Frugal millionaires, many self-made, don’t engage in lavish spending or live off large inheritances, according to Ramsey Solutions’ National Study of Millionaires, which surveyed 10,000 participants.
The study concluded that high-net-worth households often live below their means, so they can invest strategically, rather than live an inflated lifestyle as their income grows.
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Based on these findings, frugal millionaires tend to practice consistent financial discipline, keeping their total living costs to roughly $3,200 per month, which is often less than what some middle-income households spend. Here’s what a frugal millionaire’s monthly budget looks like before retiring.
Many smart millionaires deposit 15% to 20% of their income into their savings or reserve accounts, to prepare for future risks and preserve their wealth, said Joe Braier, CEO and president of Lake Country Advisor. They treat savings as an expense, especially when they get closer to retirement.
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Housing costs equal about 33% of high-income earners’ budget, according to the U.S. Bureau of Labor Statistics (BLS). However, most frugal millionaires’ homes are paid off, avoiding mortgage payments and compounding interest.
This brings their housing costs to around $776 per month or about 7%, according to the BLS, which covers property taxes, homeowners’ insurance and routine maintenance.
Frugal millionaires are mindful of everyday energy costs, keeping major utility bills to about $300 per month, which includes electric, gas, water, sewer, and trash.
They often lower the heat and air when they’re not at home and invest in energy-efficient appliances and fixtures, such as WaterSense-labeled showerheads, which can save the average family 2,700 gallons a year, according to the Environmental Protection Agency (EPA).
Many frugal millionaires have cut the cord, opting out of costly cable bills in favor of a few of their favorite streaming services. They select basic mobile phone plans without all the bells and whistles, averaging $121 per month, and may bundle phone and internet for better deals. Some lower-tier internet plans start at $34.99 per month for Fios.
According to the U.S. Department of Agriculture (USDA) thrifty food plans cost around $477 per month. This means most meals are prepared at home, and dining out and food delivery is kept in check. Not all millionaires shop at gourmet food stores. Surprisingly, many buy their groceries staples in bulk at Costco or shop at Walmart, Trader Joe’s and Aldi to take advantage of the savings.
