5 Purchases the Wealthy Refuse To Spend On, According to Money Pro
As a financial planning expert in the industry for over 30 years, I deal with the psychology of money. Observing people’s spending habits and how they have changed over time has been quite fascinating. There is a visible shift in the overall mindset of individuals who have amassed a significant amount of wealth throughout their working years.
While the amount that defines one’s wealth varies across America, Charles Schwab conducted a survey that revealed people in American consider having an estimated net worth of $2.2 million is a qualifier. With so many first-generation wealth accumulators committed to savings and investments, as their resources begin to increase, their spending habits change as they seek to become financially free.
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If you have the desire to become wealthy, here are five things wealthy people think twice about spending their money on.
1. Lottery Tickets
Wealthy people do not entertain get-rich-quick vices such as lottery tickets. While the practice appears harmless initially, the lure of hitting a mega jackpot dissipates as they begin to rely more heavily upon investing in a diversified portfolio, stable business or investments that have the greater opportunity to yield a positive return.
Relying upon the chance to get rich associated with the lottery doesn’t make economic sense once they realize how much money is being spent. A best practice is to assess how much money you are spending on lottery tickets and begin systematically setting that money aside in a growth mutual fund or investment.
2. Lines of Credit
Purchasing items that require accumulation of debt through credit cards, lender services or other lending entities isn’t something a wealthy individual would do. They understand accumulating debt or paying the interest rates on money borrowed instead of making a direct purchase is a greater cost for the item over time.
The best practice is to purchase something in full. Even if credit cards are being used for additional perks, the bill should be paid in full each month so finance charges are not accumulated. Wealthy individuals exercise discipline when spending money and wait until they can purchase their desired items outright.
3. Showy Brand Names
While they may have purchased name brand items in the past, wealthy people prefer quality discretionary items and are not so fixated on the name brand clothes and/or various accessories. In addition to not wanting to be a target for theft, the perception that they are wearing their assets on their back is a look they try to avoid.
While they are not cheap, they remain fiscally responsible, choosing to purchase quality items that will last over time. Purchasing the latest brand name is no longer appealing.
4. Multiples of Assets
Initially, when someone begins to accumulate wealth, they may desire to purchase the car of their dreams or a house in the neighborhood they always envisioned. However, a major misconception is that wealthy people spend money accumulating a fleet of cars or homes in multiple locations.
It isn’t unusual to have a primary residence and a vacation house. However, the primary focus for those who have accumulated assets is based on usage.
Paying additional expenses just to have items that are not being used is a waste of resources and the money can be allocated elsewhere. Luxury items require insurance, so having a fleet of cars that aren’t being driven or a house that isn’t be utilized becomes a liability.
Once they have transitioned from being nouveau riche, maintaining their wealth curbs their appetite to spend frivolously.
5. Fleeting Fads
Wealthy people do not spend money on the latest fads. They do not purchase items simply because its hot for a particular season. They do not travel to the vacation spot that is considered the place to be. They are not moved by the societal trends that can often leave people spending money they do not have.
This is especially true for first generation wealth accumulators who worked and saved money responsibly. Hard work and sweat equity change their mindset as it relates to spending.
The Wealth Mindset
The journey to accumulating wealth is possible. The decisions a person makes will determine how successful they will become.
As a financial expert, I suggest a commitment to savings and investments. Over time, your net worth will increase, especially if you are working with a professional. Your standard of living will increase over time, as well.
Consider purchasing luxury items and the things you desire with your dividends and interest once you have built a firm financial foundation. Maintaining that practice will guide you to a solid financial lifestyle.
Editor’s note: Dr. Nicole B. Simpson is a dedicated certified financial planner and the CEO and founder of Harvest Wealth Financial.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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