There are all sorts of sayings out there, pushing you to buy goods, expensive clothing and to really live beyond your means. You’ve probably heard the “dress for the job you want, not the job you have” many times before. In reality, this saying is more about prepping your mind to think like an executive when you’re working in the mailroom, not to actually dress like one while sorting letters. But what do the most successful individuals do? How do they spend their money and what sort of money habits do they practice? After all, they have all the money, so doesn’t it mean they will spend it as well? Not exactly.
Here are several of the top money habits of the most responsible and successful people in the world.
Live Beneath Your Means
Warren Buffett is one of the wealthiest individuals on the planet. However, he still lives in the same house he purchased decades ago while driving an older model Cadillac. He understands there isn’t an inherent need to go out and purchase something larger and newer just because he can. Realistically he could go out and purchase just about anything he wants without much of an issue, but he understands these kinds of purchases are not important. He still lives a comfortable life, but it is well beneath his means.
Another prime example is Steve Jobs. Look at what he would wear on stage during product releases and presentations. He didn’t outfit himself in the latest styles or extremely expensive clothing labels. He wore his customary black turtleneck, cheap brand jeans and white sneakers. His entire outfit cost less than an iPod Shuffle. Most people purchase material such as cars, clothing or homes not necessarily for themselves, but to show off to others. These purchases are seen as status symbols. The next time you’re looking at buying something, consider whether you’re doing it for yourself or for someone else. If you’re buying it to impress someone else you need to stop. Live beneath your means. While others are swallowed up by debt (but look good doing it) you’ll see your personal wealth grow.
Don’t Keep Up With the Jones’
This goes hand in hand with the previous point. There is often an arms race when it comes to the latest and greatest. It is why Apple continually roles out iPhones every single year, even though very little actual change with the phone. People want to buy the latest, despite the latest not really adding to their quality of life. It is why people lease cars instead of buying them. They want the ability to go in and select the newest car every other year, even though leasing a car ensures a continual bill for something they will never own.
Mark Zuckerberg created Facebook (or at least, he helped created it and managed to push it to the forefront). His net worth is constantly shifting, but with hundreds of millions of dollars at his disposal, he isn’t strapped for cash. However, he drives a VW GTI, which costs about $30,000. This isn’t the only example though. Most of the wealthiest people in the world do not go out and try to purchase the most expensive items in order to compete (granted, if someone sees Warren Buffett on the street they will know there’s no possible way to compete with him financially even if they wanted to). Another example is Bill Gates. The man could buy the entire Rolex company if he wanted to, but instead, he wears a $10 watch. It does what he needs it to do and that is that. He understands there is no need to keep up with the Jones’ and always need to purchase the latest and greatest. He uses what works for him. You need to do the same. Yes, the newest car may look great, and there are some incredible advancements in home appliances, but just like the first point, you don’t need to go out and buy material just because everyone else is. This is a recipe to draining your bank account and racking up the debt.
Pack a Lunch
It sounds pretty simple, right? Make a lunch and bring it to work with you. It is straight forward advice and yet it dives much deeper into the financial stability of the wealthiest and most successful individuals in the world. It isn’t just about making a lunch at home. It is not spending money unnecessarily. Charlie Ergen is the CEO and founder of Dish Network. He, much like Warren Buffet, has lived in the exact same house for the last two decades. He also packs a lunch and brings it to work with him every day.
Does packing your own lunch every day really make a difference though for your own financial goals? Yes, it really can, especially if you apply it to more than just a sack lunch. Packing a lunch might save you $100 a month (or more) over eating out for lunch at work every day. Now, consider making your own coffee in the morning instead of buying it at Starbucks on the way to work. There is almost always a way you can enjoy what you like, without spending more for it. You can use this mindset for everything from the cable channels you likely don’t need to drinking home tap water instead of bottled water. So don’t just look at Charlie Ergen and other executives as packing a lunch to save a few bucks a week. Look at it as a concept and apply it to your own life. You’ll likely see a drastic improvement in the amount of money you have to invest, put into a business venture or to set aside for retirement (Time, 2017).
You’re Not a Bank
As you begin to grow your wealth through smart investing and an excellent business strategy, there is one hard truth you’re going to quickly discover: people will see you as their personal bank. Whether friends or relatives, there will be those who come out and ask you for money because they know you have it (or assume you have it). You may have a difficult time saying no to them. After all, you have the monetary means to assist and they are your friend. But the problem with this is, outside of very specific circumstances, if someone takes money from you, they may never pay it back, and the chances of them returning to ask for more money increases.
You are not a personal bank to your friends and family. You have worked your tail off to make it. You’ve put in the hard work and, chances are, you’ve failed your share of times but refused to give up. You didn’t take hand outs, nor did you ask for them, so you expect the same from others. One of the fastest ways to seeing your personal financial goals disappear is to begin handing out all of your money to others. It is the common lottery winner problem. Someone wins the lottery and suddenly has a large amount of cash at their disposal. They are not used to having this kind of money so they really don’t know what to do with it. People then come out of the woodworks and begin to ask for money. After all, the lottery winner now has several million dollars and could afford to pay out a couple hundred thousand here and there. This is a major reason as to why most lottery winners end up with nothing after a few short years. They let people treat them like their personal bank.
Many of the most successful and wealthiest individuals in the world don’t just provide handouts. However, that doesn’t mean they never give money. Perhaps a friend is looking to start a business. You can use this opportunity to look into their business idea and, potentially, use the money you give them as an investment. This way, while you are helping them out you may end up with greater returns in the long run. If you do decide to offer money, make sure there are very specific conditions and stipulations, because giving money to friends and family members is one of the fastest ways to destroying an important relationship.
Begin as Early as Possible
It is true many of the most successful individuals and CEOs around the world begin their workdays earlier than everyone else. However, that is not what we’re discussing here. Instead, in regards to your financial status, the earliest you begin setting money aside for retirement the faster you’ll be able to retire. Whether it is contributing money to your IRA or other retirement investment accounts, the wealthiest people on the planet begin by putting money into these accounts.
Not everyone is going to end up a multi-millionaire. If you have a great business venture, an excellent support staff, and the drive to accomplish it than there’s nobody to stop you. However, there are some fields and jobs where you just won’t make this kind of money, which is perfectly fine. Not everyone wants to be a millionaire. They just want to live a comfortable, happy life with their family. Most billionaires like Bill Gates have their retirements mapped out for them. They’ve had money in their retirement accounts for several decades and have simply added to it with the more money they’ve managed to earn. Regardless of what you’re hoping to accomplish during your lifetime though, it is essential to start saving for retirement as soon as possible. Even if it is only a few dollars a month to start, a little is much better than nothing (MarketWatch, 2016).
Invest In Yourself
There will come a time in your life (if it hasn’t already come) where you have an idea. You know it is a great idea or you have a dream and you know you can accomplish it, but nobody else really believes in you. Your friends may doubt you, your family doesn’t support you and you are more or less left isolated on an island. This can be an incredibly lonely feeling. You have a passion that nobody else supports. You could give up and just go the route of everyone else, or you can believe in yourself and invest in yourself. The most successful people in the world at some point in time had to invest in themselves (at least those who didn’t inherit their wealth from their parents).
There are many ways you can invest in yourself. It might be as simple as purchasing a self-help book that outlines the different steps you need to take in order to be successful. You may need to pay a coach or move across the country to a location where your desired job is located. At some point, you’ll need to put your money where your mouth is. Even if it isn’t a ton of money, investing in yourself can put you in initial financial trouble. But the thing about it is if you don’t believe in yourself, how can you expect anyone else to? Individuals such as Steve Jobs and Bill Gates helped create their companies from the ground up. The head of Dish Network grew up in a family that pinched every penny because his parents lived through the Great Depression. So if you have a passion and a goal, do what others around you won’t do and invest in yourself. It may be the only way you actually achieve what you know you can accomplish in life (Entrepreneur, 2016).
When it comes to money and money management, the rest of the world will tell you one thing, but chances are the habits of those with power and success do something completely different. From living beneath your means to not keeping up with the Jones’, you don’t need to go out and spend, spend, spend. Much of what everyone spends their money on doesn’t actually help their bottom line or financial well-being. The sooner you begin to incorporate these successful habits into your own, personal financial structure, the sooner you’ll see your own spending power and personal wealth grow.