Last updated on August 18th, 2020 at 06:34 am
The secret may lie in living like you’re poor. Or at least poorer than you really are until you can afford to live better. But blowing your life savings on buying a Rolex watch may not be the smartest thing to do if you want to be rich.
The formula for being rich sounds simple. Earn more than you spend but is is easier said than done.
What many of us don’t realize about self-made millionaires is that many of them got to where they are by being surprisingly frugal—and staying surprisingly frugal, even when they had plenty of money at their disposal. By being smart with their money, they’re able to build wealth in a way they never could if they were focused on living the high life.
Here are 6 money secrets the savviest millionaires know. Follow them, and you could become a millionaire, too.
Savvy millionaires couldn’t care less about luxury cars, or even about leasing a new mid-range car every few years. They will happily drive their decades-old economy sedan until it’s no longer financial smart to do so.
A car is a means of transportation, plain and simple. Seeing it as a status symbol is an easy way to blow your money.
Why waste your wealth on extra rooms you hardly ever use? Buy a home that’s big enough for your family to live comfortably and save your money for other things. Otherwise, you’re paying not just for the rooms themselves, but also for furnishing them, heating them and keeping them clean and well-maintained.
Just because you “can” afford to buy something at full price, that doesn’t mean you should. You don’t get rich by spending haphazardly; you get rich by making every dollar you have stretch as far as it can.
This includes things like buying generic, buying used instead of new, comparing prices and negotiating rates. You worked hard for your money, so make it work hard for you.
Sometimes it’s smart to open a credit card to get a significant discount or to earn rewards points. That’s fine, so long as you pay the balance off, in full, each month.
Sometimes you need to finance a big purchase, like a home or an education. That’s acceptable, so long as you make sure you can pay it off in a timely manner and monthly payments fit within your budget.
But whenever possible, avoid debt like the plague. It will siphon away your hard-earned money and you’ll wind up paying far more for your purchases than their initial cost.
Financial experts recommend you put aside at least 10-20% towards your savings goals: an emergency fund, your retirement, etc. Money-smart millionaires put aside even more. True financial success means knowing your money will be able to take care of you now, and in the years to come.
At the end of the day, having a mansion won’t make you much happier than having a cozy cottage, if the rest of your life isn’t in order. While it’s certainly nice to have the best of the best, real happiness stems from being content with our lives and the people in them.
Seek inner happiness rather than chasing the thrill of external possessions, and you’ll find your life is rich indeed, no matter how much you have in the bank.