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frugality, as a lifestyle choice, will give you more capital to allocate to other areas at the end of the day. Being frugal won't make you rich, but overspending and overpaying for things when you are starting out isn't a step in the right direction to becoming wealthy.
Being frugal and investing wisely will make you rich whichs means calculated risks.
You're unlikely to find people with Gates/Ellison wealth living in the typical suburb, but there are plenty of "middle-class millionaires" living in average neighborhoods around the country.
Are they frugal? I think it would be more accurate to say that their spending patterns reflect different priorities than most suburbanites.
Then, how come living frugally didn't make ME a billionaire? There must be some other reason why they are billionaires. Something I'm not doing.
You're not going to become a billionaire by frugality alone. You'll need to own some wildly successful business or be a real whiz in the financial industry to hit that status.
A lifetime of investing at least 10% of one's income will get a lot of people to millionaire status, though...although the higher the percentage, the better off you'll be.
Last edited by mysticaltyger; 12-18-2010 at 02:40 PM..
Sorry, for not being clear, I actually meant to say 50-60K of monthly income, not yearly. If you have passive income of 50K every month, something you don't have to move a finger to earn (often in addition to your other 'earned' income) you should be able to afford a business class ticket once a month or even twice a month and not be considered to have a wasteful lifestyle.
I think you're setting the bar awfully high. That kind of passive income is not attainable for the overwhelming majority of us. Put another way, only a tiny fraction of people can afford to both live rich and be rich. But most people can attain "low millionaire" or "financially comfortable" status by living a notch or two below where they're "supposed to" for their income level and investing the difference in a mix of stocks & bonds.
The other good news, is that from a happiness standpoint, once your material standard of living gets a notch of two above the bare essentials, having more money/stuff doesn't add much additional happiness. That kind of happiness can only come from good relationships/spirituality/loving your work.
My folks, with an estimated net worth a little over 1 Mil. Not exactly "rich" but..
their monthly spending is only about $1000 (house paid off.) Frugality has been a lifelong habit for them and it's difficult to break!
My parents are kinda similar. My mom told me their basic living expenses are about $1500 a month. Their "ordinary nice" 3BR suburban house outside Philadelphia was paid off a long time ago. They do go to Florida for 3 months in the winter, but they could easily cut that out if things really got tough.
I think they have more than 1M and they also have 2 modest pensions, plus Social Security, but it's the same basic idea as what you're describing. Comfortable lifestyle, nothing flashy, but plenty of money for extras like travel (at the mid range price point) if they want to.
My parents are kinda similar. My mom told me their basic living expenses are about $1500 a month. Their "ordinary nice" 3BR suburban house outside Philadelphia was paid off a long time ago. They do go to Florida for 3 months in the winter, but they could easily cut that out if things really got tough.
I think they have more than 1M and they also have 2 modest pensions, plus Social Security, but it's the same basic idea as what you're describing. Comfortable lifestyle, nothing flashy, but plenty of money for extras like travel (at the mid range price point) if they want to.
My parents are the same. They have more than 2M but they go bonkers if they have to spend more than 1400 on the credit card every month. That's why I rarely spend money.
As for the original topic. I have rich relatives. And they have had their money inherited their position passed down. They are not frugal and don't have to be. If you are talking about those type of rich then no they are not frugal.
If you don't drink, smoke, or use much tech then you'll probably become pretty wealthy.
I feel sorry for all the people that have to buy a case of beer every weekend night, man does that stuff add up. Then you lose the next day of productivity as well. Wow. That's money that could have been reinvested in yourself down the toilet, literally.
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