7 Things the Wealthy Elite Do With Their Money (That You Should Also Be Doing)
Wealthy people have a track record of making some pretty serious money moves. When you have that much wealth, a whole world of opportunities opens up for you. For the rest of us, these strategies can feel completely out of reach.
It’s true to an extent, but even the wealthy elite are following some core principles any of us can adopt. If you’re interested in growing your net worth, consider taking a page from their book.
These are some tried and true things the super rich do with their money that any of us can do.
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They Live Within Their Means
Many people live a lifestyle that creates the illusion of wealth, without actually having the cash to back it up. But people who are truly wealthy know not to spend money they don’t have.
In fact, it’s common for people with serious wealth to live below their means. They often live in modest homes, drive practical cars and adhere to a strict budget. Their net worth might surprise many people, but this is exactly how they were able to build it.
Of course, this isn’t true across the board. Plenty of wealthy people do live lavishly, but we can all take some inspiration from rich people who are known for living like an average Joe.
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They Secure Future Income
Wealthy people are almost always looking toward the future. Instant gratification usually comes at the expense of long-term stability and they know this all too well. That’s why the rich often focus on securing future income.
One good way to do this is with an annuity. Annuities are contracts between you and an insurance company that allow you to earn interest on a lump-sum investment.
Generally speaking, payouts can be offered for life or span a specific time period. This investment option is growing in popularity and many issuers are currently offering high rates.
They Put Their Money To Work
Wealthy people don’t tend to let their money sit around collecting dust. Sure, they put a certain percentage of their wealth in standard savings accounts, but they also don’t shy away from investments.
Risk tolerance varies, of course, but most realize the importance of taking at least some risk. A solid investment strategy is a key part of any portfolio. And you can invest, even if you’re not wealthy.
They Pay Themselves First
Frivolous spending doesn’t lead to affluence. This is why the wealthy pay themselves first.
Specifically, they save money from every paycheck before having the chance to spend it elsewhere. They typically have the money automatically transferred to a savings account, ensuring it never even touches their hands.
This practice essentially treats saving money like a bill. Prioritizing saving in this manner is smart, because it eliminates any temptation to spend the money instead.
They Manage Debt Wisely
Interest adds up fast and wealthy people are acutely aware of that. Therefore, you won’t catch them racking up high-interest debt — i.e., credit cards.
They also don’t waste money financing assets that depreciate quickly, such as cars and boats. However, many do take a mortgage out to purchase real estate, especially when interest rates are low.
For example, in 2012, Mark Zuckerburg reportedly refinanced a $5.95 million mortgage on his Palo Alto, California home with a 30-year adjustable-rate loan starting at 1.05%, according to Bloomberg.
While taking out a mortgage with a low interest rate does ultimately increase the overall amount a wealthy person will pay for a real estate property, it can make sense. This allows them to have more cash in hand for investments offering high returns.
In this case, the money they’ll pay in mortgage interest is more than offset by the gains they’ll make on their investments.
They Value Their Time
It’s certainly not a secret that wealthy people often hire help. However, some have reasons for doing so that you might not suspect.
You might assume they pay for services like housekeeping, landscaping and car detailing because they don’t want to do these tasks. This might be true, but sometimes this is actually a way to save money.
For example, if a wealthy person earns $400 per hour, but can hire someone to detail their car for $100 per hour, this is a cost-effective move. They’re still able to net $300 per hour, while having a much-needed task accomplished on their behalf.
The average person might be able to do this on a less-pricey scale. For example, if you can earn time-and-a-half at a rate of $45 per hour, but would need to hire a babysitter who charges $15 per hour, doing so would make financial sense.
They Seek Additional Income Streams
The wealthy elite don’t rely on just one form of income. They know it’s important to have multiple income streams — both to generate extra cash and as a backup plan.
For example, they might invest in a local small business or purchase rental properties and act as a landlord.
Of course, having multiple income sources can also be achieved in a more attainable way. For example, you might create printables to sell on Etsy or serve as a food delivery driver once per week.
Wealthy people clearly know a thing or two about money, so applying at least some of their favorite strategies to your own finances can make a big difference. You might be surprised at the impact a few seemingly small adjustments can make to your own financial situation.
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