Wed, 11 Feb, 2015
The surprisingly frugal spending habits of the rich
You may be surprised to discover that some of the richest people in the world are also some of the biggest penny pinchers. Then again maybe that’s part of why they managed to accumulate such wealth in the first place.
Here are some habits of the frugal wealthy you can possibly take on board to help with your savings.
Resisting the impulse buy – It’s hard for some people to avoid the tendency to splurge, or resist getting tempted by all those sale signs when they go shopping. Wealthy people are not reactionary. They have a tendency to be a little more considered in their purchasing habits.
One of the greatest fears of high net worth individuals is becoming poor – especially if they have previously struggled with finances. So, they tend to take their time with purchases. Delayed response helps them avoid some of the impulses that would result in poor choices otherwise. Opportunities are more easily made up than losses.
Milking the value – This may surprise you: like most of us, wealthy people are all about getting the most bang for their buck. Whether it be frequenting auctions, liquidation sales or using Shop A Dockets, the super rich are more aware than anyone about getting the best value for their money.
Quality not bling – The rich tend to adopt a ‘quality over prestige’ mindset when purchasing big-ticket items. A Mercedes is more appealing than a flashier Ferrari. They look for quality that suits their needs rather than feeling they have to spend as much as their income or net worth would allow.
Wealthy families also often hand down valuable, well-made assets such as furniture from generation to generation, demonstrating how buying quality helps to preserve wealth. So the lesson is – for the important things in life, buy quality. Take good care of it, so you only buy once.
Avoiding debt – Affluent people are more likely to avoid debt like the plague unless it involves a business venture. People trying to achieve wealth will leverage themselves hoping for that break or thinking that eventually they'll be able to catch up. But avoiding debt can be the key to becoming wealthy and staying wealthy.
The rich are often money vigilant, which can mean they're less likely to buy on credit and more likely to pass on a purchase if they can't pay cash. Wealthier individuals are more anxious about making sure they have enough money and are managing it well.
Lifestyle choices – It's important to remember that you can learn to stretch your money and accumulate wealth, regardless of your income level, by living below your means, which is often a characteristic of the wealthy. Controlling what you spend is part of wealth preservation. You can't control interest rates and the stock market, but you can control a lot of the discretionary part of your lifestyle. That can mean pinching a few pennies to maintain prosperity.