Most of us think that just because wealthy people have lots of money, they spend it on everything their hearts desire. But, that simply couldn’t be any further from the truth. In fact, you’ll find that wealthy people are often very frugal when it comes to spending. That being said, here are ten things wealthy people don’t spend money on.
10. Impulse Purchases
According to The Motley Fool, 90 percent of Americans say they regret making impulse purchases. But, the wealthy are not included in that number. “If you buy things you do not need, soon you will have to sell things you need,” billionaire investor Warren Buffet told Forbes, according to an article published by Reader’s Digest. Does this mean that wealthy people never buy lavish items? No, it just means they put more thought into what they’re buying — which is the exact opposite of what impulse purchasing is.
9. Credit Cards
Based on what you see on TV and in the movies, you’d think wealthy people have a ton of credit cards that they use everyday. But, the truth of the matter is the richest 10 percent of Americans are half as likely to have credit card debt. And, according to an article published by Reader’s Digest, Tom Corley, author of the book Rich Habits: The Daily Habits of Successful People, told U.S. News & World Report that only 8 percent of wealthy people use more than one credit card. On the other hand, 77 percent of poor people have multiple credit cards — and most likely a ton of debt, too.
When was the last time you saw a wealthy person in line to purchase lottery tickets? You may be saying to yourself, “Well, that’s because they don’t need to.” That’s true, and, while it’s possible for them to double their wealth doing so, most of them are totally against gambling. According to Reader’s Digest, Warren Buffett says gambling is just a way for the government to prey on its citizens. “A government shouldn’t make it easy for people to take their social security checks and [waste them pulling] a handle,” he said. Buffett even went so far as to install a slot machine in his home to teach his kids about the dangers of gambling. “I could give my kids any allowance they wanted as long as it was in dimes. I mean, I had it all back by nightfall,” he told shareholders at Berkshire Hathaway’s 2007 annual meeting, according to CNBC’s Warren Buffett Archive. “I thought it would be a good lesson for them.”
7. Expensive Cars
If you were to sit down and binge watch episodes of “MTV Cribs,” you’d think that wealthy people spend a lot of money on cars. After all, that’s what you see in their garages and driveways. And, while some of them do it, the richest 10 percent of Americans don’t spend a ton of money on cars. They only spend about 2.4 percent of their net worth on cars. That’s because these individuals have been taught what to do with their money. They invest it instead of spending it on things that depreciate over time.
6. Overpriced Homes
Here’s something else you’ll definitely see on “MTV Cribs.” But, those overpriced homes aren’t owned by the ultra wealthy. In fact, wealthy people house shop much like the rest of us: They look for deals. “They want to feel like they’re getting the most value for their dollar and not like they’re getting ripped off,” Reader’s Digest said on its website. What’s more is that some wealthy people forgo purchasing an extravagant home altogether. In fact, many of them are opting to rent. “Renting is more popular than ever, even among the wealthy,” Michael Corbett, host of Extra’s “Mansions and Millionaires,” told huffingtonpost.com, according to Reader’s Digest.
5. Stuff Instead of Experiences
Lots of people think spending money on stuff (i.e. material things) will bring them happiness. And, it will — but only to a certain extent. We’re not saying that you should never splurge. You just have to be smart about what you’re splurging on. The wealthy know this, and that’s why they spend their money on meaningful experiences (e.g. family vacations) instead of stuff (e.g. expensive sneakers). According to personal finance blog Money Crashers, “research by happiness economists shows that people are usually happier when they spend their money on experiences rather than stuff.” That makes sense considering that you’re more likely to look back on your family vacation with fondness than you are those Adidas Yeezy shoes you probably bought on impulse.
4. Showing Off
If you spend money trying to impress other people, there’s a pretty good chance you’re not wealthy. Most rich people don’t do this. Michael Kay, president of Financial Life Focus and author of The Feel Rich Project: Reinventing Your Understanding of True Wealth to Find True Happiness, told the Chicago Tribune that rich people know they’re not in a race against others, so they don’t care what others think. If they did, it’s highly unlikely they’d be rich today, he added. Instead, what they do is live below their means and shun big-spending lifestyles.
3. TV and Video Games
Rich people don’t become rich by sitting at home watching TV and playing video games all day long. That being the case, they usually don’t spend money on big TV packages and the newest video games either. In fact, a 2015 Nielsen survey showed that people living in households with an annual income of less than $25,000 were the ones spending all their hard-earned cash on TV and video games. “We expected high-income households to own more devices, but we did not anticipate that low-income consumers of all devices had greater usage,” Glenn Enoch, Nielson’s SVP of Audience Insights, said, according to Reader’s Digest. What’s more is that more than half of rich people say they don’t even watch TV. They probably don’t even have time to since they’re busy building wealth.
2. Large Inheritances
If you’ve ever longed to be the son or daughter of a wealthy businessman, you may change your mind once you read this: Wealthy people don’t leave a pile of money to their kids and grandkids. Instead, they donate it to charity so that it goes to those who need it the most. Why? Well, according to Reader’s Digest, Bill Gates and Mark Zuckerberg both said they want their kids to find their own way in life rather than relying on a big inheritance to see them through.
1. Luxury Brands
Don’t let those designers dresses you see on the red carpet fool you. Those celebrities are paid to wear those gowns. That being said, while most of them can afford luxury brands, they actually don’t spend money on them. In fact, IKEA founder Ingvar Kamprad told Newsweek that he won’t wear anything that doesn’t come from a flea market. Meanwhile, Bill Gates told Time magazine that he still wears a $10 watch even though he can afford a more expensive one.
Your turn! What things do you avoid spending money on in order to build wealth. Let us know in the comments section below.