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 not make impulsive purchases and stick to your budget.
Try this practice every time you go shopping for clothing, household items or other specific things you can gauge the price beforehand. Only use the cash you bring on these outings and fight the temptation to use your debit or credit card to buy other 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:
Allocate a percentage of your paycheck into savings each month.
Saving money can be done by setting up direct deposit so your savings are automated.
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.
These automatic savings can pay future you in the form of investment accounts, retirement plans or IRAs.
You can spend what is left of your paycheck after savings on necessities and wants.
As your pay increases so should the amount you pay yourself each month in savings. Make sure to grow this 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. All traveling frugally means is to not be wasteful with your money on your next trip- which often saves you the money you can then put toward other savings goals or even future vacations.
Live Beneath Your Means
Slight edits to your budget make a big difference has certain discretionary choices can save you hundreds per month. Being able to afford something doesn’t make it a good investment. 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
Across the board, where you put your money matters. No matter if it is a high-yield savings account, retirement plan, real estate, CD or investment in stocks or bonds, make sure you are putting your money where it can grow. Make sure you are earning interest instead of paying interest whenever you make a financial decision.
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 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. You can make your money work for you in a frugal manner, so the extra money you save goes toward giving you a more comfortable lifestyle — not unlike how the super rich and famous live. 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