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If You Want To Be Rich, Live Frugally

Updated on April 25, 2011

Do you want to be wealthy? Most people do, yet they aren't typically willing to make the sacrifices required to become wealthy. Did you know that most people that look and act rich really aren't? And most people that are rich don't look or act it? If you want to become wealthy then you have to live frugally. When people live frugally, they usually aren't trying to look or act rich.

Think about your spending and saving habits. Do you live beneath your means (spending less than you earn each paycheck) or do you spend every penny that comes through your bank account trying to appear wealthy? Rich people are more inclined to save money than spend money. When you spend all the money you earn, there is nothing leftover to save.

You might think that wealthy people always have the latest and greatest of everything, such as cars, electronics, homes, etc. but this tends to not be the case. One of the ways wealthy people amass their wealth is by purchasing good quality items (for example a very reliable car) and holding on to them for as long as they can. They are not perpetual upgraders; they use what they have as long as it is usable. This allows them to spend less and save more.

One of the principles of frugality for us is to look at the long term, bigger picture rather than just the immediate want. If you only want to drive a nice new car all the time, then you will constantly be purchasing a nice new car. The likelihood of you paying cash for these frequent car purchases is slim. By looking at the bigger picture and realizing that we want to save as much money as possible, means we buy a good quality used car with cash and hang on to it as long as we possibly can. This not only saves us thousands of dollars over a fancy new car, but also means that we do not have a monthly car payment. No monthly car payment = more money to save.

Using the car payment as an example, let's look at how that money can benefit you better if you save it. Let's assume a car payment of $500 a month, an average amount for a $25,000-$30,000 vehicle. Many people assume they will always have a car payment and see nothing wrong with paying $500 a month (or more) each month for their car. Over a person's lifetime that can mean more than $270,000 spent on car payments (assuming a car payment from age 25-70 or 45 years worth). That is a lot of money to spend on cars!

Imagine instead, that you saved that $500 a month in a mutual fund averaging 8% (a very conservative estimate!) for those 45 years. According to this savings calculator, if you saved $500 a month for 45 years, earning an interest rate of 8%, you will have an astonishing $850,672 at the end of 45 years. That could buy a lot of cars!

One of the reasons that wealthy people become wealthy is that they save as much money as they can by spending as little as they can. They live a very frugal lifestyle so that they can save as much as possible. This doesn't have to mean eating nothing but beans and rice and wearing clothes with holes in them. You can live frugally while still dressing nicely, doing and having nice things, and driving a nice car. The key is you don't have to spend a lot of money on it. Make sure that you live frugally, spend less money each month than you earn, and make wise purchases using cash only and you will eventually become rich - just like the true rich people.


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    • Thundermama profile image

      Catherine Taylor 

      5 years ago from Canada

      Great advice, funny how people make sweeping judgement about people based on possessions.

    • mary615 profile image

      Mary Hyatt 

      6 years ago from Florida

      I grew up in a family that was "poor". I was taught from an early age to live on a strict budget. I continue to live that way. Saving money on items becomes a game for me; like going to Goodwill to save money. I also stopped using cable TV (I wrote Hub about that), I use a Roku box for movies, etc. I have tried to teach my children how to live frugally, too.

      Great article, I voted it UP, etc. and will share.

    • profile image


      6 years ago

      You could not be more correct. I'm four years from retirement at 62, and my husband and I have saved well over $500,000 dollars, our home and seven acres were paid off long ago, I have a new Subaru I paid cash for and will have 'till it drops. We want for nothing and if there IS something we do want, we just go get it. Frugality leads to FREEDOM, boys and girls.

    • MarloByDesign profile image


      7 years ago from United States

      Yes, Millionaire Tips - and people need to stop impulse buying if they do not have money.

    • Millionaire Tips profile image

      Shasta Matova 

      7 years ago from USA

      I agree with this. If we spend the money purposefully, and not waste it on the little things that we will forget five minutes after we bought, we will have money to buy things that will improve our quality of life.

    • NaomiRuth profile image


      7 years ago

      Good sound advice, living frugally doesn't mean you have to eat beans, love it!! Spending less than you make is the key, thank you for writing this article.

    • dusy7969 profile image


      7 years ago from San Diego, California

      Saving is key to living a rich lifestyle.We should keep habit to saving.If you save the money then you can invest in future need and so thanks this hub.Thanks for this useful sharing.

    • Mamelody profile image


      7 years ago

      I always thought when people bought flashy stuff then they're rich until I discovered most people live on credit cards. Excellent hub hun.

    • MarloByDesign profile image


      7 years ago from United States

      Londonlady, good to know. Thanks.

    • Londonlady profile image

      Laura Writes 

      7 years ago

      This is actually really true. Savings is key to living a "rich" lifestyle. Great hub, voted UP :)

    • MarloByDesign profile image


      7 years ago from United States

      I definitely believe in living frugally. I am not sure about "Did you know that most people that look and act rich really aren't?", but maybe you have seen some research I am unaware of. Thanks for the Hub to reinforce some good philosophies.

    • HealthyHanna profile image


      7 years ago from Utah

      This is sooo true. I have seen situations, however, when the income really truly does not stretch across to cover all the bills. Then it is time to take action. Sometimes, we need to find ways to generate 'more'. We live in a society where even stopping all spending doesn't stop all bills. This is when we need to get creative.

    • profile image


      7 years ago

      Yes its quite simple isn't it, just don't spend all your income each week and your money must grow. The car example is a good one.

    • kafsoa profile image


      7 years ago

      Oh you're all right, we could have been of good money saved if we could stop ourselves buying all things we've baught then give away especially appliances and electronics which start at a very high price then go cheaper, if we've just been more patient and wise!

    • Paradise7 profile image


      7 years ago from Upstate New York

      Oh, so true!!! The richest folks in our family are also the most conservative when it comes to spending. They have nice things, that they hang onto. They look for quality bargains; they pay cash, then live with the items for years and years.

    • fucsia profile image


      7 years ago

      There are some people who are born in a wealthy family, and there are other people who build their wealth also through a frugal lifestyle. They have respect of the money and they are wise!

    • profile image

      Sd dickens 

      7 years ago

      Very useful advice. To me there's a difference we need to recognize between wealth and income. Wealth is what you accumulate by living below your means. Eventually that wealth can be a source of income and provide financial independence. If you have a high income but spend it all then you're never going to be wealthy.

    • Peter Owen profile image

      Peter Owen 

      7 years ago from West Hempstead, NY

      This is the curse of the baby boomer - buy everything and often. It is coming home to roost now that we are trying to retire

    • annaw profile image


      7 years ago from North Texas

      I often heard my father say do not buy anything you do not NEED. I believe he was right. If I count all the money I have spent on things I did not need, I would have a nice nest egg, money in investments and all the rest.

    • Gareth Pritchard profile image

      Gareth Pritchard 

      7 years ago from North Wales

      Maslow’s hierarchy of motivational needs are food, warmth, shelter, love/companionship, self actualisation, transcendence.

      People who have a need to covey that they are wealthy are actually internally poor because they have missed out on more than one of these needs, so feel the need to express the opposite as they can never really be wealthy. A very distressing thing of this is most of it is inflicted upon them by others who feel the same and have experienced the same or similar, poverty is nurtured by greed and the need to conceal the pain of broken self worth. The saddest thing of all is it is openly encouraged by us and the world which we create or chose to ignore.

      The final call is this, I have been praised on more than one occasion for being frugal but the truth is I am not at all because the only things worth buying are food warmth and shelter; everything else is not a need. The one thing that there is not a lot of anymore and probably the only thing that can’t be bought is love.

      Please have a nice life, Gareth.

    • smcopywrite profile image


      7 years ago from all over the web

      i always wondered about this concept. if i am rich what is the difference if i am still continuing to live poor?

    • roanna profile image


      7 years ago from Virginia

      It is very nice example with the car payments.

      Overall your approch to getting wealthy makes sense.

    • vwriter profile image


      7 years ago from US

      Great hub. You've shown that being frugal doesn't have to hurt.

    • shogan profile image


      7 years ago from New England

      "One of the reasons that wealthy people become wealthy is that they save as much money as they can by spending as little as they can."

      Wow, that's the truth. Those people I know with the most money are the same ones who pass out hard candies at Halloween and tip 10% at restaurants. Not to generalize too much...just basing my evaluation on those I know, of course! Good hub, Jennifer.


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