MONEY matters

Mark Zaifman's thoughts on money, global economic trends and politics

The Seven Habits of Frugal Millionaires

Mark Zaifman   |    Thu, Oct 31, 2013 @ 10:27 AM

frugal millionaires

Like most financial advisors that have been in practice for over ten years, I have my fair share of clients that are millionaires. So with that said, what makes our millionaire clients different than your “average run of the mill” millionaire client? The answer; the majority are frugal and proud of it.

If you’ve read the best-seller, The Millionaire Next Door, you know many of the people portrayed in the book are, relatively speaking, pretty frugal. Keeping that thought in mind, and based on years of observation, below are the seven most common frugal habits of Spiritus millionaires.

1 - Living Below Your Means

As your income rises, so do your lifestyle expenses. That’s the American way, right? Not for Spiritus millionaires. They consciously live below their means. The habit of saving money, lots of money, is deeply ingrained in their psyche.

Being frugal is a habit that comes naturally and easily for these clients. The ability to absolutely control their spending leads to higher self-confidence around their money habits. And it’s that higher awareness, that knowing that you have mastered cash flow 101 that creates the feeling of financial empowerment, which ultimately, at the end of the day, is how these millionaires stay millionaires.

2 - Seeking Symbols of Abundance

When was the last time you picked up a coin from the ground? Whether it’s a shiny quarter, thin dime, nickel or penny, think about it, when was the last time you not only spotted a coin but actually stopped to pick it up?

One of my favorite clients, a physician in Colorado, keeps track of every cent he finds and gathers. His income is ultra-high, yet he will not hesitate for a second to pick up any coin he spots. On top of that, he tracks his findings in Quicken annually. For fun, we actually compete to see who has found the most money at the end of each year.

These coins you spot and find are obviously not going to change your financial life, but seeing them as symbols of abundance, being thankful for those symbols continually showing up in your life keeps the abundance flowing and keeps these millionaires grounded and centered.

3 - Avoid Paying Retail Prices

This habit is probably the most common trait I’ve observed. Whether it’s finding bargains on Craigslist, gadgets on eBay, travel using vrbo.com or airbnb.com, checking the library instead of Amazon for the latest best-seller, our frugal millionaires are well aware of how much money they save when seeking better value for goods and services.

4 - Spending Money = Spending Life Energy

If you’re a fan of the best-seller Your Money or Your Life, then the term ‘life energy’ is very familiar to you. Think about your life energy as your precious time on this planet.

Now think about how you consciously or sometimes unconsciously trade/exchange your life energy for money. You take your most precious and valuable asset, your time, and you exchange that time for money. Surely knowing the value of that exchange develops the habit of spending your money very wisely and prudently.

5 - Will Splurge When Warranted

For some, the word frugal is another way of saying your cheap. I could not disagree more. Being frugal is about stretching the value of the dollar you earned. Cheap has nothing to do with that equation.

One of my millionaire clients recently purchased a brand spanking new Tesla. Another just spent a small fortune inviting and also paying for his close friends and relatives to join him in Hawaii for his 50th birthday celebration. On and on I could go. The habit of treating yourself, splurging even when desired, is a habit that keeps the money flowing into your life. It’s grounded in the belief that the more you give, the more you receive.

6 - Money Aligned With Your Core Values

Aligning your money with your core values is a habit that takes time to build and sustain, yet one that continues to reward year after year. Think about it as developing and fine-tuning your internal moral compass.

For our frugal millionaire clients, this habit is non-negotiable. They know staying in money harmony and keeping balance in your life allows you to continue to not just survive but thrive. Practice makes the master with this habit. Soon enough, before you know it, your intuition responds instantly to your financial decision making and your inner guidance system automatically points you in the right direction.

7 - Having a Plan and Sticking to it

How did our frugal millionaire clients become wealthy? They had a plan and they stuck to it. Planning is a habit that takes time to cultivate as it does not come naturally for most people. It begins with tapping into your imagination, visualizing the future you intend to create in bright colors then putting your plan into action.

Sticking to your plan is about your capacity to be resilient. It’s an inner awareness that setbacks are learning opportunities and signals that allow you to course correct. Because your plan is strategic, you take comfort in knowing where you’re headed, how you’re going to get there and how you can get back on track if needed. Ultimately, having a plan and sticking to it is the ‘secret sauce’ if peace of mind is your ultimate destination.




Image credit http://www.flickr.com/photos/peddhapati/