From Jennifer Lawrence to Mark Zuckerberg, 11 billionaires who like to live frugally
- Author of ‘The Next Millionaire Next Door’ identifies six ‘wealth factors’ that help you become rich
Many millionaires and billionaires have something in common aside from having a high net worth: they are frugal.
It’s this characteristic that helped them become rich in the first place, according to Sarah Stanley Fallaw, director of research for the Affluent Market Institute. She co-authored The Next Millionaire Next Door: Enduring Strategies for Building Wealth, for which she surveyed a number of millionaires in America.
To identify characteristics that are the most predictive of net worth, Stanley Fallaw conducted two studies that included a group of individuals with a net worth ranging from US$100,000 to US$1 million and a group of high- and ultra-high-net-worth individuals.
I was raised to have value for money, to have respect for money, even though you have a lot of it
She found that six behaviours, which she called “wealth factors”, are related to net-worth potential, regardless of age or income. One of those is frugality – a commitment to saving, spending less, and sticking to a budget.
That is not surprising when you consider the habits of some of the richest people: Warren Buffett is notoriously frugal, and Richard Branson has previously said that displays of wealth embarrass him. The same extends to some A-list celebrities who rake in millions for their movies and TV appearances.
One of those behaviours, frugality, came up several times during the research – many of the millionaires she interviewed stressed the freedom that comes with spending below their means.
“Spending above your means, spending instead of saving for retirement, spending in anticipation of becoming wealthy makes you a slave to the pay cheque, even with a stellar level of income,” she wrote.
Several of the best-known millionaires and billionaires built wealth by living frugally – a habit they continue after becoming rich.
Consider Warren Buffett, who is worth US$82.8 billion and is the third-richest person in the world. Not one for lavish purchases, he spends relatively little money.
