How To Become A Frugal Millionaire
When you are sitting there dreaming of the day you win the Powerball you typically aren’t thinking of ways to not spend money.
Usually, you are going through a massive list of things you would do and buy with the money.
Yeah, you might pay off your house and some bills but then you see yourself on endless beach vacations or driving the sportiest luxury car.
Being frugal isn’t something you would be interested in. Why would you be?
Saving money is something you are forced to do in order to make ends meet. It’s not something millionaires have to worry about. Or is it?
Shockingly, 70% of lottery winners end up broke within just a few years of hitting the jackpot.
Going broke usually happens because the frugal money skills were never learned and implemented when money was tight.
So people don’t know how to be responsible for a huge increase in cash flow.
What does this all have to do with becoming a frugal millionaire?
Well, the reality is that many millionaires got to where they are by being frugal and many more of them keep their money by being frugal.
The Wealthy & The Frugal
If you read my previous post you know that Warren Buffet isn’t just millionaire but a billionaire.
All thanks to his frugal habits and conservative investing he has surpassed a mark most people strive for their entire lives.
Here is a list of things Mr. Buffet does to keep his spending modest:
- He has lived in the same home since 1958
- Never spends more than $3.17 on breakfast (from McDonald’s)
- Doesn’t own a luxury car
- Uses coupons
It might be a little tough to grasp that someone like Leno could be so serious about money when he is best known for his comedic role in The Tonight Show.
But surprisingly Leno never spent a dime of his Tonight Show earnings.
Jay Leno always had two incomes, one that he saved and one that he spent. He always spent the lower income even after he was making nearly $30 million a year on The Tonight Show.
If you watch Shark Tank you know Mark Cuban is a wealthy businessman.
Even though he is the owner of the Dallas Mavericks he still lives in the same house for the past 18 years.
Another thing Mark does is shy away from luxury vehicles. This is a practice he started in his college years of several roommates and mac and cheese diets.
His only splurge has been a private jet that he acquired in the 90s.
Would you have ever dreamt that the founder of Zappos lives in a trailer court? Probably not. But that is exactly where Tony Hsieh lives.
The cost to maintain his 240 square foot Airstream is only $1,000 a month.
Tony makes a conscious effort to spend his money on experiences and not things. This may be why he feels the random events that take place around his campfire are so amazing and well worth the lifestyle choice.
If you are a woman reading this there is a good chance you have worn items created by Sara Blakely.
Sara is the founder of Spanx, a multi-billion dollar company.
The headquarters for her booming business was located in a 1,100 square foot apartment for several years. Even as the money started rolling in Sara always kept costs low by staying in buildings way below what the business could afford.
Have you ever noticed in every picture of Mark Zuckerberg he’s wearing the same t-shirt and jeans?
This is Mark’s strategic move to decrease the number of decisions he has to make in a day. His minimalist wardrobe also has a very frugal benefit.
Mr.Zuckerberg is also known to not drive luxury cars. He says this a way to not be ostentatious.
Alice’s father may be a little more well known than she but she still carries on her father’s frugal legacy.
Alice Walton is the heiress to the Wal-mart fortune.
Like her father, she drives an older and modest vehicle. Her vehicle of choice is a 2006 Ford F150 King Ranch.
Her father, Sam Walton, drove a 1979 F150 until his death in 1992.
How You Can Be A Frugal Millionaire
1. Copy The Experts
It’s usually said that when you want something that someone else has you need to mimic their behavior.
If you want to be a millionaire learn the things they do that afford them the lifestyle.
And no this doesn’t mean copying the misleading examples on TV. It means emulating the millionaire next door living in a 1,200 sq ft home driving a 2012 Honda Civic.
2. Live Below Your Means
Just because your friends Brad and Sarah just built a 3,000 square foot, 5 bedroom home doesn’t mean you have to keep up.
Be okay with spending less on your housing and vehicles.
The more your living expenses are below your income the more money you have to save and invest.
3. Drive Modest Vehicles
Your neighbor just bought a brand new Chevy Suburban, fully loaded, and seats 7. And the kicker is they only have 1 kid.
Now you may feel a little insecure and feel some pressure to upgrade your early 2000s model but don’t buy into the hype.
The new vehicle sitting in your neighbor’s driveway isn’t even worth as much as it was in the dealership lot when they bought it.
Let someone else pay the depreciation costs and buy a used vehicle when you need to purchase a reliable mode of transportation.
4. Never Rely On A Single Income
The average millionaire has 7 streams of income. They never put all their eggs in one basket.
You shouldn’t either. You may want to consider adding another income stream as another level of financial security.
If it takes two incomes to run your household you can’t consider the income of your spouse as a second source. If you were to lose your job and it meant financial despair then 2 incomes aren’t enough.
5. Make Your Money Work For You
One thing millionaires have figured out more so than anyone else is how to make their money work for them.
Millionaires make their money do the work by investing it. This ensures that they are making money even when they sleep or are on vacations.
Making their money work for them gives them the freedom of time. The freedom of time to some millionaires is more important to them than the money itself.
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