Do you know that most millionaires today are self-made millionaires, or those who are called first generation millionaires. Those millionaires are the ones who made it to the top without getting much inheritance from their parents.
So, how did those self-made millionaires grow their wealth?
They grew it like any one of us would; they worked hard, got multiple sources of income and of course, saved their hard-earned money.
That’s right. Despite having a huge amount of net worth, some of them still know how to save money.
Maybe some of these millionaires are better than you when it comes to saving money. Now, there’s only one way to find that out, right?
10 Ways That Millionaires Do To Save Money
They pay themselves first
What do you do first when you receive your paycheck?
Do you spend first and let the remaining be your savings, or do you save before you spend?
If you’re spending first, then maybe that’s one of the reasons why you are having trouble saving your money.
How could that be?
It’s because you’re doing it the wrong way, you must do it the other way around, and save before you spend. You must pay yourself first before you pay your bills or buy something you need.
Paying yourself first before spending will make sure that you have a good amount of money saved every month. You can save at least 10% of your monthly income for starters and use the remaining 90% to cover your monthly expenses.
You can even save more depending on the budget that you have set up.
Millionaires follow a budget
Even millionaires know that having a budget is important for them to organize their finances properly and find out where their money are going to. They want to know if they are utilizing their money well. All because they hate to see their hard work go to waste.
Live below their means
Most millionaires don’t like to brag their net worth, and show off to other people. I learned this from the book that I recently read: The Millionaire Next Door. Here’s an excerpt from that book on how typical millionaires like to spend on their suits.
First, Johnny, Mr. J.G., from our audience wants to know: “What’s the most you ever spent for a suit of clothing?”
“The most I ever spent…the most I ever spent…including the suits bought for myself and for my wife, June, and my sons, Buddy and Daryl, and my girls, Wyleen and Ginger…the most I ever spent was $399.” said Johnny.
That’s right. Not all millionaires buy expensive clothing, some just don’t see the point of spending too much on a single suit.
Note: The book was written in 1996, so the price of the coat is not that accurate. Anyway, the book just wants you to know that even millionaires know how to live below their means, that’s why you should too.
Millionaires have a good credit score
Millionaires are not fond of borrowing money, unless it’s something they would need and benefit from like starting another business or expanding their business, they wouldn’t apply for a loan.
That’s one of the why they can get their application approved easily. Another one is because they have a high credit score that makes them a low-risk investments to most lending companies.
Millionaires have their own investment portfolio
Millionaires invest their money. They know that getting an ordinary savings account to help them in growing their saved money is not a smart decision. They chose to be investors because millionaires know that it’s the best way that they could do to grow their wealth over time.
Investing is also one of the reasons why millionaires don’t have to work so hard for years and are able to retire comfortably without any worries about their finances.
Millionaires know how to take care of their things
People who take care of their things are the ones who are able to save more money because they don’t have to buy the same thing over and over again. A good example of a thing that should be taken good care of by anyone who has one is a car.
Having a car is a great thing, right?
Of course, it is. The only thing bad about it is once you purchase one of your own, it will only decrease in value. That’s why you shouldn’t be buying a new car every year or two and sell it. You wouldn’t be able to get the value that you paid for it if you’ll just use it for a couple of years.
You must take a good care of what you have now, so that it will again take several years before you make another car purchase. Not buying a car every year means you’ll be able to use your saved money on other important things in life like your child’s education or for your retirement funds.
Well, this is not only applicable to automobiles, but also to every material thing that you have.
You don’t need a garage full of cars. Unless, you’re a well-known NBA athlete or actor who wants to show off to their fans what their salary has got them, then you don’t really need to have dozens of brand new and luxury cars.
Warren Buffett, one of the top ten richest men in the world today, drives only one not-so-luxurious car. A Cadillac DTS that he bought six or seven years ago. Now, that’s frugality at its best, isn’t it?
Having only a single car for your family also means you are helping save our planet by not polluting our air too much that families with multiple cars do, and at the same time you can save more money on gas and car maintenance.
Millionaires pick the right partner
Getting divorced can be very costly for some, and sometimes your ex-wife or ex-husband could get everything that you worked for with the help of a great attorney.
What’s the best thing you can do to avoid that?
It’s to find the right lady or a man to marry, and be with each other for the rest of your lives. Don’t tie the knot with someone you’re not compatible with, especially when it comes to your finances because it might end up into a disaster when you two begin living in a single household.
Always remember that marriage shouldn’t be rushed and must be taken seriously by both parties involved.
My professor once told me that before you get married you need to think it all over again a hundred times, that’s what he did, and he and his wife are married for 22 happy years now, all because they were perfect for each other.
Do family planning
Having a child can be quite expensive, and it’s going to be more expensive as he or she or they grow older. Just think about it if you’re going to have a lot of children, but you only got one source of income.
Do you think you’ll be able to provide good care and education to them?
I think you would not. That’s why you need to know the number of children that you could possibly have that your household’s income can sustain and not follow the number of children that you really want, especially if you want more than 3 children, sometimes having just two can be costly for some couples too.
But don’t worry about that, if you really want to have many children, you can still have them, you just need to…
…Have multiple sources of income
You need at least two or three sources of income, or more, whether you want children or not. A good idea that I thought of is to get two sources of income for every child that you have or want to have. That way you will be able to sustain their needs and if your finances allow some of their wants too.
Why do that?
It’s simple, by having multiple sources of income means if you get furloughed, or fired from your job, you can still get some money to be spent on necessary things in life like food, shelter/rent/mortgage, and of course, some of your essential household bills (e.g. water and electric bills).
It’s also a good way to become rich, because most wealthy people in the world don’t rely on a single source of income. They have many that’s why they were able to accomplish their life goals and are capable of having any number of children that they want.
Millionaires are not that different from us. They’re just people who know how to value their money and use them properly. Oh yeah, they are also way richer than some of us. So, that’s that.
Now, have you done some of these money saving ways that millionaires do? What are those specifically?
Photo Credit: IsaacMao