To be a good money manager, you don’t need to be rich.
But, many wealthy people are skilled with money. It’s how they got there. Millionaires aren’t always living the life you think they live. They are frugal and only spend what they can afford. They are always looking for ways that they can make their money grow rather than spending it.
Millionaires or not there are certain purchases that don’t make financial sense. These are the top seven items they won’t buy or spend money on.
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1. They aren’t buying new cars
Lynnette Khalfani Cox, personal finance expert and author, says that “the person who has several hundred thousand dollars in the bank or may even have a millionaire will drive a five year-old car or 10 years-old car.”
According to contributor Steven John, a new car can lose 10% and 20% in its first month. This kind of loss is not something that someone who is good with money would want to accept.
People who are smart with money know that buying used is the best way to get the most value. They also know that by keeping the same vehicle for a while they can save a lot.
2. They don’t lease new cars.
Khalfani-Cox believes that someone who is good with money will be able to lease. She says, “They won’t say, ‘Oh let me lease this $50,000 car and then next year let us lease another one.'”
Even though your monthly and up-front payment may be lower you won’t own as much as you would with a loan. A lease can be a way to avoid debt for the short-term, but those who are skilled with money will see it differently.
Alain Nanasinkam, vice president of strategic initiatives at TrueCar , previously stated to Insider’s Tanza Loudenback, “If you are motivated by the lowest long term cost, buying and maintaining your car longer will make more financial sense.”
People who are good with money will be less likely to get caught up in the latest and greatest. A lease is not the best option for them.
3. They won’t purchase houses they cannot afford.
The people who are good with money don’t want to spend more than what they can afford on real estate. They know that the best piece is the one they can afford. This is pretty easy to determine thankfully since there is an extensive array of home affordability calculators available online.
Holly Johnson is an Insider contributor who saved hard to pay her house by the age of 40. She travels extensively throughout the year using credit cards and spending sparingly.
She and her husband purchased a much smaller house to allow them to retire early and live mortgage-free. Johnson stated that housing affordability calculators had always advised her that she could spend twice, three times, or more on a house than she did. Johnson wrote, “But we have always ignored these calculators and forged our path.”
They would be able to save more money each month if they had bought a bigger house. We would also need to significantly reduce our annual travel budget.
4. They won’t buy things with credit they can’t afford.
No interest will be paid on purchases over $2,000 or $20, regardless of whether they are $2,000 or $20.
You’ll pay interest each month if you have a credit card balance. Many credit cards charge interest rates that are 25% or higher.
Elizabeth Aldrich, an Insider writer, racked up $10,000 in debt during her 20s. She’s since learned from her mistakes and is now a good money manager , repaying it all in three years , and creating a $20,000 fund within six months.
She reflected on her money mistakes and highlighted the fact that she had a high credit card balance as one of her biggest problems. She wrote that she used to accumulate a credit-card balance each month and pay it off by the end. She wrote that she “spent thousands of dollars in credit card interest during my 20s.”
She doesn’t spend any interest money now.
5. They aren’t buying luxury goods made by brand-name designers
Khalfani-Cox says that people who are good at money are less interested in brand labels or tag and label names.
Insider’s Hillary Hoffower reports that “showing off wealth is not the way to signify wealth. The top 1% of Americans have spent less on material goods in the US since 2007.
Many wealthy people are choosing to spend their money on things, instead of buying material goods. privacy , Exclusive Wellness and Fitness Routines And investing in education Instead of purchasing designer items.
6. They are less likely to buy unnecessary material and prefer quality over quantity.
People who are smart with money don’t buy cheap clothes and fill their closets with fast fashion clothing. They prefer to invest their money in items that last.
Khalfani-Cox states that they are more concerned about quality than quantity. “I believe people who are good with money are not afraid to be against the grain and to unplug from consumerism.”
7. They are probably not planning extravagant, costly weddings.
Everybody who has ever planned a wedding knows how expensive they can be. But people who are good with money don’t plan to spend a lot on their big day.
Nathan Clarke, The Millionaire dojo, used aggressive savings strategies and investments to save over $100,000 by the age of 25. He now hopes to become financially independent and is working towards his goal of becoming a millionaire.
He and his wife were able to save $100,000 by having a low-cost marriage. They spent only $10,000 and saved heavily.
Clarke stated that all they paid was for decorations and food. I don’t get why people feel they need to spend $50,000 for a wedding. I would rather spend $50,000 to travel the world than just once a year.
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