5 BIG Expenses Rich People Avoid
5 BIG Expenses Rich People Avoid Struggling to make ends meet is frustrating. Even more so when it feels like you’ll never dig yourself out of this hole you’re stuck in. How do rich people do it? How do they manage to be … just …
RICH? Well, spoiler alert, their secret isn’t really a secret. In fact, it’s super simple. In a nutshell? … they just don’t spend money on unnecessary things. And I know … you probably assumed that rich people are busy flexing their wealth with expensive things to show off. But … surprisingly … That isn’t really the case.
And, even more surprisingly, the things they don’t spend money on are probably some of the things that you DO spend your money on. I’m Kim, and in this Article I’m going to share five big expenses that the rich avoid. And, yeah. Number five is quite the eye-opener. But more on that in just a moment.First, let’s get into the meat of this …
The first expense that rich people avoid is Debt repayment. Yes, even wealthy people don’t like being in debt. But that doesn’t mean that debt is the main thing that keeps you from being financially free.
But the difference is, rich people use debt as a TOOL to keep their wealth going. Borrowing money from banks is generally not the optimal way to leverage debt. Most wealthy people don’t like to use it unless it helps them earn more money, and most of them won’t apply for standard bank loans, credit cards, or car loans.
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And even if they do, they have a specific and well-thought-out plan. If you look at a home loan, for instance, you’ll see that the average borrower has to pay back those loans for up to 30 years. With over $300,000 during that time, they’ll definitely end up paying back much more than they borrowed, even with a favorable loan rate.
And that’s why rich people don’t spend money like this unless they have a plan for it. Without being able to leverage that debt for an increased revenue flow, or to purchase an asset that earns income, it generally isn’t worth it.
So, here’s a question for you: think about the debts or loans you have. Now count how many of the things you bought with those funds are currently earning you money. If the answer is less than 50% of the number of loans you have, then you may want to rethink your approach.
The second expense that the rich avoid are designer brands. You might love designer labels, and the idea of wrapping yourself in some elegant couture may be your idea of heaven. But even though the Kardashians try to have us believe otherwise, most rich people don’t spend their money on these sorts of things.
If you’ve watched the movie Confessions of a Shopaholic, you know that the main character has a lot of debt because she bought so many designer brand clothes. We all know that having clothes to wear is important for comfort and social propriety. But you really don’t need a lot of clothes. Especially EXPENSIVE ones.
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After all, is your body any more protected from the elements if you put on a $5 t-shirt versus a $50 t-shirt? People who have a lot of money would rather wear shoes that last at least a year. For example, Steve Jobs is known for wearing a black shirt, basic jeans, and plain sneakers. It’s a simple wardrobe.
But even so, it became one of his identifying parts of his brand. It just goes to show that you don’t have to pay through the nose in order to represent who you are. Fashion is popular and can show how our culture has changed, but it’s not very useful when it comes to making a living and staying wealthy.
You might not realize that most rich people probably dress not much differently than you. Because, at the end of the day, what good are all these material things if they don’t give your life a much deeper meaning?
Why spend money on a new pair of shoes every month? Shoes don’t make you financially wealthy. Money does. Ask yourself this: would you be more impressed with someone who has ten thousand pairs of shoes, or someone who has a ten thousand dollars of monthly passive income?
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Over priced homes
EXACTLY! Moving on to the third expense the rich avoid, is over priced homes. Social media would have you believe that being rich equals living in a mansion. But the truth is, most rich people don’t like owning property. Or rather, put more specifically, they don’t like paying for expensive homes to live in. At least not without a good exit strategy.
There are a few things rich people do differently when it comes to home ownership. First, they make sure they buy their homes as close to or below their current market value. Second, they don’t seek out high priced accomodations.
They look for a home that fulfills their specific needs and, even more importantly, has the potential to earn them income while they live there. How can you earn income from your home? Well, a few quick ways are to rent out part of the home – which works even better if you buy a duplex or triplex.
Or, you could use part of the home as an office for your side hustle business, which counts as a business write-off. Or you could live in one part of the home while you renovate another part, either for a rentable in-law unit, or to increase the value so you can sell it again.
The point here is that buying expensive homes in a nice neighborhood is often taking people in the opposite direction of being rich. You have to look at your living expense as a proportion of your actual income. There is a big difference in buying a $300,000 home for someone who makes $300,000 a year versus someone who makes 3 million dollars a year.
VIDEO games and entertainment
The fourth expense that rich people avoid are VIDEO games and entertainment. That isn’t to say that rich people don’t partake in fun activities. After all, watching TV and playing Article games are fun things to do. But the trick is to not make them the center of your universe.
Experts say that rich people don’t spend more than an hour a day watching TV or playing Article games, while the average person spends between 5 and 7 hours a day doing these things. That is pretty amazing.
The average person spends around 500 to 700 percent MORE time doing these things! Imagine if you spend those extra hours on your side hustle?
How would that impact your life? Rich people are also less likely to subscribe to streaming service packages since they often spend most of their time doing things which are more beneficial to them, like reading books, consuming educational materials, or working on their businesses.
Individuals with less money in the bank tend to watch more TV than those with more money. In other words, you will be able to make more progress toward your financial goals and think more clearly about the here and now if you spend less time mindlessly flipping through channels on TV and sitting around ruminating about what might have been.
Now, turning off your brain from time to time is a good thing. It actually has been proven to improve focus and brain power for the times you need it. But the main thing is that most of us are spending way more time tuned out than we spend on developing useful skills and increasing our useable knowledge.
Dining out and eating fast food
And finally, the fifth expense that rich people avoid is dining out and eating fast food. Sure, fast food is cheap. But that price tag on your $5 value meal is actually no value at all. Why? Because the value you get from the food you eat is much more than just how much you spent to acquire it.
The value of food is also in how it fuels our productivity and ability to improve our future lives. People with more money tend to eat more cheaply. But, more importantly, they tend not to eat OUT, preferring instead of cook for themselves or have a home cooked meal.
And when they DO eat out, they select the food carefully, making sure to get the best value possible. Shopping for groceries is a better option than going out to eat every day. Sure, it seems easier in the short term to grab a quick Gordita crunch wrap than to prepare a fun bento lunch the evening before you go to work.
But there is no substitute – both financially and nutritionally – for preparing your own food that you picked up at the grocery store. Eating out once in a while, as part of your overall financial plan, is fine. But don’t make it a daily routine.
Here’s the thing: rich people aren’t really that much different than us. Sure, their bank accounts tell a different story, but at the end of the day the only difference between them and the rest of us is that they make different decisions about how to spend their money.
They know how to leverage money to help them make MORE money. THAT is the paradigm shift that rich people have made which the rest of us just need to work towards. If you were going to pick one item to start with, I would probably recommend reducing your debts.
Debts are the only things you have that you actually have to pay a fee to pay someone else back money. You’re not just paying back the money you borrowed, but you’re paying interest for the priviledge of having borrowed it in the first place! CRAZY! So, if you’d like to wipe some of that debt off your slate, then be sure to check out THIS Article where I show you how to become debt free as quick as possible.