Many millionaires and billionaires have something in common aside from having high net worths: They’re frugal — in other words, they watch what they spend.
It’s this characteristic that helped them become rich in the first place!
There are countless ways to reduce your living expenses! Figure out what is draining you the most right now, and implement alternatives to cut down on your spenditure!
While non-wealthy people daydream about spending money without worry, buying fancy cars, big houses and expensive clothes, the rich understand that the more money you spend, the less you have. The wealthy wouldn’t stay wealthy long if they spent excessively. No matter how much money you earn, you’ll always be poor if you spend more than you make.
The rich recognise that the less you spend, the more money you have to grow your wealth. Keep in mind that frugality is relative to your income — a wealthy person may spend much more than someone who is considered middle class. But in relative terms, the rich tend to be thrifty, and they make sure they don’t overspend.
Consider the habits of some of the world’s richest people. Warren Buffett is notoriously frugal, and billionaire Richard Branson has previously stated that displays of wealth embarrass him. The same extends to some A-list celebrities who rake in millions for their movies and TV appearances.
Spending above your means, spending instead of saving for retirement, spending in anticipation of becoming wealthy makes you a slave to the paycheck, even with an impressive level of income.
Branson – who’s now worth 3.5 billion USD – has modest roots. He’s frugal when it comes to luxury items, largely because he grew up in a middle-class family. “The idea of having a possession that is there just as pure luxury, and is not actually paying its bills, is something which I’d be embarrassed about,” he says.
You wouldn’t find a lot of expensive artwork hanging in any of his homes. He prefers to buy watercolours at reasonable prices. He also doesn’t spend much on clothes. To Branson, the biggest luxury isn’t money: “If we’re talking about personal luxuries – and the luxury of being your own boss – the biggest reward is the amount of time one can find for family and friends,” he says.
When considering cutting liabilities and multiplying money: it’s worth mentioning that a lot of millionaires and billionaires actually choose not to own houses! Again, this mentality leads back to the middle class post-war learning that you needed to own — which is largely outdated now.
Of course, millionaires and billionaires, quite honestly, can afford to own a house anyway, but of the ones who do — they own small and modest houses! It’s all about the mentality behind their actions — and it benefits them in other areas of their lives, too! Warren Buffett, for example, still lives in the same house he purchased in Nebraska for $31,500, all the way back in 1958. His modest home is 6,570 square feet, has five bedrooms and 2 1/2 bathrooms, and is worth an estimated $652,619.
Think about it. If you buy a house for $1.5M, you have to maintain that house whenever problems arise.
Now, If you decide to sell this house for that $1.5M, with that capital you could go straight to the bank, and land a loan of up to 80-85% for a larger property. You could aim for, approximately, a $7M multi unit property which will offer you so much more, like:
So, really, you could purchase a large multi-unit apartment complex, live in one unit yourself, and rent out the rest.
The same thing goes for new, young homeowners who are thinking about buying their first home. You should locate a buy that has a separate rental unit with a separate entrance; or at least buy a house that is suitable for creating such a unit. A unit can, in most cases, cover around 50-90% of your monthly loan payments! Winning.
Just some food for thought for your Monday. 💭👌
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