The attitudes of poor and financially successful people to spending are radically different. What the former are willing to take out a loan, the latter simply don’t need. After all, rich people know which expenses pay off, and which don’t. Here are 13 things you don’t have to invest in.
A pragmatic attitude towards money helps people become billionaires – it’s no secret. When you analyse what the world’s most successful business people spend their money on, and what they avoid, you’re in for a surprise. Some things, which have long been considered the attributes of luxury living, are completely unnecessary to them. On the contrary, non-rich people tend to think that these very purchases or investments will take them closer to luxury.
So what sort of expenses seem to be unnecessary?
1. Emotional buying
Discounts, sales and promotions can have a hypnotic effect on some people, leading them to buy things they don’t really need. You hardly need another pair of black trousers or two packs of crisps for the price of one. But it’s the spending that gets you further away from the coveted million. The famous billionaire investor Warren Buffett said: “If you keep buying things you don’t need, one day you’ll have to sell the things you do need” – and that phrase is the essence of impulse spending. To avoid them, always make a shopping list for the month or before you go to the shop.
2. Expensive real estate
Buying a property at an inflated price can make you the owner of a nice home. Buying a property that is cheap but has prospects for the future will give you a good return on your investment. That’s usually what savvy investors do.
3. Extended warranty
Worried about expensive equipment that will go bad, owners of modest incomes often buy an extended warranty and overpay. Better-off people are confident in the quality of what they purchase and know that a standard manufacturer’s warranty will suffice in most cases.
4. Luxury wardrobe items.
Expensive brand clothes and shoes are usually chosen by people with lesser incomes in order to raise their status. And famous businessmen, multi-billion dollar corporation owners, celebrities and royalty are quite comfortable showing up in public in simple outfits from inexpensive brands.
5. The latest smartphone model
The joke about students taking loans for the latest version of a gadget has long ceased to be just a joke. And a wealthy person will think a hundred times about whether he or she needs a new tech right now, whether it justifies its inflated cost. After all, gadget prices are dropping rapidly with the release of more and more new models, which allows you to save quite a bit.
Speaking of loans. What primarily distinguishes a financially well-off person from a less successful one is the attitude towards the bills. Wealthy people try to plan their expenses wisely, make do with their own money and pay everything on time. That’s why they don’t take out loans, they don’t default on bills and they don’t pay extra fees. As billionaire Mark Cuban remarked, ‘Using a credit card shows you don’t want to be rich.
7. All your children’s wishes
Pampering your kids isn’t a bad thing, as long as it doesn’t escalate into indulging absolutely every child’s desire. Toddlers will always want a new toy and older children will always want a fancy gadget. Even in this situation, a well-to-do person will weigh everything up and decide whether the purchase is worth the money or just another whim.
8. Fast food
People with a low income are the main consumers of fast food. Successful consumers prefer to eat right. They tend to make tasty, filling meals from simple, inexpensive ingredients. And if you want a good meal at McDonald’s, you’ll have to spend a fortune there.
9. Image costs
No matter how hard middle-income earners try to elevate their status with the trappings of a ‘luxurious life’, they never succeed. Fancy banquets, business class on flights, precious crockery, limited-edition accessories and other unnecessary luxury – spending your last penny on these things just to rub it in someone’s face won’t make you rich. Even the occupants of Buckingham Palace save energy. And many successful businessmen and politicians travel in inexpensive cars or economy class. Frugality, where possible, allows them to save huge sums for something more important.
10. Luxury design
There’s nothing more pointless than investing in an expensive interior and constantly updating it to keep up with the latest trends. Especially since all that gilding, monograms and the like are totally impractical. Wealthy people want simplicity and comfort. They choose natural materials, calm colours, textures and practical solutions, which for years will not go out of fashion.
What is meant here, of course, is not education in general. But the costs for additional classes and tutors for general subjects in order to get into the best university, training in the university only because of its prestige (including the purchase of a diploma) and other expenses that allow you to get knowledge, but not the ability to apply them. After all, the “crust” very rarely opens the way to wealth. Children of millionaires attend common schools, while they, as a rule, graduated from an ordinary university or did without any higher education at all. Therefore, a successful person would rather spend money on good specialized courses in what he is really interested in, than try to learn everything in the world.
12. “Higher powers”.
It is hard to imagine the leader of a major corporation consulting a fortune-teller or an oracle on where to invest the next million. No, such people rely only on their own analytical skills, their own and others’ experience, and hard facts. Superstition, belief in divination and some higher power which should give the right answer – usually this is typical of insecure people. And insecurity and financial well-being are incompatible.
13. Life and Business Coaches.
All of these coaches, who promise to unlock the secret of wealth in just one session, really know how to make money. On gullible clients who pay them for the opportunity to listen to the same “water” retold for the thousandth time, or facts lying on the surface. No famous billionaire has ever learned how to raise capital through such training. And truly brilliant personalities share their secrets for free, for example, in interviews. Because they know: someone else’s success cannot be repeated, but they can be inspired by it and find their own unique way.
Such seemingly insignificant habits form a whole worldview, which distinguishes successful people from those who never manage to earn a living. To become successful, you have to start with a simple change: stop spending unnecessary money and learn to save it for more important things.
Can you tell us which expenses you could give up right now? And which ones are you never willing to give up?