Things Rich People Don't Waste Money On and Smart Savings Strategies for You

Table of Contents

• Introduction
• How Rich People Approach Spending
• 9 Things Wealthy People Rarely Buy
  • Luxury Vehicles
  • First Class Upgrades
  • Multiple Properties
  • Brand Name Clothing and Accessories
  • The Latest Smartphones
  • Extended Warranties
  • Fancy Kitchen Appliances
  • Take-Out Coffee Drinks
  • Lottery Tickets
• Smart Money-Saving Strategies
  • Max Out Retirement Contributions
  • Invest in Index Funds
  • Eliminate High-Interest Debt
  • Build an Emergency Fund
  • Avoid Lifestyle Inflation
  • Avoid Unnecessary Purchases
  • Buy Quality Products
• Balancing Frugality with Enjoying Life
• Conclusion

Introduction

We've all seen portrayals in movies and TV of rich people flaunting their wealth with ridiculously expensive cars, private jets, multiple mansions, and more. But the truth is most wealthy individuals don't spend money that way in real life.

Rich people focus their spending on assets and investments that appreciate over time, not flashy depreciating purchases. They also display an ability to differentiate between necessities and discretionary wants.

This article will explore the mindset behind rich people's thrifty habits and highlight nine specific things they tend to avoid buying. You'll also learn money-saving strategies to help everyday folks build financial success.

How Rich People Approach Spending

Wealthy folks view money differently than the average person. Here are some of the key principles guiding their spending and saving habits:

• They focus purchases on assets and investments that gain value over time, not material items that depreciate quickly. Cars, electronics, designer clothing all decline in value the moment you buy them. Wealthy people understand this concept of differentiating between appreciating and depreciating assets.
• Status and impressing others don't drive their purchase decisions. Rich people have inner confidence and self-worth not dependent on external shows of wealth. They don't feel a need to buy flashy items to broadcast an image of "being rich."
• They prioritize spending on experiences that enrich their lives, not accumulating more "stuff." Experiential purchases like travel, hobbies, and time with loved ones provide more happiness than material goods according to research.
• Every purchasing decision is a careful deliberation. Wealthy folks avoid impulse buys and analyze each item's necessity. They think through what value it will provide, whether they can find a comparable substitute for less money, or if they could put those funds toward more important goals.
• Debt is avoided. They compare prices to find bargains and discounts when possible. Carrying debt means losing money to interest that could be invested instead.
• Quality over quantity. Rich people buy durable, well-made products even if they cost more upfront. Cheaper versions may need frequent replacing. They apply this mindset to large purchases especially like homes, appliances, cars, and electronics.
• Convenience is not always worth high prices. Wealthy folks analyze supposed conveniences to see if the speed or ease provided is worth spending far more for. Oftentimes, a little patience or planning allows them to get convenience more affordably.

Now let's explore specific items and purchases rich people tend to avoid, and why they forgo these particular things.

9 Things Wealthy People Rarely Buy

Even though they could afford to purchase anything, rich people skip out on buying certain items they see as wastes of money or poor investments. Here are 9 examples:

1. Luxury Vehicles

Lavish cars like Bentleys, Ferraris, and Porsches seem an obvious splurge item for the super rich. But most millionaires actually view high-end luxury cars as a poor use of money. Why?

They depreciate rapidly - That $200,000 luxury car will lose about half its value in the first 3 years. After 5 years it may be worth only 35% of its original price. That's a lot of money to lose and a terrible return.

Maintenance and insurance costs are extremely high - Repairing luxury car models costs much more than average brands. Something as routine as an oil change may be 2-3 times higher. Insurance costs thousands more per year for a top-end vehicle.

The performance capabilities often go unused - Unless you track race, you won't utilize most of a Ferrari's 212 mph top speed in normal driving. The average commute involves stop-lights and traffic, not windy back roads.

Newer safety technologies are often absent - Ironically, high-end vehicles are often lacking new safety tech like collision warning systems, lane keep assist, and automatic braking available in many standard brands.

For all these reasons, savvy rich folks buy new or used practical, reliable cars if they buy any vehicle at all. Many in high-density metro areas also utilize public transportation more than the general public. Uber, Lyft, subway systems, buses, and trains provide convenience without the hassles of car ownership.

2. First Class Upgrades

Given the private jet money they have, it would seem obvious for wealthy folks always to fly first class when traveling. But rich people tend to book basic economy flights and save the money or reinvest it instead. Here's why first class doesn't provide good value:

The high price tag - First class seats typically cost 4-5 times an economy ticket for domestic flights and 7-8 times higher internationally. That's thousands of dollars for one flight.

Little marginal benefit - The additional leg room and cabin service changes the flight experience, but debatably not over $2,000 worth for a 5-hour flight. The actual travel and arrival is unchanged.

Time savings inconsequential - First class may board 15-30 minutes earlier, but that's a small fraction of total transit time. The difference in an 8-hour international trip is negligible.

Money better spent or invested - That thousands spent on first class tickets could fund an entire additional vacation or be invested toward long-term financial goals.

Savvy rich folks recognize the disproportionately high cost just isn't justified. The convenience and luxury of first class comes at a steep price, with little extra value over economy seats. They choose to keep more money in their pockets.

3. Multiple Properties

You might assume wealthy people own lavish homes in cities across the globe. Some do of course, but most understand the hassles and unnecessary costs of multiple properties. Consider:

Recurring expenses add up - Mortgage or rent, property tax, home insurance, regular maintenance and repairs must be covered no matter how often you actually visit the home. Utilities, cleaning, landscaping quickly compound too for additional houses.

Occasional use - Even if you own four different homes, realistically you can only live in one at a time. The others sit vacant most of the year unless rented out.

Headaches managing properties - Finding reliable caretakers and contractors to maintain multiple houses adds complexity. If issues arise or tenants, you don't have ready access being remote.

One high-quality, well-appointed primary residence with space for entertaining will meet most wealthy folks' needs. When they desire a change of scenery temporarily, alternatives like renting a vacation property or hotel suite provide greater flexibility.

4. Brand Name Clothing and Accessories

Runway fashions and expensive boutique brands are often seen as ubiquitous in rich people's wardrobes. But many millionaires focus on fit, comfort, quality construction, and timeless style over flashy logos and trends. Here are some of their strategies:

• Shop end-of-season sales, discount outlets, and consignment stores for substantial savings on apparel.
• Buy versatile basics in solid colors that pair with many other items over printed patterned pieces.
• Choose quality natural fabrics like wool, cotton, silk, and linen that last over synthetics.
• Find a great tailor to get consistent custom fit at a fraction of designer brand prices.
• Repair and properly care for favorite items to extend their usable life.
• Avoid high markups on brand name accessories by purchasing Classic styles at regular retailers.

Rich folks would rather keep extra money in the bank than overspend to flaunt logos. Classic accessories and timeless styles offer versatility over fast fashion trends of the moment. Quality construction ensures longevity versus cheap disposable pieces.

5. The Latest Smartphones

Though they could easily afford any cell phones on the market, you won't see wealthy folks waiting in lines for the latest iPhone release. Here's why:

Each new model costs $800-1,200 - The latest iPhones and Samsung Galaxies retail at nearly the cost of many people's entire computer. Even "leasing" through carriers has you paying $30-40 monthly forever.

They're outdated quickly - New models arrive like clockwork every September-October. Features get superseded within a year or two by faster processors, improved cameras, and more.

Prior models still work great - Using an iPhone or Galaxy that's 1-2 years old provides the same functionality at a fraction of the cost. Wealthy folks use older phones until they stop working or break.

Most users don't tap full capabilities - Let's be honest, beyond apps, web browsing, maps, and the camera how many use all the fancy bells and whistles? You can get by just fine without the latest and greatest mobile chipset or display.

Savvy rich people buy phones a generation or two old, use protective cases, and keep them operative as long as possible. Avoiding the constant upgrade cycle saves substantial amounts long term.

6. Extended Warranties

Retailers love to push extended warranties which promise protection in case your product breaks. But research indicates they are money makers because most people don't need repairs. Here's the scoop:

Low claims rates - Companies calculate premiums based on projected repair data. Actual warranty use tends to run 10-30% below these projections based on denial reasons and hassles filing claims.

Product reliability improves - Thanks to better engineering, manufacturing standards, and electronics miniaturization, most products these days don't just easily break with normal use.

Self-insure instead - Wealthy folks recognize that self-insuring makes more statistical sense. Putting the money you'd spend on warranties into an emergency fund means you can cover repairs if needed. And you keep all your cash if you don't need repairs.

Don't waste money on likely unnecessary extended warranties. Savvy rich people understand statistics prove self-insuring offers better financial value in most cases.

7. Fancy Kitchen Appliances

Champagne taste could have you splurging five or six figures for a professional Wolf or Viking range and stainless side-by-side refrigerator. But while fancy, are these truly necessary? Often not, says rich folks' logic:

Functionality hasn't changed radically - Sure stainless looks sleek, but does it make your fridge colder or stove cook better? Basic white appliances work just as well.

New problems introduced - Some high-end appliances have reported issues like leaking refrigerators, faulty touchscreens, and premature part failures. More complexity = more to break.

They often don't recoup cost - Upscale kitchen upgrades may help home values marginally, but likely not near enough to offset their hefty prices.

Repairs and maintenance are costly - Swanky brands usually equal sky-high repair bills, parts delays, and service headaches. Basic Whirlpool and Maytag models tend to be more fixable.

Unless you're an avid home chef, most functional ovens and refrigerators suffice for the average person's cooking needs. Wealthy folks recognize fancy appliances make minimal impact for the cost and focus spending instead on passion projects or investments.

8. Take-Out Coffee Drinks

Stopping at Starbucks or your local cafe seems an affordable luxury when a latte costs $5. But even small amounts daily add up substantially over time. Let's crunch the numbers:

$5 daily - At just a single $5 drink per day, you'll spend $150 monthly and $1,825 yearly.

$15 daily - Up that to a routine double-shot vanilla latte and breakfast sandwich, you're looking at $450 monthly and $5,475 annually.

Make coffee yourself - A bag of quality ground coffee costs under $10 and brews ~40 cups. Even adding milk, sweetener, etc., that's under $0.25 a cup.

Buy equipment to save more - A basic $20 Mr. Coffee or pour-over setup pays for itself quickly. Or invest $100-200 for an espresso machine to mimic barista drinks at home.

Most wealthy folks brew their own quality coffee for a fraction of take-out costs. Some even batch brew into a thermos to take along and further limit spending.

9. Lottery Tickets

You'll almost never find wealthy individuals playing the lottery unless jackpots surpass $500 million. Why don't rich people buy lottery tickets then? Simple - the odds are abysmal.

Mega Millions odds 1 in 302 million - To put that in perspective, you are 3 times more likely to be killed by a vending machine, 90 times more likely to marry a millionaire, and 10,000 times more likely to get audited by the IRS.

Powerball odds 1 in 292 million - The chances are better you'll become president (1 in 10 million), date a celebrity (1 in 88,000), get away with murder (1 in 150), or be struck by lightning (1 in 12,000) than win the Powerball jackpot.

Lotteries rely on poor math skills - People see the huge prize amounts advertised but don't comprehend the miniscule odds. Statistically it's a complete waste of money.

Wealthy folks are proficient with numbers and understand steady saving and smart investing offer the only reliable path to building wealth over time. For fun, they may partake in office pools when jackpots get astronomical but otherwise don't bother with lotteries.

Now that you know what specific purchases and luxuries rich people avoid, let's explore proactive steps you can take to enhance financial standing.

Smart Money-Saving Strategies

Simply eliminating certain discretionary purchases provides some savings. But you accelerate your financial progress by making a few targeted adjustments:

Max Out Retirement Account Contributions Each Year

Maximize contributions to 401(k) plans, IRAs, or other tax-advantaged retirement accounts available. Take full advantage of any employer matching funds offered if you have that benefit. Consistently funding these over your career allows compound growth through the stock market to work its magic.

Invest Extra Savings in Broad Index Funds

Rather than letting excess cash sit in ordinary bank accounts, invest it in low-cost index funds that track entire market sectors. Over long periods, index funds reliably outperform most actively managed investments. The key is giving your money decades to compound.

Pay Off All High-Interest Debt Aggressively

Credit cards, payday loans, title loans, and other "predatory" lending sources charge outrageous interest rates and fees. If you carry any of this debt currently, funnel all extra money toward wiping it out before anything else.

Build an Emergency Cash Fund with 3-6 Months' Living Expenses

This gives you a financial cushion and flexibility when unexpected costs come up - car repair, medical bill, appliance replacement. Having an emergency fund prevents relying on credit cards or loans when financial shocks occur.

Avoid "Lifestyle Inflation" as Your Income Rises

It's tempting as you earn more to spend more too on "nicer" things. Continuing to live below your means allows you to save and invest the difference. Build wealth and financial freedom rather than inflating expenses.

Avoid Unnecessary Purchases That Don't Improve Quality of Life

Every spending decision, evaluate "Is this something I really need and will use frequently or that adds lots of value?" Decline discretionary wants that give short-lived pleasure but clutter your space and finances.

Buy Quality Products That Will Last

Cheap versions may lure you in with lower price tags. But low-grade materials and construction often mean you'll be replacing items again and again. When you can, pay a little more for durable quality possessions, especially on higher cost items.

Making these seven money management adjustments will allow your finances to progress faster. The habits, practiced consistently over years, set the stage to achieve financial independence and live life on your terms.

Balancing Frugality with Enjoying Life

Adopting certain economical habits of rich people makes solid financial sense. But don't deprive yourself of all joys in the quest for savings either. Here are a few parting cautions:

• Don't cut out pleasures and experiences you truly love simply to pinch pennies. You want life balance.
• Avoid reducing quality so much that it negatively impacts health, safety, relationships, or work performance.
• Remember that wealthy people can comfortably afford all life essentials. Support causes that help provide basic needs for less fortunate members of your community.
• Balance smart savings habits with enjoyment of life. Spend money on your highest priorities that bring meaning or enrichment.

The goal isn't to scrimp and scrape over every dollar forever. Building savings and net worth through these methods allows greater freedom to gift, travel, pursue hobbies, and spend on priorities later without financial stress.

Conclusion

Rich people value their money and spend carefully on purchases that enrich their lives, not impress others. Avoiding extravagant depreciating luxuries allows them to invest in assets that build lasting wealth.

Implementing proven money management strategies - like paying off debt, consistent investing, and building emergency savings - will help everyday folks work toward financial independence. Curtail mindless spending, but don't deprive yourself either. Find balance through smart savings and spending on what matters most.