Why You Need to Start Spending Like a Millionaire

Especially if you’re not one, yet.

Karen Banes
Jun 5 · 7 min read

If you’ve ever read The Millionaire Next Door by Thomas J. Stanley and William D. Danko, you’ll already be aware that you could be living next door to a millionaire, even if you live in a modest neighborhood, and even if your next-door neighbor shops at Walmart. Not every millionaire owns a fancy house or shops at Gucci. In fact, many millionaires are indistinguishable from the guys who lie awake at night worrying about debt. Apart from the fact that they’re not lying awake at night. They’re sleeping like a baby.

In the above-mentioned book, the authors make the interesting point that in the USA:

“There are nearly three times as many households with investments of $1 million or more living in homes valued at $300,000 or less than there are living in homes valued at $1 million or more.”

That’s simply how millionaires (often) choose to spend their money: on investments, not square footage. There are exceptions, of course, but an awful lot of millionaires don’t want to live in mansions. In fact, they don’t particularly want you to know that they’re millionaires. Many of them don’t care what you think. Others are deliberately modest. Plenty of them are far too busy enjoying financial freedom and security to worry about what or whether people think of them at all.

These are the millionaires who would rather have money than have people think they have money. They’d rather have rental properties and other investments that no-one knows about, than a big house and flash car that no-one could possibly miss. They’d rather have true financial security than debt. They never fell into the trap of taking out a huge mortgage just to look like they might be rich. They have no desire to do what many others do: spend money they don’t have, on things they don’t want, to impress people they don’t like. And many of these millionaires don’t have a crazy high income or much inherited wealth, either.

There are millionaires who inherit wealth, of course. That’s still the easiest way to get wealthy, and a common reason for the ongoing wealth gap. But there are also millionaires who quietly, unobtrusively, accrue wealth through their own spending habits. This is how they do it.

They live within their means

Millionaires spend less than they earn, which is the simplest way to accumulate extra money. They buy houses they can actually afford the mortgage payments on, not the most expensive house they can possibly get a mortgage for. In The Millionaire Next Door, the authors stress that 50% of millionaires have lived in the same house for more than 20 years, which is why there’s a reasonable chance of living next door to one. Doing this gives them a chance to actually pay off a mortgage, rather than constantly increasing mortgage payments by regularly upgrading to a bigger, better house.

Not all people who live within their means become millionaires. But people who consistently live beyond theirs never do (unless that inheritance comes along).

They don’t buy things for the sake of conspicuous consumption

Some millionaires are more likely to spend a little extra on quality, but they rarely spend money for the sake of it. You won’t generally find their closets stuffed full of designer goods. Freedom and financial security are more important to them than conspicuous consumption.

That’s why you won’t necessarily know if you live next door to a millionaire. They often won’t be wearing designer clothes or buying a fancy sports car, or even using the latest iPhone. Conversely, a lot of people who do own those things went into debt to get them. And potential millionaires don’t tend to take on consumer debt, because that’s one of the most expensive debts around, and it’s hard to build wealth while paying 19% interest on a maxed out credit card.

They use money to make money

The average millionaire spends double the time of the average person on financial planning. If you want to spend like a millionaire, you’ll want to spend more time browsing investment products and properties, and less time browsing online shopping sites.

In fact, if you want to start spending like a millionaire, the most useful thing you can do is re-frame “spending” as “investing” and learn to ask: “Is this something I want to invest in?” when considering parting with your money. Investment is also where you can take on some debt, but not the type of credit-card-backed, consumer debt your peers might have.

In the book, Rich Dad, Poor Dad, Robert Kiyosaki covers this well. Good debt is debt that you take out to invest in an asset that consistently makes you money. The most obvious example is any investment property that you rent out for an amount that covers (or more than covers) the monthly mortgage payment and other expenses on that property. Not only is this type of debt OK. For many people it may be the fastest route to building real wealth and property assets, and, apart from a mortgage on their own house, it’s the only type of debt many millionaires (or potential millionaires) will consider.

They spend more time creating than consuming

This is an obvious one, but every act of consumerism costs you money, while a lot of creative acts make money. While it’s possible to become a millionaire through employment, a lot of self-made millionaires are self-employed and/or consider themselves entrepreneurs, and one thing they do spend money on is creating their business.

They’ll also spend on their own education and training to enable them to create whatever it is that will make them money. Ditching your addiction to consumerism and cultivating creativity is a great step to take on the road to becoming a millionaire.

They actually like thinking about money, and they love a bargain

So rather than just spending, they’ll consider things like alternative costs. This isn’t being mean, or even frugal. It’s more like being interested in money and what it can buy. Self-made millionaires often start out thinking “I could buy this bike to get to school/work, or spend this much on public transit and have this much left over”. Later in life, they might be thinking “I can buy this supercar, or this affordable car and this boat for the same price,” or “I can buy this mansion in my home town, or this more modest house in my home town and this condo in The Bahamas for the same price”.

They’ll try and get a bargain, not because they can’t afford full-price, but because they’re interested to see what can be negotiated. Many millionaires shop the sales and always negotiate on a property or vehicle. They may not need to, but they like to pay well below market value, whether they’re buying a t-shirt or a vacation home.

They’re not emotional about spending

The non-millionaires? They’re impulsive. And emotional. They spend without thinking. They don’t consider alternative costs or bother to negotiate. They put purchases on credit cards because they don’t want to deal with the emotions involved in thinking about ‘real money’.

They offer the going price on a house because they’ve ‘fallen in love with it’. That’s not how houses work, incidentally — never fall in love with an inanimate object. There are undoubtedly other similar houses, and unlike people, if you see a house you really like, you can potentially even build one that’s very similar.

They have money they don’t spend

Most millionaires “pay themselves first”, often investing around 10% to 20% of their income, and routinely investing any inheritances or windfalls, rather than spending them. If you ask “How would you spend $100,000 if you won it?” most people will answer with a long shopping list. The millionaires would likely answer “Why would I spend $100,000 if I won it?”

They have a budget and know how much they spend

That’s how they became millionaires, and old habits die hard. Knowing how much you spend is a characteristic of most self-made millionaires, and it’s not just about budgeting. It comes back to that trait of actually liking to think about money. When you track things, know how much you spend and on what, and actively think about where your money comes from and where it goes, you are totally in control of your finances. Which is definitely a millionaire trait.

They spend their money on things they actually want

The reason you might be living next door to a millionaire, even if you live in a modest neighborhood, is that plenty of millionaires want to live in a modest neighborhood. It might be because they want to travel or leave a legacy for their kids, but that’s the key.

They have things they want to do with their money and they do those things. That’s exactly why some millionaires don’t want to live in a very expensive neighborhood, because that’s when other people may start dictating what you ‘should’ spend your money on. People in fancy neighborhoods spend money on fast cars and fancy golf club memberships and private schools, which is fine if that’s what you want, but not so great if you don’t get a kick out of driving fast, hate golf and want to raise down-to-earth children with a diverse friendship group.

Whether you’re on your way to your first million, or wallowing in debt, it might be time to start spending like a millionaire, or at least thinking like one.


This article is for informational purposes only, it should not be considered Financial or Legal Advice. Not all information will be accurate. Consult a financial professional before making any major financial decisions.

Making of a Millionaire

Publishing Stories on all things related to personal finance

Karen Banes

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Freelance writer & indie author sharing thoughts on creativity, productivity and success. https://karenbanes.com

Making of a Millionaire

Publishing Stories on all things related to personal finance