There are valuable lessons to be learned from the spending habits of the ultra rich. The world's frugal billionaires did not get wealthy by driving modest cars. But some of their lifestyle choices may be able to tell us something about the attitudes that make and keep some people wealthy. Stories abound about the things well-known billionaires do that border on extreme frugality.
We’ve heard and read about Monaco’s Prince Rainier buying sets of socks in matching colors and designs so that when one gets lost or worn out, there is always a ready match, eliminating the need to buy a new pair. In the same manner, much has been written about the old Omaha home of 20th century’s most successful investor Warren Buffet, which he bought in 1958 for $31,500, and his old Lincoln Town car with plate number THRIFTY that he traded for a 2006 Cadillac.
And while frugality is a common trait among first-generation filthy-rich who knew the hard work involved in creating and amassing wealth, some of the younger sets are not to be out-scrimped.
Last year, Facebook founder Mark Zuckerberg came under fire for not tipping after lunching in Rome, where meal gratuity is not really expected, except when you are an American, or famous. Social critics failed to note that the kid wears hoodies and flip-flops and was fine with dorm meals before he gets to billionaire status. Of course, there’s the Duchess of Cambridge Kate Middleton (daughter of self-made British millionaires) famously known for her preference for DIY and her frugal fashion sense despite marrying royalty.
It is noteworthy that the billionaires on our list are not just your typical, run-off-the mill frugal types who clip coupons, grow their own mint leaves and buy, use and hold on to their second-hand cars. What we have rounded up are super-rich individuals who are so tightwad it can be said that they literally skate through cheap avenue. Know what these shocking habits are, and see if you can pull them off yourself, even without the additional digits in your bank account.
Next time you're sitting on the bus and dreaming of that hot new sports car (which will require a big fat loan!), take a look at the ordinary-looking older gentleman sitting next to you.
He could be Ingvar Kamprad, the founder of Ikea, who uses public transport frequently.
And when he's not catching the bus, Kamprad drives a 14-year-old Volvo 240 GL.
He's not the only billionaire with a modest taste in cars. Last year Warren Buffet, the world's most successful investor, auctioned his unpretentious 2001 Lincoln Town Car - with its famous ?THRIFTY? number plate - on eBay to benefit a charity. He replaced it with the middle-of-the-range Cadillac DTS.
More billionaires with modest cars: Sergey Brin, the co-founder of Google, drives a compact Toyota Prius, a green hybrid car, and Steve Ballmer, who succeeded Bill Gates as CEO of Microsoft, drives a 10-year-old Lincoln Continental.
"Ikea people do not drive flashy cars or stay at luxury hotels." - Ingvar Kamprad
These wealthy people did not get wealthy by driving modest cars. But their cars may tell us something about the attitudes that make and keep some people wealthy.
In the first place, it's important to understand that it's not stinginess that dictates their choice of transport - even though any one of them could buy a Maserati or Rolls Royce without even looking at the price tag.
Buffet alone has given millions to charity, and encourages the shareholders of his Berkshire Hathaway Corporation to do the same. Kamprad generously supports many philanthropic causes through IKEA, including UNICEF. Ballmer of Microsoft donated $10 million to Harvard University and when Brin and his partner listed Google, they gave 1% of the company's equity and profits to a new Google charitable foundation in perpetuity.
These men are not tightwads. But they certainly are careful about what they spend their money on. One thing all of our frugal billionaires do have in common is the fact that they know what's important to them, and a high status car is not one of those things.
"From my (Russian) parents, I certainly learned to be frugal and to be happy without very many things. I still look at prices. I try to force myself to do this less, not to be so frugal. But I was raised being happy with not so much." - Sergey Brin
Most of the billionaires we've talked about had fairly modest backgrounds. Kamprad was a farmer's son from rural Sweden. Buffet's father was a middle class stock broker. The Brin family were penniless refugees from Russia and Ballmer's father worked for the Ford Motor Company for 30 years and was middle manager when he retired.
Buffet still lives in the home he purchased for $31,500 in 1958, which is not to say that all billionaires are so frugal. Mukesh Ambani, the world's 14th ranked billionaire, is currently building a 27-storey family home in Mumbai incorporating three levels of workshops and parking for his family's 128 imported cars. But it's the frugal rich who should interest us, since they, like ourselves, started with modest means - and to some degree, still choose to live the same way.
Frugal habits seem to be hard to shake off. Buffet, who would probably never go into debt except to borrow the capital to invest for even more profit, sent his daughter ?round to the Cadillac dealer to pay for his new mid-range car in cash. Brin tells how he still feels bad if he leaves food on his plate at meal times.
"A very rich person should leave his kids enough to do anything, but not enough to do nothing." - Warren Buffet
Our frugal billionaires have a few other things in common. They started businesses from scratch and built them up through their own hard work. And they are self confident enough to please themselves - the more money they make, the less likely they are to spend it just to impress others.
The simple truth is that step one in creating wealth is to set aside some money you would have spent on something else in order to save and invest it. The more frugal you are, in the sense that you spend money on what is important to you rather than what is important to other people, the more you will be able to invest.
"Money can't buy happiness. Last year I had $48 million, this year I have $50 million - and I am no happier." - Arnold Schwarzenegger
On the other hand, to be frugal is not to deprive yourself of all of life pleasures. If you love classical music, and you want to spend $20,000 on a music system, that's ok - as long as you are spending this money to impress yourself, and not the world at large.
Similarly, if you are going to go into debt, it should be in order to borrow investment capital that can produce income and growth. Don't go into debt just to buy a bigger and better wide screen TV.
Above all, it's critically important to understand that being thrifty alone is not enough to create wealth. It's what you do with the money you save that matters.
That is why a personal financial plan is so important - it defines a goal, and a goal is a real incentive to keep on being disciplined, because you know there will be a reward at the end of the journey.
But how do you draw up such a plan? For many people the missing link between the desire for financial security and the reality of attaining it is a trusted advisor. A personal coach for your finances who will work out a program to tone up your investment muscles and work out a routine you can stick with.
Finally, no matter how much you want to be rich, we should remember that money is not everything. As Warren Buffet reminds us, ?Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars.?
We’ve heard and read about Monaco’s Prince Rainier buying sets of socks in matching colors and designs so that when one gets lost or worn out, there is always a ready match, eliminating the need to buy a new pair. In the same manner, much has been written about the old Omaha home of 20th century’s most successful investor Warren Buffet, which he bought in 1958 for $31,500, and his old Lincoln Town car with plate number THRIFTY that he traded for a 2006 Cadillac.
And while frugality is a common trait among first-generation filthy-rich who knew the hard work involved in creating and amassing wealth, some of the younger sets are not to be out-scrimped.
Last year, Facebook founder Mark Zuckerberg came under fire for not tipping after lunching in Rome, where meal gratuity is not really expected, except when you are an American, or famous. Social critics failed to note that the kid wears hoodies and flip-flops and was fine with dorm meals before he gets to billionaire status. Of course, there’s the Duchess of Cambridge Kate Middleton (daughter of self-made British millionaires) famously known for her preference for DIY and her frugal fashion sense despite marrying royalty.
It is noteworthy that the billionaires on our list are not just your typical, run-off-the mill frugal types who clip coupons, grow their own mint leaves and buy, use and hold on to their second-hand cars. What we have rounded up are super-rich individuals who are so tightwad it can be said that they literally skate through cheap avenue. Know what these shocking habits are, and see if you can pull them off yourself, even without the additional digits in your bank account.
Next time you're sitting on the bus and dreaming of that hot new sports car (which will require a big fat loan!), take a look at the ordinary-looking older gentleman sitting next to you.
He could be Ingvar Kamprad, the founder of Ikea, who uses public transport frequently.
And when he's not catching the bus, Kamprad drives a 14-year-old Volvo 240 GL.
He's not the only billionaire with a modest taste in cars. Last year Warren Buffet, the world's most successful investor, auctioned his unpretentious 2001 Lincoln Town Car - with its famous ?THRIFTY? number plate - on eBay to benefit a charity. He replaced it with the middle-of-the-range Cadillac DTS.
More billionaires with modest cars: Sergey Brin, the co-founder of Google, drives a compact Toyota Prius, a green hybrid car, and Steve Ballmer, who succeeded Bill Gates as CEO of Microsoft, drives a 10-year-old Lincoln Continental.
"Ikea people do not drive flashy cars or stay at luxury hotels." - Ingvar Kamprad
These wealthy people did not get wealthy by driving modest cars. But their cars may tell us something about the attitudes that make and keep some people wealthy.
In the first place, it's important to understand that it's not stinginess that dictates their choice of transport - even though any one of them could buy a Maserati or Rolls Royce without even looking at the price tag.
Buffet alone has given millions to charity, and encourages the shareholders of his Berkshire Hathaway Corporation to do the same. Kamprad generously supports many philanthropic causes through IKEA, including UNICEF. Ballmer of Microsoft donated $10 million to Harvard University and when Brin and his partner listed Google, they gave 1% of the company's equity and profits to a new Google charitable foundation in perpetuity.
These men are not tightwads. But they certainly are careful about what they spend their money on. One thing all of our frugal billionaires do have in common is the fact that they know what's important to them, and a high status car is not one of those things.
"From my (Russian) parents, I certainly learned to be frugal and to be happy without very many things. I still look at prices. I try to force myself to do this less, not to be so frugal. But I was raised being happy with not so much." - Sergey Brin
Most of the billionaires we've talked about had fairly modest backgrounds. Kamprad was a farmer's son from rural Sweden. Buffet's father was a middle class stock broker. The Brin family were penniless refugees from Russia and Ballmer's father worked for the Ford Motor Company for 30 years and was middle manager when he retired.
Buffet still lives in the home he purchased for $31,500 in 1958, which is not to say that all billionaires are so frugal. Mukesh Ambani, the world's 14th ranked billionaire, is currently building a 27-storey family home in Mumbai incorporating three levels of workshops and parking for his family's 128 imported cars. But it's the frugal rich who should interest us, since they, like ourselves, started with modest means - and to some degree, still choose to live the same way.
Frugal habits seem to be hard to shake off. Buffet, who would probably never go into debt except to borrow the capital to invest for even more profit, sent his daughter ?round to the Cadillac dealer to pay for his new mid-range car in cash. Brin tells how he still feels bad if he leaves food on his plate at meal times.
"A very rich person should leave his kids enough to do anything, but not enough to do nothing." - Warren Buffet
Our frugal billionaires have a few other things in common. They started businesses from scratch and built them up through their own hard work. And they are self confident enough to please themselves - the more money they make, the less likely they are to spend it just to impress others.
The simple truth is that step one in creating wealth is to set aside some money you would have spent on something else in order to save and invest it. The more frugal you are, in the sense that you spend money on what is important to you rather than what is important to other people, the more you will be able to invest.
"Money can't buy happiness. Last year I had $48 million, this year I have $50 million - and I am no happier." - Arnold Schwarzenegger
On the other hand, to be frugal is not to deprive yourself of all of life pleasures. If you love classical music, and you want to spend $20,000 on a music system, that's ok - as long as you are spending this money to impress yourself, and not the world at large.
Similarly, if you are going to go into debt, it should be in order to borrow investment capital that can produce income and growth. Don't go into debt just to buy a bigger and better wide screen TV.
Above all, it's critically important to understand that being thrifty alone is not enough to create wealth. It's what you do with the money you save that matters.
That is why a personal financial plan is so important - it defines a goal, and a goal is a real incentive to keep on being disciplined, because you know there will be a reward at the end of the journey.
But how do you draw up such a plan? For many people the missing link between the desire for financial security and the reality of attaining it is a trusted advisor. A personal coach for your finances who will work out a program to tone up your investment muscles and work out a routine you can stick with.
Finally, no matter how much you want to be rich, we should remember that money is not everything. As Warren Buffet reminds us, ?Of the billionaires I have known, money just brings out the basic traits in them. If they were jerks before they had money, they are simply jerks with a billion dollars.?
No comments:
Post a Comment