8 frugal habits to become a millionaire which helped me become and stay a millionaire.
There are approximately 35 million people who are millionaires in the world. As Robert J. Samuelson states so perfectly in The Washington Post, “That’s about 5% of the U.S. adult population (241 million in 2014), or one in 20. Rarefied, yes; exclusive, no.” Though the population numbers have gone up in the past year, they still prove a point. It’s totally possible for you to become a millionaire when you know this 8 frugal habits to become a millionaire.
I personally have been a millionaire several times in my life. I’m an entrepreneur and take chances. Sometimes they pay off and sometimes they don’t. The following are a few of the tips that have helped me to become and stay a millionaire over the past couple of years.
While becoming a millionaire rarely occurs overnight, it’s still an achievable dream if you work hard and follow these eight frugal habits.
1. Live below your means.
Do you really need to purchase a McMansion? Do you honestly have to have the latest luxury vehicle in your driveway? While status items like these can be enjoyable, even the extremely wealthy have realized that it’s better to live below your means if you want to extend your wealth.
Take Warren Buffett for example. He still resides in the same Omaha, Nebraska, home that he pitched in 1958 for under $32,000. Buffett is also known for purchasing modest vehicles, like his 2006 Cadillac, which was auctioned off for charity. Apart from having been owned, and signed, by Buffett, the car was described as “nothing special.”
About eight years ago, I started making real money. That doesn’t mean I changed anything in my lifestyle. Sure, I got a few nice things, but I didn’t change the way I lived. This has saved me countless dollars.
2. Never pay full price.
Did you know that households that average an income of $100,000 or more use more coupons than households that earn under $35,000 annually? They also don’t shop at luxury stores like Tiffany & Co. or Brooks Brothers. Instead, they prefer to shop at Walmart, Target, and Home Depot.
The wealthy never pay full price for the items they want or need. (My personal experience is that the ultra rich never pay full price for anything.) I personally like to shop on eBay and Craigslist. This helps me get super-nice quality things for a much lower price. Note: I still don’t buy crap. I purchase nice things; I just don’t pay full price for them.
3. Cut out unnecessary expenses.
There are numerous small ways that you can cut out those unnecessary expenses that will add up over time. For example, how much money have you spent on ATM withdrawal fees or transaction fees when sending or receiving funds electronically? There are multiple alternatives that don’t include these fees.
On a larger scale, you should also create a monthly budget so you can examine where your money is going each month. You may quickly realize that you actually don’t need that cable package that includes every channel. Instead you can downgrade, or cut the cord entirely, and use alternatives such as Hulu, Amazon, or Netflix. If a budget sounds too restrictive to you, try not having the money to budget! Merely keeping track of all of your expenses, however, will go a long way to helping you see what you are spending your assets on.
4. Rent or sell your current possessions.
Do you have a closet full of unused junk or clothes you no longer wear? Do you have a spare guestroom or extra office space? You can make money simply by selling your unwanted items online through Craigslist, eBay, and Amazon, or offline by having a yard sale, visiting a consignment shop, or hosting a closet party. You could rent bedrooms on Airbnb. You can even rent out everything from your office, parking space, car, or even tools when you’re not using them.
As opposed to collecting dust or taking up space, you can sell or rent the possessions you already have to make some quick cash.
5. Leave the cash and plastic at home.
If you leave the house without your credit card and a large amount of cash, you won’t be tempted to purchase items that you don’t really need. In fact, according to US News & World Report, it’s been found that “86% of people who spend cash on luxuries like expensive cars, jewelry, and electronics are nonmillionaires trying to act the part by purchasing luxury brands.”
Instead, follow the example set by T. Boone Pickens. Make a shopping list and carry only the cash you’ll need to make those specific purchases. This way, you aren’t putting yourself into additional debt. Remember, if you don’t have the cash to make a purchase or pay off your credit card, then you probably can’t afford the purchase in the first place.
6. Don’t waste money on ‘get rich quick’ schemes.
There is no such thing as getting rich quickly. This is something the wealthy have realized. According to studies conducted by Thomas C. Corley, “16% of the wealthy gamble on sports at least once a week versus 52% of the poor.” Additionally, “9% of the wealthy play the lottery every week versus 77% of the poor.”
Don’t waste your money on trying to accumulate a large amount of wealth in a short amount of time, because the probability of that happening is slim to none. Instead, invest the money you would have spent into new business opportunities.
7. Go green.
Going green is excellent for the environment. But going green can actually save you some green as well. For example, you could reduce your heating and cooling bills by turning your heat down during the winter and the air temperature up during the summer by just 2 degrees. You could also invest in a gadget like the Nest to help monitor and manage your heating and cooling expenses.
You could also recycle cans and cardboard for a couple of extra dollars, replace energy-guzzling gadgets with newer Energy Star models to cut back on your electric bill, and consider carpooling or taking public transport instead of driving yourself to and from work.
8. Get a side gig.
There are two financial incentives for getting a side gig. The first, and most obvious, reason is that this will bring in additional income that can be used to pay down your debt or placed into savings or investments.
The other reason is that if you’re busy with a side gig, then you’ll have less time to spend the money you’ve earned. For example, if you do web design, tech support, or became a bartender on the weekends, you’re less likely to go out to eat or shop all day. Here are a few tips to earn an extra $500 a month. Every little bit helps.
Now that you know this 8 frugal habits to become a millionaire, it’s time to figure it out and go do it. I have faith and believe in you. If you’re ever lost or need a little advice, I’m here to help!