Written by Trent Hamm, The Simple Dollar is a popular personal finance blog that chronicle's one man's road back from overwhelming debt to financial security. Hamm declared the contents of the blog to be in the Public Domain in 2008 and available for sharing when attributed properly. We will share a couple of posts a week.
Several readers sent me this wonderful article describing the frugal habits of several billionaires. We’re not talking millionaires – billionaires. These are people who could keep a personal staff of a dozen assistants to take care of everything without breaking a sweat. Here are a few tidbits:
US oil magnate T. Boone Pickens, worth $US1.2 billion, reportedly shops with a grocery list and only carries enough cash in his wallet to cover what he is about to buy for better budgeting.
One of the world’s richest men, Carlos Slim Helu, who has an estimated net worth of $US67.2 billion, lives in the same modest house he has owned for 30 years, reports the UK Telegraph. His bedroom is said to be “the size of a Manhattan hotel room”.
Legendary US investor Warren Buffett, who has an estimated net worth of $US54.6 billion, famously still lives in the same five bedroom house he bought 55 years ago for $US31,500.
Why do they do this? If they trivially have the means to live in a nicer house with a big bedroom or can send someone to do the grocery shopping for them, why do this?
Even being billionaires, they know one simple fact and live by it: every dollar you don’t spend on something foolish is a dollar you can instead spend on something worthwhile.
What’s something foolish? A food item at the store you don’t really need. A bigger house than you need, which drains property taxes and maintenance and utilities from your pocket. An entertainment item you don’t have time for. The list goes on and on.
Even someone who has more than a billion dollars uses a grocery list and keeps only enough cash in his pocket to buy what he intended to purchase. Two of the richest men in the world live in rather small houses.
Why? They recognize that they don’t need more. They have enough.Recognizing that they have a big enough house and that they don’t need more food at the grocery store means that more cash remains in their pocket.
Sure, it might just save them $50 on a grocery trip. It might shave just a few thousand off of their property taxes. Those are pretty small amounts for them.
But let’s look at that in perspective.
Let’s say your net worth is $100,000. To T. Boone Pickens, the $50 he saves on his grocery trip is 0.000004167% of his net worth. To someone with a net worth of $100,000, 0.000004167% of your net worth is about half a cent.The impact on his life is about the same as half a cent would be in your life, yet he’s willing to put out the effort for that frugal tactic.
Why? A penny is a penny. If you don’t need something, spending that penny on it means you have one penny less to put to work elsewhere.
It doesn’t matter how rich you are or how poor you are. Every time you make a conscious choice to spend less in a way that doesn’t remove genuine value from your life, you have more money for other things. You can save for retirement. You can build up an emergency fund. You can start investing for whatever your dreams are.
Frugality is foolish, you say? Tell that to the billionaires.