Here are some valuable pieces of advice to set you off on your path to your first billion.
Pay yourself first
What do you do first when you receive your paycheck: spend first and let the remaining be your savings? Or do you save before you spend? If you’re spending first, maybe that’s one of the reasons you are having trouble saving your money.
How could that be? You need to do it the other way around, and save before you spend. You must pay yourself first before you pay your bills or buy something you need.
Paying yourself first before spending will make sure that you have a good amount of money saved every month. You can save at least 10% of your monthly income for starters and use the remaining 90% to cover your monthly expenses. You can even save more depending on the budget that you have set up.
Keep your home simple
Billionaires can afford to live in the most exclusive mansions imaginable—and many do. Just look at Bill Gates’ sprawling 66,000-square-foot, $147.5-million mansion in Medina, Washington. Yet frugal billionaires like Warren Buffet choose to keep it simple. Buffet still lives in the five-bedroom house in Omaha that he purchased in 1957 for $31,500. Likewise, Carlos Slim has lived in the same house for more than 40 years.
Use self-powered or public transportation
Thrifty billionaires John Caudwell, David Cheriton, and Chuck Feeney prefer to walk, bike or use public transportation when getting around town. Certainly these wealthy individuals could afford to take a helicopter to their lunch meetings, or ride in chauffeur-driven Bentleys, but they choose to get a little exercise and take advantage of public transportation instead. Good for the bank account and great for the environment.
Keep your scissors sharp
The average haircut costs about $45, but people can and do spend up to $800 per cut and style. Multiply that by 8.6 (to account for a cut every six weeks) and it adds up to $7,200 per year, not including tips. These billionaires can certainly afford the most stylish haircuts, but many cannot be bothered by the time it takes or the high price tag for the posh salons. Billionaires like John Caudwell and David Cheriton opt for cutting their own hair at home.
Buy your clothes off the rack
Some people, regardless of their net value, place a huge emphasis on wearing designer clothes and shoes. But frugal billionaires decide it’s simply not worth the effort or the expense. You can find David Cheriton—the Stanford professor whose early investment in Google made him a billionaire—wearing jeans and a t-shirt.
Ingvar Kamprad, founder of the furniture company Ikea, avoids wearing suits, and John Caudwell, mobile phone mogul, buys his clothes off the rack instead of spending his wealth on designer clothes.
Skip luxury items
It may surprise you, but the world’s wealthiest person, Carlos Slim (the same guy who could spend more than a thousand dollars a minute and not run out of money for one hundred years) does not own a yacht or a plane. Many other billionaires have chosen to skip these luxury items. Warren Buffet also avoids these lavish material items. “Most toys are just a pain in the neck,” he’s said.
Billionaires follow a budget
Even billionaires know that having a budget is important for them to organize their finances properly and find out where their money is going. They want to make sure they are utilizing their money well and not wasting their work.
Billionaires have a good credit score
Billionaires are not fond of borrowing money. Unless it’s something they would need and benefit from, like starting another business or expanding their business, they wouldn’t apply for a loan.
That’s one of the ways they can get their application approved easily. Another one is because they have a high credit score that makes them a low-risk investment to most lending companies.
Billionaires have their own investment portfolio
Billionaires invest their money. They know that getting an ordinary savings account to help them in growing their saved money is not a smart decision. They chose to be investors because billionaires know that it’s the best way to grow their wealth over time.
Investing is also one of the reasons billionaires don’t have to work so hard for years, and are able to retire comfortably without any worries about their finances.
Billionaires are not that different from us. They’re just people who know how to value their money and use it properly. Oh, and they are also way richer than pretty much all of us.
Now, have you done some of these billionaires’ money-saving tips? Which ones?