When it comes to managing money, the rich stick to their own set of money rules. It makes sense because that’s how they built wealth in the first place. So, what does it take to build wealth?
Building wealth is not only about making more money but also about avoiding unnecessary purchases. Otherwise, you can end up a poor millionaire. Let’s explore what sets the rich apart.
1. New Cars
Consider that new cars, on average, cost $25,000–$60,000. The average debt Americans carry is $24,000 for autos alone. Even if you’re a car enthusiast, buying most cars new isn’t intelligent. The moment you drive it off the lot, the car’s value depreciates. Wealthy people tend to avoid these purchases.
2. Full-Price Luxury Clothing
Clothing brands are notorious for great marketing. Regardless of the clothing material, paying $100 for a T-shirt that could be bought for a fraction of that is not intelligent. Steve Jobs, Apple’s co-founder, was iconic for wearing a personal uniform featuring a black turtleneck, blue jeans, and New Balance sneakers.
Although you don’t need to go to these extremes, look around your closet. The odds are that you have more clothes than you can wear weekly.
3. Latest Tech Gadgets
It seems that the iPhone had more exciting launches because of its revolutionary features. Although the iPhone and many other electronics are still released with cool features, most are considered unnecessary.
Do you really need the latest processor or camera? Don’t fall victim to purchasing a new phone you can’t afford when most new features mean little to you. Rich people most likely don’t pay attention to the latest tech or upgrade unless absolutely necessary.
4. Extended Warranties
If you’re like most people, you purchase a protective case for your electronics. Often, additional warranties are not needed. If you’re paying an extra $10–$15 monthly to protect your electronics, you may as well save this money to purchase a new one instead.
5. High-End Gyms
Rich people manage their time well. They don’t have to commute long to the gym and may even work out at home. Spending over $50 for a gym membership isn’t intelligent, especially if you only go to the gym a few times weekly. Consider working out at home or finding a cheaper gym alternative.
Try to find a lower-end or local gym that charges $10–$20 a month. Often, these gyms will have quality gym equipment for a fraction of the cost of larger gyms.
6. Impulse Purchases
Most of us are guilty of entering a store and purchasing impulsively. The thrill of spontaneously finding a good item is exciting, but it can drain your wallet if you do it too often. Rich people are more disciplined about how they spend their money; it’s how they’re able to increase their wealth.
This doesn’t mean you can’t make any more impulsive purchases. However, discipline is a crucial indicator of success.
7. Overpriced Groceries
With rising prices in today’s economy, it’s hard to avoid spending a lot of money on groceries. However, wealthy people know that most expensive grocery items are costly because of their branding. We’ve become more conscious of what we eat and will pay more attention to nutritional facts.
Use this to your advantage. If two items offer the same ingredients and similar taste, opt for the cheaper option.
8. Premium Cable Packages
Rich people don’t pay for things they can get for free. Consider buying an antenna if you’re paying for cable and only watch a few channels. Additionally, you can opt for a streaming service that offers most of your shows.
However, spending close to $1,000 on cable is a poor choice when you could invest that money in a stock and likely double it in a few years.
9. High-Interest Debt
Rich people have a lot of money because they avoid debt like the plague. Most people accrue debt to help pay for cars or home upgrades they don’t need. Impulse buying with cash is one thing, but if you find yourself constantly paying for items with debt, consider cutting back where you can.
10. Expensive Coffee
It doesn’t take a mathematician to realize that buying coffee at Starbucks is more expensive than brewing it at home. It’s also no secret that most millionaires are frugal. You can bet they aren’t buying $6 coffee daily.
Consider buying a coffee maker if you regularly purchase coffee at coffee shops. You’ll pay less than $1 per cup of coffee and be able to sip on a fresh cup first thing each morning.
11. Luxury Hotels
It’s okay to splurge on luxury hotels if you have budgeted for this expense ahead of time and do so sparingly. Like coffee, most rich people don’t regularly spend their hard-earned money at expensive hotels.
Consider booking your trips in advance so you have enough time to research. Look for online coupons that can save you a decent amount of money.
12. Fast Fashion
Fast fashion is bad for our planet and can be expensive. The only ones winning here are the fashion retailers. Like Steve Jobs, most wealthy don’t spend too much money on their fashion wardrobe.
If anything, the fewer outfits they have, the better because choosing outfits requires less brain power.
13. Private School Tuition
Expect to pay over $10,000 a year for your kids to attend private schools. With education becoming more readily available, college diplomas yield less return on their investment, and private schooling is a bad investment.
Unless you can comfortably pay for private school, don’t spend your hard-earned cash here. Rich people who are frugal most likely pass on spending their money here.
14. Eating Out Frequently
Do you have any $400+ monthly memberships? If you eat out frequently, think again. On average, US households spend close to $5,000 annually eating out. With rising grocery prices, you can bet restaurants feel the hit and charge more to cover this price hike.
With many visually engaging online cooking tutorials, there’s no excuse not to cook at home.
15. First-Class Airfare
First class seems like the dream for many. However, if you must experience first-class airfare once in your life, consider flying first-class on short domestic flights. Expect to spend over $1,000 for longer trips. If you travel frequently, first class doesn’t make sense.
Instead, invest the money you save on your favorite airline, where your money has higher odds of increasing in value.
16. Bottled Water
If you consistently pay for bottled water, you might as well throw some more money out the window. Nowadays, you can fill your water jugs for less than $1 per gallon. Not only will you reduce plastic, but you’ll also drink healthier water and save money. If you must purchase plastic, consider buying in bulk at places like Costco.
17. Bank Fees
It’s no surprise that banks make a huge profit by charging their customers for fees. To avoid these fees, monitor your bank alerts and transfer money quickly when an account is low on funds. You can also set up automatic transfers. Additionally, find creative ways to avoid account minimum requirements by linking your mortgage or setting up direct deposit.
18. Trendy Investments
You can bet most rich people avoid risky investments like Dogecoin. Although cryptocurrency is here to stay, all crypto is not created equal. Take the time to understand what you’re investing in. Otherwise, you’re gambling at best. You don’t need to track company financials thoroughly, but you should invest in companies you believe in with money you can afford to lose.
Rich people most likely became rich by regularly investing their money. They took calculated risks on stocks, themselves, or business ventures. Be sure you do the same.