Gates, often avoid credit card debt as it can cause high interest rates and damage credit scores. Successful people understand the importance of maintaining a good credit history and focus on paying off balances on time to prevent being burdened by debt.
#2. Lottery Tickets
Lottery tickets may seem like a harmless expense, but they can quickly add up and contribute to consumer debt.
Millionaires understand that the odds of winning the lottery are incredibly low and instead choose to invest their money in more stable financial opportunities.
Keep in mind that your chance of winning the Powerball is roughly 1 in 292 million.
It’s a fact that people who make less than $10,000/yr spend, on average, $597 on lottery tickets(6% of their income).
By avoiding lottery tickets, millionaires can maintain their financial situation and avoid the stress of debt. They understand the importance of making wise financial decisions and avoiding unnecessary expenses.
#3. Expensive Cars
Although owning a luxury vehicle may be tempting, millionaires often forgo purchasing high-priced cars, opting for practicality and reliability instead.
In the book, The Millionaire Next Door, most of the millionaires surveyed drove a Toyota or Ford.
Now quite the Lambo we thought they’d drive!
This choice helps them preserve their wealth and maintain a frugal lifestyle.
#4. Impulse Purchases
Financial security is a top priority for millionaires. To achieve this, they avoid making impulse purchases. By carefully considering each expense, they can ensure that their spending aligns with their long-term financial goals.
At the end of every three months, it’s a good practice to review your financial situation and analyze your expenses. Without doing this, you could be in the dark about how much money you’re spending on impulse buys.
Falling prey to buying on impulse is all too easy, particularly if you’re accustomed to swiping your credit card before you think about it. It can lure you into purchasing both essentials and stuff you don’t really need or that doesn’t serve any significant purpose.
#5. Late Fees
Late fees are one expense the wealthy avoid like the plague. These sneaky costs can eat into your savings and negatively impact your credit score, especially when you’re lax about settling your debts on time.
It doesn’t matter if it’s credit card debt, a mortgage, or a student loan, paying on time is key. A great way to avoid this is by setting up automatic payments.
#6. Designer Clothes
Sometimes, the wealthiest people aren’t interested in wasting money on designer clothes and choose more budget-friendly options.
You might be wondering: so what do rich people wear? Many wear outfits strictly based on the occasion. This means if they’re making an appearance at important events, they may have to look expensive.
However, if the occasion doesn’t require luxury, they would appear simple and moderate.
For example, billionaire Mark Zuckerberg has been seen repeatedly wearing plain T-shirts anyone can buy for around $14. Rather than splurge on high-end brands unnecessarily, he prefers to remain comfortable.
Don’t Miss Any Updates. Each week I’ll send you advice on how to reach financial independence with passive income from real estate.
Sign up for my newsletter
#7. Groceries and Household Items
Comparatively, millionaires often spend less on groceries and household items than the average family.
By shopping strategically for the best deals and avoiding unnecessary purchases, they can manage their finances more efficiently.
#8. Luxury Housing
Even though some pro athletes and celebrities boast about living in expensive homes, millionaires don’t.
Most millionaires live in houses worth far less than they can afford, allowing them enough money to invest in cash-flowing assets.
For instance,Warren Buffett continues to live in the original five-bedroom house he purchases in 1958 for $31,500.
#9. Entertainment and Leisure
Millionaires are mindful of their spending on entertainment and leisure activities. They may choose to invest their free time in productive pursuits, such as spending time with family members or engaging in hobbies that contribute to their overall well-being.
This approach allows for a balanced lifestyle while maintaining financial stability.
#10. Low-Interest Savings Accounts
You might not have thought about it, but a low-interest savings account could actually stop you from earning more money. Interestingly, millionaires don’t usually put their money into these accounts either.
It’s a safe place to store your money; you can take it out whenever needed. But it’s not the best place to invest if you want your money to grow.
There are better alternatives to traditional savings accounts beyond physical banks. Online banks, for example, have high-yield savings accounts that offer a much higher return on your savings over time. This can be a simple and effective way to increase your wealth.
So, before you decide to keep all your money in a low-interest savings account, remember that millionaires don’t usually use them.
Smart Investments
Real Estate
Millionaires understand the importance of financial freedom in the long run and recognize that purchasing investment properties can be a strategy for long-term success.
They may buy properties in high-potential areas and rent them out, using the rental income to cover mortgage payments and build equity.
Mutual Funds
Millionaires don’t waste money on get-rich-quick schemes; they know the value of well-chosen mutual funds for their portfolios.
By diversifying investments across various industries and asset classes, they can minimize their risks and maximize potential returns in the long term.
Private Equity Funds
One area where millionaires allocate their funds is private equity. These investments involve funding privately-held companies with the potential for exponential growth, offering significant returns on their investment.
However, millionaires know that private equity funds can be high risk, so they invest wisely and in moderation, balancing their portfolios with lower-risk options.
Emergency Fund
Financially savvy individuals prioritize having an emergency fund to handle unexpected situations. Maintaining a well-funded safety net can prevent them from making hasty financial decisions or taking on debt in a crisis.
An adequately funded emergency account provides the peace of mind to weather financial storms and focus on building wealth.
Net Worth and Bank Account
Millionaires don’t measure their financial success through extravagant possessions or high balances in their bank accounts. Instead, they understand that their true financial situation is determined by their net worth, which is the difference between their assets and liabilities.
By tracking their net worth, they can gauge their investments and strategies’ effectiveness in growing their wealth.
Summary Of 10 Things Millionaires Do Not Spend Money On
The 10 things that millionaires typically avoid spending their money on include credit card debt, lottery tickets, expensive cars, impulse purchases, late fees, designer clothes, groceries and household items, luxury housing, entertainment and leisure, and low-interest savings accounts.
Millionaires prioritize avoiding consumer debt, making wise financial decisions, and aligning spending with long-term goals.
Join the Passive Investors Circle
