18. Inflated Interest Rates
A better credit score may result in paying many thousands less in interest for a mortgage, car loan, or other form of credit. In fact, as of April 2017, the average FICO score in the US has hit an all-time high of 700. People who have money and are successful understand that it’s important to have a great credit score because this is part of what determines the rates you pay. A good score can translate into savings of hundreds, or even thousands, of dollars over the life of a loan, while a bad score can literally cost you in inflated rates—or leave you out in the cold completely.
To keep good credit, wealthy people are likely to value the importance of on-time bill payment, rectifying mistakes in their credit reports, and maintaining low levels of debt. If you have a halfway decent credit history and are carrying a balance, give your credit card issuer a call to request a higher limit. This reduces your credit utilization rate, so there’s a possibility it could bump up your score. Might as well ask if they’ll lower your rate at the same time; the less money you’re sending in interest payments, the more will go toward paying down your balance. Wealthy people understand that high interest rates can be avoided with some financial intelligence.
17. Extended Warranties
We’ve all been there. You buy a flat-screen TV and, next thing you know, someone is trying to talk you into an extended warranty. Most financial experts, including Dave Ramsey, say that the rich generally don’t even bother with these offers. All arguments aside, though an extended warranty sounds like it would provide extra protection, very seldom do they offer value for your dollar. Rather, they tend to simply bloat retailers’ profits, with Consumer Reports noting that stores keep about 50% or more of what you pay for these warranties.
Successful people avoid this cost by researching big purchases. They know that most products come with a warranty from the manufacturer that is good enough, and extended warranties are usually useless. So before you buy an extended warranty, check what the manufacturer covers, as you might just find that it covers more than you expected. Also compare what it might cost you for out-of-pocket repairs to the cost of an extended warranty. Most of the time, forgoing the extended warranty is the wise financial move.
📘 Free Downloadable Resource: Don’t forget! At the end of this article, I’ll be offering you free access to a collection of must-read books for anyone serious about building wealth.
16. Luxury Homes
The rich don’t invest in lousy real estate because they realize that not all properties are bound to appreciate. Consider the case of billionaire investor Warren Buffett. He still lives in the Omaha, Nebraska house he bought for $31,500 in 1958. Although he did splurge on a vacation home back in 1971 when he bought one for $150,000 in Laguna Beach, California, and in 2017 he put it on the market for $11 million, thereby potentially netting himself a profit of $10.85 million. But not everyone will be as lucky as Buffett is regarding real estate.
Author and entrepreneur Tony Robbins believes that, for Millennials, property should be thought of as an income engine rather than just somewhere to put down roots. Real estate can generate its own wealth if you approach it strategically. Consider, for example, Robbins’ Namale Resort and Spa in Fiji. That’s not just a vacation destination—it has a great revenue stream, charging between $1,244 and $2,500 a night for an all-inclusive stay.
The point is that the wealthy invest not just in real estate, but wisely in real estate that generates them income, and stay away from illiquid deals that leak wealth.
15. Expensive Brand-Name Clothes
While it is true that designer labels connote riches, many affluent people have no desire to fritter away their money on costly luxury brands for every purchase. Despite the fact that they could buy qualitative attire, they know and understand quite well that expensive does not always mean better. Financial expert Leslie Tayne shares, ‘Financially successful people compare shops and understand the importance of both quality and cost.’ They may buy a less expensive item or select key high-quality pieces from less expensive stores so that they can make the smartest financial decision.
So what do wealthy folks wear? Well, it varies all the time. For instance, ex-First Lady Michelle Obama used to dress in the best of designer attire, but she also wore Target attires when her husband was in office. If you’d love to emulate the rich spending lifestyle, ask yourself if that $200 jeans pair from a designer outlet is something you should spend on or if that average $30 one from a discount store will do as good. Shop smartly: Go with a sense of what you are going to buy and how much you are willing to spend, not looking for labels to decide how you are going.
14. Extravagant Inheritances
Many affluent families support their children’s education and housing but do not tend to consider it a value to leave them substantial material heritage. According to the poll conducted by Personal Capital, only 18% of wealthy parents with assets of over $500,000 would prefer to pay the rent for their children in full, and 14% are prepared to provide assistance in buying a house. Nevertheless, most of the wealthy individuals would not provide lifelong maintenance for their children.
This is considering the genre where most millionaires and billionaires have pledged a large percentage of their money to be passed on to some charitable causes and thus do not give it all to their children. For example, Bill Gates plans to leave the greater share of his fortune to the Bill and Melinda Gates Foundation rather than to his three children. At the same time, Facebook founder Mark Zuckerberg and his wife Priscilla Chan pledged to give away 99% of their shares in Facebook to charity within their lifetimes — although that is while raising two daughters.
Wealthy families are attempting to establish a tradition of giving more than a transfer of large amounts to the next generation.
13. Video Games and Televisions
Adults in higher income households also tend to spend much less time in front of screens compared to lower-income counterparts, especially when it comes to video games and TV. If anything, 2015 Nielsen data showed that adults in homes making less than $25,000 a year played video games for an average of 42.22 minutes each month whereas those in homes making over $75,000 played just 17.58 minutes of video games monthly.
📘 Free Downloadable Resource: These aren’t just any books; they are the most recommended reads by the wealthiest people in the world. Download them today !
The trend is not dissimilar in the case of television: an adult in a lower income household would, on average, have been watching live or recorded TV for 211.14 minutes per month, compared to just 113.42 for an adult in a higher income one. That’s over three 30-minute TV episodes that richer people spent doing something more worthwhile with their time. If that’s what you want to follow in the effective and successful people, cut down on screen time to do more of results-producing activities that can in any way develop you personally or financially.
12. Impulse Purchases
We’ve all felt the pull of impulse buying; going into the store for one or two items and coming out with a cart full of stuff that we really hadn’t intended to buy. Be it a special offer or spending more than we should, impulse purchases are not generally seen as the behavior of the wealthy. For the most part, the affluent are calculated planners, and shopping with no rhyme or reason doesn’t fit into their financial game plan.
Become more purposeful with your spending. Leslie Tayne, author of Life and Debt, counsels using cash to help control impulse purchases. ‘Use the envelope system and bring only a predetermined amount of money to each store,’ she advises. In that way, you are likely to be on budget, preventing any desire to overspend. To the point, even Warren Buffet values thinking and, if needed, even the exercise of reflective spending. He has famously been quoted as saying, ‘I insist on much time being spent, almost every day, to sit and think. I do more reading and thinking and make fewer impulse decisions than most people in business.’
Therefore, the takeaway from this would be to plan in advance and never make impulsive purchases—a habit of successful finances.
11. Autopay Services
Although autopay can simplify your finances, it can also make it almost too easy to lose track of where your money is going. Paying bills automatically may seem convenient because you’ve got them ‘set it and forget it,’ but that approach can help disconnect your spending habits. Without making a point to actively monitor your account, you very well could be in trouble if more money is flowing out than coming in.
We see that this class of people is diligent in tracking the transactions they make. By paying with hands and tracking their expenses every month, wealthy individuals enable themselves to control the outflow. People who are successful financially often write everything that was spent in a month so that they can set a budget for themselves, enabling them to trace and limit expenses. Without this level of awareness, over-spending becomes more likely, setting up financial troubles in the future.
In other words, being intentional and deliberate about what your money is doing can save your financial stability from the pitfalls of autopay.
10. Cable Costs
Cable TV providers often boast of keeping prices low, but then proceed with hidden charges such as for broadcast networks or sports channels, which quickly jack up your bill. Those costs add up, but the good news is that most cable companies are willing to negotiate. Garrett Gunderson, founder of Wealth Factory, reports that he was able to reduce his cable bill from $270 a month to $100 just by calling to cancel and haggling.
If you feel like your cable bill is spiraling out of control, look deeply into what, exactly, you are paying for. Pinpoint the stations that you consistently watch and those that you don’t. Renegotiate a package that is tailor-made to your viewing habits. You may also be paying for some extras that you do not need; for example, you might be paying rental fees for boxes or modems when you should just buy your own equipment and recoup your investment within a few months.
A good way to cut down on expenses and not on what you enjoy watching is through negotiation or reduction of non-essential services.
9. Prepaid Cash Cards
It may sound like the greatest idea for a newbie in a distant land, but mostly these have not-so-obvious costs. ‘Almost all prepaid cards come with activation fees, swipe fees, or monthly maintenance fees,’ says Steve Wang, a certified financial planner. That all seems like not very much at first, but after some time, they could start to pile up and chew into your funds.
If your preference is definitely the prepaid card, by all means, watch out for those that have no fees; most of them. Wang says one should use the card only when absolutely necessary and make sure you’ve read the fine print and understand just how much it might cost in fees. Prepaid cards won’t be seen as a daily support for the payment of bills from people who are wealthy, and perhaps rightfully so. If you must use one, then make sure you’ve done your homework to avoid paying unnecessary fees.
Not paying all of those extra fees on prepaid cards is one smart way to keep a few extra dollars in your pocket.
8. Overdraft Fees
Overdraft fees are the good kind of fee: avoidable but for a good price. You overdraw, and you might get hit with over $30 in fees. As financial expert Drake shared, there’s a way to avoid that. You can set alerts up with your bank that will let you know if your balance is getting low.
Another option is to decline overdraft protection. This means your debit card will be declined for a purchase that’s more than what you have in your account, so you can’t accidentally overdraft. Plus, most banks will extend a grace period or waive an overdraft fee once a year if you call them up and ask. Monitor your balances, and use all these features to avoid stupid fees.
Successful people do not pay such fees because they are always aware of what is happening with their finances; so can you. Small solutions, like alerts or opting out of overdraft protection, go a very long way in keeping you financially healthy.
7. Rich People Use Cash or Checks
Credit cards, as it turns out, are not the preferred method of tender for high-net-worth individuals and stealthy savers. Previous research has demonstrated that people shell out a lot more when forking over with credit cards than if they used cash. According to Gallup, the average cash transaction is $22 and for non-cash payments it’s $112! What that significant difference shows is how using credit can encourage some to overspend.
📘 Free Downloadable Resource: Don’t forget! At the end of this article, I’ll be offering you free access to a collection of must-read books for anyone serious about building wealth.
Cash, or even worse, a check — it takes so long to process that brain delay is often enough to keep you from making the purchase. Just add those in the cash envelope and also that will give you a guideline to stick on when spending. Set aside an earmarked amount of cash for discretionary spending and keep it in your wallet, drawer, or envelope. When the money’s gone, you have reached your weekly/monthly limit.
This will help you to limit expenses and is a very disciplined practice among many financially secure people. If you use cash or checks, you will more than likely spend less and stay within budget.
6. Saving Over Spending
This habit may seem like a no-brainer, but prioritizing saving over spending is one of the richest-oriented habits. Consumer finance expert Andrea Woroch says, “Instead of rushing to spend they first pay themselves by putting savings into a retirement account or other self-directed savings account.” It may not seem gratifying because you don’t have the cash in your hands, but months or years later, seeing how much you’ve saved up is a decent compensation to not having to worry about debts.
Rich people understand the importance of saving for your future, in particular your retirement. They work to make sure they have a pension that can support them for the rest of their days. Move saving up the priority list before any spending spree, and make sure you are putting enough money aside to your budget for other expenses like bills, groceries, and the rest of the essentials.
This is a very sensible and thoughtful way to save money; it also guarantees you have some financial security for the future. This is one of the things rich people do with their money that allows them to stay rich.
5. Rich People Use Coupons
The rich even search for ways on how to save money, and being moderately frugal really helps them maintain their wealth. Frugal people don’t have too much pride to use a coupon, scour the ads for the best price, or compare all of their options before making a purchase. Rich people do not make impulse buys, and neither should you.
Andrea Woroch adds, “Those who are good savers will consider every purchase and investigate alternatives (buying used products, shopping competitors for better pricing, or using a coupon to bring the cost down).” Moreover, they go through reviews like these to purchase wisely. Use this as an example to download a coupon app and see if you can get one for the next purchase before making it. Every little bit helps, and even the wealthy understand that leveraging their purchasing power can be a very smart decision.
4. Learn How to Reduce Bill Costs
You don’t need to make big changes to start saving on your household bills—small tweaks can make a big difference. For example, simply turning off the lights when you leave a room or unplugging devices you’re not using can quickly lower your electricity bill. Being mindful of water use can also help. Try taking shorter showers and turning off the faucet while loading the dishwasher. Even keeping a water bottle or pitcher in the fridge means you won’t need to run the tap for cold water, which saves time and resources.
It’s also a good idea to check your home regularly for leaks in faucets, dishwashers, or toilets because even tiny drips can waste a lot of water over time. Adding faucet aerators is another smart tip—they cut water usage without sacrificing performance, which means more savings for you. And don’t forget about your light bulbs. Swapping out your old bulbs for LEDs is an easy win—they last longer, use way less energy, and give off brighter light, so your electricity bill will thank you.
All in all, these simple changes add up and can make a noticeable impact, not just on your bills but also in conserving valuable resources.
3. Avoiding Putting Money Away
It’s pretty shocking, but about 56% of Americans are living paycheck to paycheck, which means millions are just one job loss away from financial trouble. Smart savers understand how crucial it is to put some money aside, even though it can feel tough at first. The amount you should save really depends on your personal situation, but most financial experts suggest having enough to cover three to six months’ worth of essential expenses like rent, utilities, food, and insurance.
Being financially prepared can really help reduce the stress and anxiety that come with living so close to the edge. If saving feels hard, it might be a good idea to take a closer look at your spending habits. Figure out what’s truly necessary and where you can cut back. Start small if you need to—even putting away a little can make a difference. Over time, growing your savings will feel easier, and the sense of security you’ll gain will definitely be worth the effort.
2. Splurging
Although it may seem obvious, wise financial managers typically refrain from wasting money on pointless purchases. Rich people concentrate on things that have long-term value rather than constantly chasing the newest technology or taking lavish vacations. Until it’s really time for an update, they’ll either continue to use their present phone or remain in a cozy, affordable motel. They truly understand the value of making prudent purchases and investing in long-lasting items.
When it comes to your personal expenditures, make an effort to prioritize purchasing long-lasting items and avoid purchasing items that depreciate or break readily. Before making significant purchases, it’s usually a good idea to do some research and give it some thought.
1. Rich People Evaluate Wants vs. Needs
Rich people are great at figuring out what they really need versus what they desire, and they frequently create a concise list to help them prioritize their requirements over wants. Comprehending this distinction is essential for economizing and preventing pointless acquisitions. While treating yourself to occasional self-care for mental health is acceptable, overpaying on unnecessary items can result in financial stress, which has a detrimental impact on mental health.
Consider whether a purchase is actually necessary before making it. Do I really need something, or am I just wanting it? Is there more than one usage for this object, or is it only one? In reality, how often will I utilize it? The wealthy did not get wealthy by making unnecessary purchases. Setting needs before wants is an essential
Congratulations on making it to the end! As promised, here’s your free access to a collection of bestsellers that have been instrumental in the success of countless millionaires. From Think and Grow Rich by Napoleon Hill to The Intelligent Investor by Benjamin Graham, these books will give you the insights you need to grow your wealth. Download them now!
