While occasionally rejecting the notions of materialism, most of us enjoy the idea of accumulating wealth. Having more money won't make all your problems go away, but in two nearly identical situations with the only difference being wealth, most of us would choose the wealthier scenario.
It's no secret why; having more money means you have the freedom to do more things. With enough wealth, you could go out to eat at fancy restaurants every day, drink the finest wines, and buy some of the nicest material possessions available. But you might be surprised to learn that many of the richest people in the world deliberately avoid this type of lavish lifestyle. Instead of using their wealth to afford whatever their hearts desire, they maintain a reasonable lifestyle and live far below their means.
Why is this? Each individual has unique motivations, but speaking generally, it's a product of habit. Most wealthy people got to where they are today by living frugally, saving carefully, and living below their means. It's only natural that, once they reached a certain peak of success, those habits followed them.
Whether you're interested in building a level of wealth similar to these ultra-rich magnates or you just want to sharpen your own money-saving skills, there is much to learn from these five frugal habits of the world's wealthiest people:
1. Buy a Modest House. Housing costs constitute the largest percentage of most households' budgets in the United States. Whether you rent or pay a mortgage, the bulk of your monthly budget is undoubtedly spent on a place to live. Because buying a house is such a big investment, many new homeowners go out of their way to pick the perfect home--which is a good strategy. The only downside is that this often leads to buying a bigger, nicer house than you actually need, sucking up way more of your monthly budget than you should allot.
Take Warren Buffett as a counter-example. He's currently living in the same house he bought back in 1958 for only $31,500. Despite having a net worth in the billions, he's never had the desire to move into something bigger or better.
2. Only Carry Cash for What You Need. If you had a net worth of $1.4 billion, your average grocery trip might consist of filling up multiple carts with whatever looks the most delicious to you at the time. Oil magnate T. Boone Pickens, on the other hand, who actually has that net worth, instead brings a detailed grocery list and only enough cash to pay for what he has planned to buy. While the occasional indulgences undoubtedly work their way into Pickens's system from time to time, the majority of his purchases are planned in advance.
One of the most important elements of Pickens's habit is that he doesn't allow himself the wiggle room to splurge on unplanned items. If he doesn't have enough cash to impulsively buy whatever intriguing item is on the shelf, he literally can't buy it. You can use this habit in your own life, making a carefully planned budget for only the items you need and restricting any other cash you might have on hand.
3. Look for Deals. Wealthy people don't go out of their way to pay full price, or even worse, pay more for items than others. Instead, they make the extra effort to find deals, clip coupons, and sniff out the best possible uses for their money. It's a way of making each dollar count more that is both relevant and effective regardless of your income level or net worth. Take, for example, Hillary Swank, Lady Gaga, Kristen Bell, and Carrie Underwood, all high-earning celebrities who reportedly clip coupons as part of their routine.
4. Pay Yourself First. Rather than paying for an object, an item, or even an experience, the wealthiest people of the world tend to pay themselves first. They prioritize investment, especially in a financial sense, and won't pay for something unnecessary unless they've first met their personal financial savings goals. Investing your money in something smart, such as a blue chip stock or a mutual fund, is a way of paying your future self--and in most cases, you'll see a far greater return on investment that way. It will allow you to spend $1,000 in a decade, rather than $100 right now.
5. Reuse What You Can. Rather than buying new, fashionable clothes every fashion cycle, focus on making the most of what you already have. Don't be afraid to spend enough money to dress well, but don't go overboard by filling your wardrobe with attire you might only don once or twice before passing along. Some of the world's top executives only own a handful of different suits, and Facebook's own billionaire, Mark Zuckerberg, frequently wears the same, identical gray T-shirt every day he goes to the office. Similarly, don't be afraid to reuse and make the most of other items in your life, as long as they're still useful.
There's no "secret" to becoming wealthy, and there's no shortcut, excepting perhaps the lottery or being born into a wealthy family. Most self-made millionaires and billionaires did so by pursuing carefully planned, frugal strategies, and have retained their wealth by following their strategies even after obtaining that wealth. Model yourself after these frugal success stories, and watch your savings grow.