Frugal Spending Habits of Self-Made Millionaires

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I’ve been studying the daily habits of the rich and poor since 2004. I’ve gathered an enormous amount of data on both groups and this data has been reported on by the media in 27 countries around the world.

The habits of the self-made rich are not exactly what you might think. You see, I discovered in my research that there were four different paths that self-made millionaires took in the pursuit of wealth: the Saver-Investor Path, the Big Company Climber Path, the Virtuoso Path and the Dreamer-Entrepreneur Path.

Each path has different requirements, different personality traits and different Rich Habits.

I did my best to share many of my findings in my various books.

With respect to the Saver-Investor Path to Wealth, the one most commonly pursued by self-made millionaires by the way, I identified some unique frugal spending habits that enabled these Saver-Investors to save and invest 20% or more of their net pay:

• 8% shopped at Goodwill stores.
• 20% used coupons.
• 64% said they bought and lived most of their lives in a modest, middle-class home.
• 28% mowed their own lawn to save money.
• 44% only purchased used cars. Typically, these were cars coming off either two or three-year leases.
• 19% managed their investments themselves – they did not solely rely on financial advisors in order to invest their savings, although many of these 19% did have financial advisor, whom they used to obtain feedback on investment decisions.
• 60% said they were frugal with their money on a daily basis. In other words, being frugal was a habit.
• 81% only used credit cards that came with reward dollars. This way they could get something for free.
• 41% spent less than $3,000 on their annual vacation.

Some of these spending habits, to me at least, are shocking because they seem incongruous. Such as shopping at Goodwill stores, or using coupons, or purchasing only used cars. Why would the rich bother with these things when they have more money than they can spend in their lifetime?

The answer is because habits are hard to break. Even Warren Buffet admits that he’s frugal with his money. He prefers eating at home every night because, well, that’s much less expensive.

You see, these frugal spending habits of the Saver-Investor self-made millionaires were forged in the very early days, long before they became rich. And, like any habit, frugal spending habits stick with you forever. Even for rich people who no longer need to be frugal.

Tom Corley is an accountant, financial planner and author of “Rich Kids: How to Raise Our Children to Be Happy and Successful in Life”, Effort-Less Wealth, Change Your Habits Change Your Life, Rich Habits Poor Habits and “Rich Habits: The Daily Success Habits of Wealthy Individuals.”