James Baldwin famously said, “Anyone who has ever struggled with poverty knows how extremely expensive it is to be poor.”
In January 2014, long after the Great Recession but before the pandemic, author Barbara Ehrenreich penned the book, “It is Expensive to be Poor,” talking about all the things poor people spend money on that rich people don’t.
Many of these things, according to one financial advisor, are fees that the rich can avoid, while the middle class and poor fall prey to unnecessary costs. Other expenses are related to wise investment practices.
See: 8 Things the Rich Spend Money on That Poor and Middle Class People Don’t
Also: 7 Things the Middle Class Spends Money on That Hurts Their Chances of Being Rich
But you might be surprised to discover that wealthy people tend to waste money in ways that are similar to the poor or middle class. When they are not mindful of their finances, according to the leaders at Aquilance, a personal financial administration firm that serves high net worth individuals, they can spend more than they should on everyday expenses.
That’s why it’s important for anyone, no matter where they fall on the income spectrum, to periodically evaluate their finances and find areas where they can save money. We spoke to the leaders at Aquilance, CEO Ken Eyler and Joe Farren, President, for some tips.
Spending Decisions Are Personal — Regardless of Your Income or Wealth
You might be surprised to learn that, just like the middle class and even some people living at poverty level, some high-net worth individuals are extremely frugal while others use their money to enjoy the finer things in life.
“Spending decisions are entirely personal,” Eyler pointed out. “For instance, we have high net worth clients who shop at dollar stores. Warren Buffett is a famous example of frugality.”
Buffett still lives in the house in Omaha that he purchased for $31,500 in 1958. The home, today, is worth roughly $1.44 million, but Buffett has told Berkshire Hathaway shareholders that he would have made far more renting it out and using the income to buy stocks. Nonetheless, he has said, “I couldn’t imagine having a better house.”
With the understanding that high net worth individuals vary in terms of their spending habits, what are some of the patterns financial advisors see in how millionaires and billionaires spend (or don’t spend) their money?
Three Things Millionaires Don’t Spend Money On
Being wealthy has certain advantages. Imagine going shopping and never having to worry about checking your bank balance because you know you have enough funds to cover your purchase.
“There are things [high net worth individuals] are often not required to spend money on due to the benefits of carrying larger balances in their bank account,” Eyler said.
However, Eyler pointed out that wealthy people will often pay more to carry a prestigious rewards credit card, like the American Express Black Card. The Black Amex carries a one-time initiation fee of $10,000 and an annual fee of $5,000. But the rewards, including an Equinox gym membership worth $3,600 per year, a $1,000 per annual Saks Fifth Avenue credit and other benefits, more than cover the cost, according to a review from Forbes. In that regard, the card is an investment rather than an expense.
Bank Fees
Eyler mentioned that millionaires rarely have to pay ATM fees, bank fees for wire transfers or monthly fees for their bank account.
Fortunately, if you have the means to open a bank account, you may also be able to avoid these types of fees by choosing a bank with no monthly fees, no minimum deposit or minimum balance requirements and no overdraft fees. You may not be ready to live like a wealthy person — but you may be able to find a bank that treats you like one!
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This article was originally published by a finance.yahoo.com . Read the Original article here. .