Financially successful people may acquire their wealth through wise investment opportunities, profitable businesses, or even inheritance. But interestingly, most rich people maintain or manage their finances by making wise spending decisions. There are certain things millionaires do not spend money on. Over time, they have disciplined their spending habits and now recognize the clear difference between their needs and wants.
I also live by this principle. I do not spend my hard-earned money randomly on things I barely need. I make calculative buying decisions, ensuring that I do not waste my financial resources on irrelevant expenses.
I will be discussing some of the things successful people never waste their money on. Consider this a vital piece of information, as it will teach you to be mindful of your spending habit and help you save extra money.
What Are The Things Rich People Don’t Spend Money On?
Many rich people do not spend money on impulse purchases and extended warranties. They intentionally make this financial decision in order to avoid breaking their monthly budgets or living beyond their means.
Why Do Rich People Choose To Not Spend Money On Some Things?
Millionaires choose to not spend money on certain things not because they want to show how smart they are with money, but because they care about their financial safety. Notwithstanding, here are a few more specific reasons why millionaires spend wisely:
- To Avoid Debt
Debt is a major financial challenge in the United States. Millions of households are in credit card debt or struggling to pay off a mortgage faster.
One’s spending habits can significantly affect how one pays off debt. To pay off your debt on time, you are not supposed to skip any monthly payments. Sometimes, it’s even advisable to make extra payments. However, this won’t be possible if one has a bad spending habit.
Hence, millionaires or people who intend to become financially successful do not spend money on everything they set eyes on. They limit their spending reasonably in order to avoid debt piling up debt or paying off existing loans.
- To Stick With A Budget
Millionaires obviously have a ton of money in liquid cash and assets. However, this doesn’t mean they fail to make financial plans. Millionaires build monthly budgets to organize their expenses and be more reasonable with their spending habits. But more importantly, a millionaire would often avoid spending extra money on random things to stick with a monthly budget.
Sticking with a budget shouldn’t prove difficult, especially when you’ve learned how to live below your means.
Besides, if you aren’t used to building a budget, and you need help setting up one, I would advise you to check out this post where I discussed the 5 easy steps to budgeting money.
- Financial Literacy
When we talk about things millionaires do not spend money on, it all boils down to financial literacy. Many millionaires attain financial freedom by educating themselves about money. Now by receiving education on personal finance, you are actually becoming financially literate.
When you eventually have financial literacy, it means you won’t be reckless with money. Hence, it’s safe to say that a lot of millionaires today do not spend money on certain things because they are financially educated. They know better than to squander their salaries or business profits.
10 Things Millionaires Do Not Spend Money On
The journey to making your first million won’t be easy. But it gets even more difficult when you aren’t careful with your spending habit. Here are some of the common things that millionaires never buy:
1. Lottery Tickets
There’s no denying that people have become rich by winning the lottery. However, it can never remain a sure way to become a millionaire. It’s a game of luck.
There’s no certainty that you’d hit a million dollars after buying a couple of lottery tickets. Instead, you’d keep burning your money fast while trying to grab your first win. Before you realize what’s happening, you may have spent hundreds of dollars hoping to win the lottery someday.
For example, If you spend $2 on a lottery ticket, and you begin to play twice a week, you’d have wasted $208 at the end of the year.
Bear in mind that your chance of winning a Powerball grand prize is 1 in 292 million. The odds are never in your favor. It’s why lottery tickets will always remain one of the things millionaires never waste their money on.
2. Interest On Credit Cards
Using credit cards could mean you’re broke since you’re practically living on borrowed money. It’s one of the things millionaires do not spend money on.
Interest on credit cards could even increase when you fail to make your monthly payments. However, the good news is that you can actually do away with credit cards even if you aren’t rich at the moment. Of course, using credit cards feel very convenient, but they affect your income terribly.
Instead of buying things on credit, try to manage your salary wisely. This may mean that you would have to drastically cut down on your expenses to prevent waste. If you adopt a frugal lifestyle that enables you to live on less, you won’t feel the need to rely on credit.
3. Late Fees
Late fees are one of the things wealthy people never waste their money on. Late fees can easily chip away at your bank balance and credit score. This obviously happens when you are not paying off your debt on time.
Whether it’s a credit card debt, mortgage, or student loan, timely payments are highly recommended. The procrastination penalty that comes with late payment would certainly affect your income. To avoid wasting money on late fees, I would advise that you automate your payments.
In a situation where your paycheck doesn’t cover all your bills and monthly debt payments, that’s a sign that you must increase your cash flow. There are several ways to do this. If you don’t mind working multiple jobs, you should go ahead and start applying for another role. Having two jobs won’t be easy, but it also means you have two paychecks: more money to cover your bills.
On the other hand, in addition to your current job, you can find a side hustle. It could be a freelance career, affiliate marketing, e-commerce, or any other online-based business that allows you to focus on your main job.
4. High-End Brands
Sometimes, the wealthiest people aren’t interested in wasting money on designers. In case you didn’t know, luxury fashion is one of the things rich people don’t spend their money on.
At this point, you might be wondering: so what do rich people wear? Well, many millionaires wear outfits strictly based on the occasion. This means if they are making an appearance at important events, they may have to look expensive. However, if the occasion doesn’t require luxury, they would appear simple and moderate.
For example, Mark Zuckerberg who’s a billionaire, has been seen repeatedly wearing plain T-shirts anyone can buy for $14 at Target. Rather than splurge on high-end brands unnecessarily, he prefers to remain simple. That’s a very commendable trait if you ask me.
5. Bad Real Estate
Warren Buffet, one of the world’s most successful investors, still lives in a house he bought for $31,500 in 1958. I’m not saying he doesn’t own other properties worth millions of dollars. I’m simply trying to talk about how he’s intentional about real estate investment.
Costly houses are one of the things millionaires do not spend money on. This is because a bad real estate purchase could become a major financial mistake. Sometimes you may buy a house, hoping to sell it in the future at a better price. However, that may not be possible because aside from the building itself, other key factors determine the value of the real estate.
If you are ever going to buy a home someday, ensure you carefully think about the decision. You wouldn’t want to spend hundreds of thousands of dollars on a property that isn’t worth it.
6. Banking Fees
I’m pretty sure I’m not the only one who gets frustrated by extra bank charges. I also try to avoid them since they are one of the things millionaires do not spend money on. Most banks would take monthly maintenance fees, depending on the type of account. Other typical charges include ATM fees, overdrafts, and other sundry fees.
Millionaires do not have to spend a lot of money on banking fees because they do not make the kind of transactions that other customers (who aren’t financially stable) make.
Overdraft fees, for example, are issued when you exceed the maximum amount you are expected to withdraw. Withdrawing above the maximum amount doesn’t mean you have a ton of money. The overdraft could be just $2,000.
Exceeding the overdraft could mean you have constantly withdrawn small amounts of money too many times. Rich people do not usually have to face this challenge at their financial institutions.
7. Extended Warranties
Extended warranties are one of the things successful people never buy. A financially successful person who walks into a showroom to purchase a new 4k TV wouldn’t accept the extended warranty offer. Mind you, this doesn’t mean you won’t get enough value from the product. As long as the product being purchased is high quality, there’s almost no need for worries.
Sometimes, extended warranties are retailers’ legal methods for taking more money than they are supposed to. Interestingly, Consumer Reports have confirmed that retailers keep at least 50% of what they charge for extended warranties.
8. Impulse Purchases
At the end of every quarter of the year, it’s important to assess your financial statement and see how you spent your money. If you don’t do this, you may never know how much you waste on impulse purchases. These are things people who are good with money would never buy.
It’s really easy to be a victim of impulse buying, especially when you are used to buying things with credit cards. You will be tempted to buy both the things you need and the things that won’t serve important purposes.
A good way to avoid impulse buying is by going to your retailer with a shopping list. When grocery shopping, for example, create a list of all the necessary items you need. When you walk into the store, make sure you stick to the list. It’s similar to building a budget.
9. Low-Interest Savings Accounts
You probably haven’t thought about how a low-interest savings account can prevent you from making more money. Well, it’s one of the things that millionaires do not spend their money on.
I’d be honest, a low-interest savings account is not a terrible choice for your savings goals. You can stash your money in it and pull your income out when you are ready. Besides, it’s pretty secure. However, regular savings accounts are not the ideal channels for investing and growing your money.
There are high-yield savings accounts beyond your traditional brick-and-mortar banks. For example, online banks offer amazing opportunities to save money and get high returns after about a year. This can be one of the easy ways to boost wealth.
The next time you think about keeping all your money in a low-interest savings account, remember it’s one of the things millionaires do not spend money on.
10. Extravagant Inheritance
This is one of the things rich people never waste their money on, especially billionaires in the US. It’s common to find wealthy people who decide to leave their wealth to the younger generation. But sometimes, rich families decide not to keep all their wealth within the household. Instead, they donate it to charity.
For example, Bill Gates has decided to donate most of his billions to the Bill and Melinda Gates Foundation. He’s leaving only a fraction of his wealth to his children. Mark Zuckerberg and his wife, Priscilla Chan, have made a similar decision.
One would quickly assume that these wealthy folks are giving back to society and helping humanity. However, that may not be the sole reason they choose to donate their wealth. Donation often reduces income taxes. For example, if I donate $100 million to my private foundation, I’ve technically reduced my taxable estate by $100 million.
Bottom Line On Things Millionaires Do Not Spend Money On
Wealthy people are not only knowledgeable when it comes to making money, but they are also quite informed when it comes to preserving and growing wealth. Earning an income is important. What you do with the income you’ve earned is even more important. That’s the essence of this post.
By addressing some of the common things millionaires do not spend money on, you should have a clue about how these rich folks are able to pass down wealth from generation to generation.
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