When you are saving for a down payment, it may help to start spending like a billionaire. It’s not as crazy as you may think. After all, many billionaires didn’t start out as billionaires or even as millionaires. They built their fortunes—and held onto them—through good financial practices.
Here are some of the habits of the rich and the merely well off, as well as a few more that are simply time-tested ways of living well, while saving money.
Spending Your Way to a Down Payment
#1: Create spending limits. Eating out may be one of your favorite activities, and you can continue to do so, just stay within your allotted budget. Warren Buffet does. One of the world’s richest men limits himself to spending $3.17 for his breakfast each day.
#2: Don’t pay more for convenience. Whether you are making a large purchase or a small one, compare prices. The little shop in the lobby of your office building may be convenient, but you can probably save at least a quarter on each item you buy if you walk down the block and purchase the same thing at the national drugstore chain.
#3: Use coupons, reward points, and promo codes. One of the stories authors Thomas J. Stanley and William D. Danko tell in their book, “The Millionaire Next Door,” is about a woman whose husband gave her a seven-figure check while she was going through her weekend ritual of clipping coupons. She didn’t stop clipping.
#4: Reign in your generosity. We all want to do more for others, but sometimes we try to do more than we can afford. When there is a collection at the office, contribute an amount that works with your budget, not what others are doing. Consider that Bill Gates and Warren Buffet—both of whom plan to give away nearly their entire fortunes, eventually—decided it was better if most of their wealth remains under their control during their lifetimes.
#5: Buy appropriately and consider purchasing preowned items. Millionaires buy their tube socks at Target and Wal-Mart, just like everyone else, and even wealthy celebrities shop in resale stores. Today, with so many online options for purchasing things like last year’s fashions, mobile devices, and cars, buying the items you want doesn’t need to threaten your savings plan.
#6: Think “hours” not “dollars.” Consider how long you have to work to make what you are about to spend. For instance, if you earn $25 an hour, you’ll be working three to four days just to pay for that latest and greatest cellphone. A $2.00 cup of coffee, however, takes about five minutes to recoup.
Ultimately, successful savers spend less than they make and also tend to be careful spenders. It sounds so simple, but it takes practice and discipline. To succeed, many people pay themselves first. They automatically shift the amount they need to save out of each paycheck and then live on what remains. It’s a time-tested practice that can help get you into the home of your dreams that much sooner.