You’re trying to pay off your debts and start saving money, but what if it doesn’t turn out to be anything? Maybe it’s time to rethink your attitude to spending so you can get out of the trap of throwing all your money away on these common things that poor people go broke trying to buy that the truly rich don’t even worry about.
By the way, all the people who have achieved real success in business projects and investments and who have made billions of dollars are very pragmatist about their purchases.
You might think rich people like to spend money. But as it turns out, nothing can be further from the truth.
It happens to all of us: we see that a nice but useless thing is offered at a discount, we buy it and then we come home and regret our decision.
Too often we spend money on impulsive purchases, which sets us apart from rich people for who find buying more jeans useless.
As billionaire Warren Buffett once said, “If you buy things you do not need, soon you will have to sell things you need.” An effective way to avoid unnecessary expenses is to create a shopping list before going to the store.
Overpriced Real Estate
Buying luxury homes at excessive prices is a dubious investment. Buying real estate at all is in many cases not an ideal investment because despite popular belief:
Your house is not an asset.
Why? Because it does not contribute to your financial well-being. Your home is a financial investment.
For a decade, Rich Dad, Poor Dad was the best-selling personal finance book, popularising the notion that houses were, for most people, expenses rather than assets.
The mindset that rich people have is to have investments that increase your cashflow. If you buy a house, it does not put money into your pocket every month. It takes money out of your pocket.
This is the reason that when the wealthy buy real estate it’s usually as part of a longer term money making plan; such as rental properties (which can be a great way to stop trading your time for money), reselling later when real estate prices go up, or something like that – rather than just as something to buy just to have.
Luxury Brand Clothes & Shoes
Rich people can afford luxury and expensive clothes from the latest and most fashionable fashion collections. However, if their life does not include frequent social events, they prefer to avoid such purchases.
When it comes to high-end designer brands, a naive individual might believe that you get what you paid for. While the fabrics and workmanship are often superior to quick fashion, the majority of your money is spent on marketing. You should know that advertising in Vogue is not inexpensive. High-end designer brand corporations spend a lot of money trying to persuade purchasers that their brands are prestigious. That’s what you’re getting for your money.
Customers who purchase luxury brands pay a premium for the designer’s name. Smart people, on the other hand, do not feel the need to impress others and hence do not fall for the hype. They dress in a way that makes them feel and look nice.
Celebrities get compensated for wearing fancy clothing, but the rest of us are not. And neither are most rich people – in many ways celebrity culture has skewed peoples perception of how the wealthy behave and what they spend money on. People don’t relize that celebrities and influencers make money from wearing and advertising brands.
The Latest Mobile Phones (and other tech gadgets)
A rich person will not rush to buy the latest model of a smartphone or watch, even if his phone is no longer fashionable, worn out or outdated.
Millionaires use different considerations when shopping: they ask themselves whether the expenses will pay off in the future – and most new upgraded phones don’t add anything that will increase the users ability to make money with it.
Loans, Fees and Penalties For Late Payments
Rich people don’t take out loans and never lose money on fines, penalties, and commissions for one simple reason: they always pay everything on time to avoid delays.
Mark Cuban, a billionaire investor, said, “If you use a credit card, you don’t want to be rich.”
Useless Toys For Children
People on average incomes often pamper their children, buy things on the slightest whimsy and fill their rooms with new toys.
If millionaires behaved the same way, their children would literally drown in toys.
However, good people prefer reasonable expenses and do not buy their offspring a new doll or game set just because it was advertised on TV.
The most important difference between a millionaire’s daily menu and a modest-income person’s daily menu is not included in the price of the products. Rich people are literally obsessed with healthy eating.
They can consume the same kinds of cereals and vegetables as us, ordinary mortals, but it’s hard to find a billionaire eating kebabs or hamburgers.
Trying To Look Rich (Make Poor People Go Broke)
Basically, this includes the cost of being rich and successful in front of others. We are talking about luxury banquets, business class flights and new cars.
People who want to look richer than they really are will spend huge sums on this purpose.
On the other hand, the really successful often lead a very modest life.
Excess Tutors and Guides For Children
People on average incomes often hire different home tutor for their children. Some hope to uncover the child’s hidden talents, which will serve as a ticket to a happy and prosperous life. Others think that instructors will help a child achieve better grades at school.
As for rich people – they know from their own experience that excessive tutoring has nothing to do with achieving financial success. This allows their children more free time to enjoy their childhood.
Poor people have it.
Rich people need it.
If you eat it you die.
What is it?
It’s Nothing. Nothing is the answer to that particular riddle.
The struggle to break out of a cycle of poverty can be tough and when people begin to gain wealth sometimes they find themselves very quickly picking up bad spending habits like the ones outlined here.
Don’t make the mistake of throwing all of your hard-earned cash away on disposable and usless items like the ones we’ve gone over here. Money can be a very powerful tool when used properly so use it properly.
Check out our Crash Course In Financial Literacy to learn more about how to be smart about your money.