5 Frugal Habits of the World's Richest People

Just because someone has accumulated a bank account that rivals that of Bill Gates doesn’t mean they spend like there is no tomorrow. Research and anecdote teaches that wealthy people, including the very wealthiest, are surprisingly frugal.

That’s not saying they're cheap. After all, there is a difference between being cheap and frugal. Frugal means being smarter and wiser at prioritizing your funds, finding the best value and making solid investments, traits that have fattened the bank accounts of the richest people in the world. They have so much wealth because they realize the real value of money.

Here are some of the frugal habits of the wealthy you adapt to build up your own hefty bank account.

1. They use coupons.

Surprisingly, households with average incomes of $100,000 or moreuse more coupons than those that bring in under $35,000. Celebrities including Carrie Underwood, Lady Gaga, Kristen Bell and Hilary Swank are just a few examples of wealthy individuals who are fans of coupons.

As a whole, it’s been found that an astounding “71 percent of the affluent use paper coupons every month, with 54 percent using online coupons every month.”

2. They live below their means.

The super rich are also known for living well below their means - even as far as cutting their own hair. One example of this is that they don’t see a vehicle as a status symbol. Instead, they realize that a car serves just one purpose; to get from Point A to Point B.

Sam Walton, the founder of Wal-Mart, famously drove around in a 1979 Ford F150 pickup truck. Walton’s son, Jim drove an older Dodge Dakota despite being worth over $16 billion. Mark Zuckerberg owns a modest $30,000 Acura TSX entry-level sedan, the 61st richest person in the world Azim Premji drove a Toyota Corolla, and Warren Buffett recently sold his 2006 Cadillac, which was noted for not being anything special, for a new model.

Many very rich people live in modest homes. Warren Buffett still resides in the house he bought bought for $31,500 in Omaha, Nebraska in 1958. Mark Zuckerberg, Tim Cook and Christy Walton all live in modest homes.

Ikea founder Ingvar Kamprad, Hobby Lobby founder David Green and former Microsoft CEO Steve Ballmer prefer to fly commercial, and even coach. Bill Gates was known to fly commercial for years. Azim Premji usually stays at company guest houses.

Finally, the wealthy don’t spend money on only luxury clothing. John Caudwell, an auto-shop owner who entered the cell phone business in 1987 and is now worth $2.6 billion, has stated "I don't need Saville Row suits” and "I don't need to spend money to bolster my own esteem.''

In fact, 74 percent of the super rich shop at Wal-Mart, while only 6 percent shop at Brooks Brothers.

3. They are charitable.

One of the more interesting habits that the rich have in common is their willingness to donate a vast majority of their wealth to a charitable cause. Zappos’ Tony Hsieh personally invested $350 million in theDowntown Project to improve downtown Las Vegas. Chuck Feeney, the co-founder of Duty Free Shops, has donated more than $4 billion to disadvantaged children and public health initiatives. Other wealthy individuals including Bill Gates, Warren Buffett, George Soros, Mark Zuckerberg, and Michael Bloomberg have donated huge chunks of their fortunes.

4. They value quality over quantity.

Wealthy individuals aren’t cheap, and certainly are not against enjoying themselves, but they put more thought into their purchases. For example, T. Boone Pickens has said,  “I don’t go cheap on anything, but I’m not a shopper. If I want something, I look at it, decide what it is, but it will usually be the best product. I’ve got a pair of loafers that I still wear that I got in 1957.”

5. They don’t carry wads of cash.

It’s been found that “86 percent of people who spend cash on luxuries like expensive cars, jewelry, and electronics are non-millionaires trying to act the part by purchasing luxury brands.”

Take the advice of oil mogul T. Boone Pickens and carry around only the cash that you need for what you intend to buy. According to Brad Klontz, a CFP professional and associate professor of personal financial planning at Kansas State University, the rich are often "money vigilant.” They avoid credit debt, and “are more anxious about making sure they have enough money and are managing it well.

Murray Newlands

7 Attributes of an Extraordinary Entrepreneur

Ashton Kutcher made headlines at SXSW this year when he announced the launch of a new investment fund with business partner Guy Oseary. But Kutcher and Oseary are not new to the startup game. In fact, Kutcher made early investments in Uber, Airbnb, and Spotify, showing a keen eye for investing in promising startups. When CNBC’s Maria Bartiromo asked Kutcher what he looks for in new companies, one of his answers was “extraordinary entrepreneurs."

What creates an “extraordinary entrepreneur” in the eyes of an investor? As Founder and CEO of Foxwordy, a startup that is the first private social network for lawyers, as well as a member of one of the largest angel investor groups that invests in Silicon Valley startups, I’ve found there are key qualities that attract investors’ attention and lead to strong, lasting investor/entrepreneur relationships.  

Here are seven key attributes of extraordinary entrepreneurs:

1. Strategic 

When it comes to your funding strategy, there are three schools of thought. One approach is to take only those investments you currently need, while the other approach is to take as much investment as you are able to get. Yet another approach is forget fundraising and focus on building the best business you can and the money will come. While there are pros and cons to each approach, what’s important is to figure out which one makes sense for your venture and stick to it. Defining your strategy in advance helps avoid setting yourself up for unmet expectations or taking your eye off the ball when it needs to be on the product or the business.

2. Frugal

Whatever funding you have must be used wisely. Spend your investors' money as if it were your own. Even better, have it be your own. I am a strong believer in the importance of entrepreneurs investing their own money into their own companies, and it is something investors are bound to appreciate and respect. WhatsApp, for example, hardly spent any of the $8M they raised from early investors, because they didn’t need to, although they certainly could have. Spend when you need to do so and save when you don’t.

3. Expert

Investor Mark Birch explains that prior domain expertise is not always a prerequisite to startup success. However, Birch cautions, “You can’t simply Google and Wikipedia your way to expertise, it requires time, research, talking to knowledgeable people and digging deep into the guts of the matter.”

Indeed, if you are new to your startup’s industry and don’t have the necessary domain expertise, you’ll need to invest time in building knowledge and networks, as well as focus on making key hires that bring domain expertise to the table. Zipcar founder Robin Chase, for example, talked about how she started a car company, yet knew nothing about cars. She made a smart move by hiring a VP of Operations who had deep experience with Hertz. 

4. Decisive 

Investors want to see that you have the backbone to deal with the difficult decisions that inevitably will arise. From having to fire family members to deciding whether to expand from a single location to multiple locations, entrepreneurs face tough calls on a routine basis and how you deal with those decisions demonstrates your leadership abilities.

5. Transparent

Authentic communication is imperative to building trust in any relationship, especially between entrepreneurs and investors. Provide transparency via regular reporting and be sure to share the ups as well as the downs. Investors know how challenging it is to build a new business and open, honest communication about challenges and successes is key.

6. Persistent

You’ve heard it before and it’s true: never give up! Investors want to see determination. In fact, how you deal with setbacks can be the very thing that sets you apart in the eyes of investors.

Richard Branson says, "many venture capital investors evaluate potential partners on how they reacted to a failed business, seeing it as a test of character, rather than a mark against them." The "key," according to Branson, is how entrepreneurs bounce back.

7. Open to advice

Don’t be afraid to connect with potential investors for input and advice. Many investors are entrepreneurs themselves and have immense knowledge and experience to share. Rather than demonstrating uncertainty or lack of knowledge, asking for advice shows a willingness to learn and consider multiple points of view. Doing so may also open the window of opportunity for funding. As Datanyze CEO Ilya Semin noted, "If you want advice, ask for money. But if you want money, ask for advice."

Is there a secret formula to being an "extraordinary entrepreneur"? Probably not. But adopting these seven attributes can certainly help you get recognized for the entrepreneur you are. Moving forward, demonstrating these key qualities will go miles towards ensuring the ongoing relationships with your investors are amazing.

Monica Zent