The Truth About Frugal Millionaires

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The next-door neighbor who lives in the same modest-style house as you do might be a millionaire. That’s because even though “frugal” and millionaire may seem like an oxymoron, it’s what propels some people toward riches.

Many millionaires are living good lives with all their needs met. So, how do these millionaires grow their wealth while meeting these needs? Are they penny pinchers, or do they have a plan?

Frugal vs. Cheap

There is a difference between frugal and cheap. Frugal is economical when using money or resources. Cheap is buying lesser quality goods or not spending at all.

A frugal person will purchase quality good, but wait for a sale. A cheap person will buy the least-expensive item without considering quality. Cheapness uses price as a bottom line, whereas the frugal uses value as a bottom line.

Both a frugal and cheap person want to save money. But a frugal person won’t do it at the cost of others. With frugality, the bigger picture is assessed. It comes with the patience to cash in on simple saving strategies.

And, finally, cheap is about spending less, while frugal is about prioritizing spending.

Don’t Keep Up With the Joneses

Frugal millionaires don’t care about keeping up with the Joneses. They ignore what others think or do. So, when their friends buy that 4,000-square foot home, the millionaire is happy with their 2,000-square foot home. There aren’t any comparisons made with a frugal millionaire.

The frugal millionaire knows that things won’t make them happy. Warren Buffet, worth roughly $90 billion, still lives in the home he bought in 1958 for $31,500.

It’s a lost cause to keep up with others. And in the end, it doesn’t matter.

Live Below Means

A frugal millionaire lives below their means. You don’t get rich by spending money. Some people are savers, and some people aren’t. But even if you aren’t a saver, you can still avoid living beyond your means. Like a frugal millionaire, you can develop habits over time. You become ingrained with the practice of living below your means.

By avoiding buying the flashiest car or the biggest house, you avoid living from paycheck to paycheck and can invest the payment you would have been making.

Avoid Debt to Be a Millionaire

One myth that millionaires have is that they leverage debt to invest. Although some do, the truly frugal millionaire prefers to be debt free.

Frugal millionaires don’t use credit cards to finance their lives. They only spend what they have when they need to spend. This doesn’t just go for the mega-rich but also for the everyday American who has accumulated $1 million over their lifetime.

A savings that many millionaires take advantage of refers to cars. They tend to buy used vehicles and keep them for a long time. Buffet drives a 2014 Cadillac XTS, while billionaire Jim Pattison of Canada has a 2019 Dodge Ram 1500 Laramie truck.

Millionaires Late in Life

Many millionaires look at money as a tool. It’s not the end all—it’s just a vehicle to help them get where they want to be as they age. They don’t neglect the tool, but they don’t worship it.

This is a lifetime commitment. Sixteen percent of millionaires achieved this status between the age of 46 and 50, and 28 percent were between 51 and 55. The biggest number, 56- to 60-year-olds, came in at 31 percent. In comparison, 21 percent of millionaires became wealthy after 60.

The first million dollars takes the most work. Millionaires work hard, long hours. They have good jobs that go hand in hand with living frugally. But, ultimately, it’s not as much about income as it is about saving and investing. Spending excess money on “things” is not an option.

Billionaires Who Are Frugal and Why

Billionaire Sir Richard Branson, worth roughly $6 billion, came from a middle-class family. He prefers to live a frugal lifestyle.

He’s been known to comment that he’s embarrassed to have a possession that is pure luxury and is not paying the bills.

Charlie Ergen, former CEO of Dish Network and worth $12 billion, brown-bagged his lunch to work. It consisted of a sandwich and Gatorade. Ergen grew up during the Great Depression.

And, regardless of his politics, Meta CEO Mark Zuckerberg, with a net worth of $80 billion, wears a T-shirt, hoodie, and pair of jeans daily. He’s also been seen with his wife shopping at Costco.

Actress Jennifer Lawrence was born to the middle-class and has always been a saver. She lived in a three-bedroom apartment for several years despite earning $15 million for the film “Red Sparrow.” Her vehicle of choice is a Chevy Volt priced at $39,000, and she still clips coupons to save.

Millionaires Practice Frugality

Although some flashy millionaires show off their money—if you look through the flash, you may find debt.

Debt is the enemy. If you want to be a millionaire, don’t try to keep up with the Joneses, and watch what you spend. Most millionaires don’t emphasize having things.

As Branson said, he goes for experiences, which means hanging out with friends and family.

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