How Millionaires Live Frugally, Budget and Save

In my five-year study on the daily habits of wealthy people I uncovered certain things the wealthy do to create, maintain or grow their wealth.

The 80:20 Rule

This rule requires that you set aside 20% of every paycheck and learn to live off the remaining 80%. You do this no matter how much money you make. If you get  a  raise or bonus set aside 20% of that raise or bonus in addition to the 20% on your regular pay. If you stick to the 80:20 Rule you will save a lot of money and you will be wealthy long before you reach retirement age. You will be one of the few among your friends and colleagues because, unfortunately, most parents don’t teach their kids the importance of saving, so nobody saves.

Budgeting & Saving

Below are some guidelines regarding budgeting and saving:

  1. Don’t spend more than 25% of your monthly net pay on housing. It doesn’t matter if you own or rent. Stick to this 25% rule.
  2. Don’t spend more than 10% of your monthly net pay on entertainment. This includes bars, movies, restaurants etc.
  3. Don’t spend more than 5% of your monthly net pay on auto loans and never lease. Leasing is something I call a Poverty Habit. Buy your cars and take good care of them.
  4. Stay away from accumulating credit card debt. If you are doing this it means you are living beyond your means and you need to cut back on something.
  5. Always invest your savings prudently. Never gamble your savings on get rich quick schemes. There’s no such thing. The power of compounding can grow your savings and make you wealthy. Saving just $250 a month over 40 years will produce $500,362 at a 5% return.
  6. Max out your contributions to the company retirement plan. If the company matches your contributions, great. That’s free money. Always take free money when you can get it.
  7. Know what you spend every month. Create a monthly budget and track what you spend. I have a budget template I’d be happy to share with you readers.

Most of the wealthy don’t make a lot of money. But they do save a lot of money. They make a habit of saving until it hurts. They focus on accumulating wealth through savings. Savings and investments are two different things. Your savings should never lose money whereas your investments represent a portion of savings that you are willing to put at risk and lose. How much you take out of your savings and invest depends on your risk tolerance. Conservative wealthy people do not put any of their savings at risk. Moderate wealthy people put 25-50%% of their savings at risk. Aggressive wealthy people put more than 50% or more of their savings at risk.

If the wealthy invest part of their savings they typically invest it in one or more of the following:

  • Their businesses
  • Their retirement plans
  • Guaranteed products like variable annuities & life insurance
  • Stocks
  • Real Estate Investments
  • Gold
  • Education for their Children

Accumulating wealth is not about hitting it out of the park.  It’s about getting singles. You get enough singles and you win the game.

In my five year study on the daily habits of the rich and the poor, when it came to money, there were significant differences between the two groups. Let’s take a look at some of the research:

  • 67% of the wealthy said they are frugal with money.
  • 8% of the wealthy shop at Good Will stores.
  • 85% of the wealthy in my study stated that they have always believed that no matter what an individual can always save money if they really want to. Only 2% of the poor share this opinion. 73% of the wealthy in my study were taught the 80:20 Rule by their parents.
  • 6% of the wealthy lease cars. Conversely, 45% of poor people lease cars. Leasing a car is a Poverty Habit. Wealthy people don’t lease cars. They purchase their cars and will drive them as long as the engine holds out.
  • 44% of the wealthy purchased a used car in the last five years. Wealthy people purchase and take good care of their cars. Purchasing a new or used car and owning it for the long term is much cheaper than leasing a new car every three years. The savings can be as much as $2,000 a year. If you want to walk in the footsteps of the wealthy begin by purchasing your cars.
  • 16% of the wealthy gamble on sports at least once a week vs. 52% of the poor. 9% of the wealthy play the lottery every week vs. 77% of the poor.
  • 100% of the wealthy save for retirement vs. only 19% of the poor
Thomas C. Corley About Thomas C. Corley

Tom Corley understands the difference between being rich and poor: at age nine, his family went from being multi-millionaires to broke in just one night, due to a catastrophic fire that destroyed his Dad's thriving business. For fourteen years they struggled with poverty. There were eleven in Tom's family, and they lived in constant fear of losing their home.

Driven by the desire to unlock the secrets to success and failure, Tom spent five years studying the daily activities of 233 rich people and 128 poor people. He discovered there was an immense difference between the habits of the rich and the poor. During his research he identified over 300 daily activities that separated the “haves” from the “have nots.” Tom decided to write a book to share what he learned. That book, Rich Habits: The Daily Success Habits of Wealthy Individuals (1st Edition), went on to become an Amazon Bestseller in the United States forty times over a three year period. To give you some perspective, in order to be a true Amazon Bestseller in the United States, where you actually receive a specific Bestseller designation from Amazon, you need to be in the top 100 of all books sold by Amazon in the United States in a given day. Rich Habits did that for nearly thirty straight days, rising as high as #7, eclipsing such Bestselling authors such as Stephen Covey, Robert Kiyosaki and J.K. Rowlings. Imagine that - an unknown, first-time, self-published author selling more books than J.K. Rowlings!

Tom now travels the world, sharing his Rich Habits and motivating audiences at industry conferences, corporate events, universities, multi-level marketing group events, and global sales organizations’ presentations and finance conferences. He has even spoken on the same stage with famous entrepreneurs and personal development experts, such as Sir Richard Branson, Robin Sharma, Dr. Daniel Amen, and many others.

Tom has shared his insights on various national and international network, cable, and Internet television programs such as CBS Evening News, NBC News, Yahoo Financially Fit, Money.com, India TV, News.com Australia, and a host of others. He has been interviewed on many prestigious nationally syndicated radio shows, including the Dave Ramsey Show, Marketplace Money, and WABC.

Tom has been featured in numerous print magazines—such as Money magazine, Inc. Magazine, SUCCESS Magazine, Entrepreneur magazine, Fast Company magazine, More magazine, Epoca Magazine (Brazil’s largest weekly) and Kiplinger’s Personal Finance magazine—and various online publications, including USA Today, CNN, MSN Money, SUCCESS.com, Inc.com, and the Huffington Post. Tom is a frequent contributor to Business Insider, Credit.com, Bankrate.com and a few other media outlets.

National publicity has garnered international media attention for Tom and his Rich Habits research spanning 23 countries. Broadcast media, online publications, and television throughout Asia, the South Pacific, Europe, the United Kingdom, and Central and South America have shared his powerful message.

In an effort to help parents, grandparents, teachers and adults become success mentors to the younger generation, Tom released his second book, Rich Kids: How to Raise Our Children to be Happy and Successful in Life in 2014. This book was the self-help category winner of the 2015 New York Book Festival and Runner-up in the prestigious 2015 Writer’s Digest Self-Published Book Awards Contest. In 2016 Tom released his third book, Change Your Habits, Change Your Life. This book provides the latest science on habit change as well as more of Tom's unique research on the specific habits that helped transform 177 ordinary individuals into self-made millionaires.

Besides being an author, Tom is also a CPA, CFP, and hold a master’s degree in taxation. As president of Cerefice and Company, CPAs, Tom heads one of the premier financial firms in New Jersey.
 
Phone Number: 732-382-3800 Ext. 103.
Email Tom
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