Feb 10, 201408:19 AMTaking Stock
with Nathan Brinkman
The frugal habits of millionaires
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The word “millionaire” typically conjures up images of a lavish, jet-setting lifestyle, but behind the scenes, that may not always be the case. Like Warren Buffett, who famously still lives in the relatively modest house in Omaha, Neb., that he bought in 1958 for $31,500, many millionaires (and billionaires) live a modest, if not downright frugal lifestyle — a lifestyle that may have helped them become millionaires in the first place.
We’ve all heard the saying “It takes money to make money.” So how can you find extra dollars to save and invest? If you’re looking to improve your financial position, consider putting some of these habits into practice.
Cultivate a frugal mindset
Many people equate being frugal with being cheap, but that’s not really correct. Being frugal means carefully watching your dollars and not spending more than you need to — a trait many millionaires employ. To help cultivate a frugal mindset, get in the habit of asking yourself this question: “With a little extra effort and/or sacrifice on my part, is there any way I can save money here?” Having a frugal mindset can really help when it comes time to playing the role of American consumer, where temptation is everywhere.
Buy wisely and sparingly
We all need “stuff” now and then; the key is not overdoing it or overpaying for it. Try to buy mostly what you really need, not what you really want. Money you save can then be used to build your savings and investment accounts.
Don’t let the price tag of your car, home, or designer suit define your character. For example, a reliable car that safely gets you from point A to point B may be completely sufficient for your needs. According to the book The Millionaire Next Door, the top car brand among millionaires is Toyota, not Mercedes or BMW. Even Mark Zuckerberg, the billionaire founder of Facebook, has been spotted driving an Acura TSX, an entry-level luxury car whose base price is about $30,000. The bottom line? As you move up the net-worth ladder, avoid the temptation to elevate your “status” by overspending on luxury goods.