Warren Buffett, one of the richest men, lives a relatively frugal life.
Bill Pugliano/Getty

  • Frugality is one of the key characteristics of wealth, according to a researcher who studied more than 600 millionaires.
  • Those who commit to saving, spending less, and sticking to a budget are more likely to become millionaires, she said.
  • Many of the richest people, including Warren Buffett and Richard Branson, have surprisingly frugal habits.


Many millionaires and billionaires have something in common aside from having high net worths: They're frugal.

It's this characteristic that helped them become rich in the first place, according to Sarah Stanley Fallaw, director of research for the Affluent Market Institute. She coauthored "The Next Millionaire Next Door: Enduring Strategies for Building Wealth," in which she surveyed more than 600 millionaires in America.

To identify characteristics that are the most predictive of net worth, Stanley Fallaw conducted two studies that included a group of individuals with net worths ranging from R1 million to R14 million and a group of high- and ultra-high-net-worth individuals.

She found that six behaviours, which she called "wealth factors," are related to net-worth potential, regardless of age or income. One of those is frugality - a commitment to saving, spending less, and sticking to a budget.

That's not surprising when you consider the habits of some of the richest people: Warren Buffett is notoriously frugal, and Richard Branson has previously said that displays of wealth embarrass him. The same extends to some A-list celebrities who rake in millions for their movies and TV appearances.

Here's a look inside the lives of some famously frugal millionaires and billionaires.


Sarah Stanley Fallaw, director of research for the Affluent Market Institute, studied more than 600 millionaires for her book, "The Next Millionaire Next Door: Enduring Strategies for Building Wealth."


She found that six behaviours, which she called "wealth factors," are related to net-worth potential, regardless of age or income.

Tristan Fewings/Getty Images

Source: "The Next Millionaire Next Door"


One of those factors, frugality, came up several times during Stanley Fallaw's research — many of the millionaires she interviewed stressed the freedom that comes with spending below their means.

Francois Nel / Getty

Source: "The Next Millionaire Next Door"


"Spending above your means, spending instead of saving for retirement, spending in anticipation of becoming wealthy makes you a slave to the paycheck, even with a stellar level of income," she wrote.

Leon Neal/Getty Images

Source: "The Next Millionaire Next Door"


Several of the most well-known millionaires and billionaires built wealth by living frugally — a habit they continue to practice even after becoming rich.

Source: "The Next Millionaire Next Door"


Consider the billionaire Warren Buffett, who's worth R1 trillion and is the third-richest person. Not one for lavish purchases, he spends relatively little money.

Steve Pope / Stringer / Getty Images

Source: Business Insider, Bloomberg


He previously told CNBC and Yahoo Finance's "Off the Cuff" that he's "never had any great desire to have multiple houses and all kinds of things and multiple cars."

Source: Business Insider


He still lives in his modest Omaha, Nebraska, home, which he bought for $31,500 in 1958. Adjusted for inflation, it's now worth about R3,945,271.

Source: Business Insider


He also drives a relatively modest set of wheels — a 2014 Cadillac XTS, which had an MSRP of R635,953.

Kevork Djansezian/Getty Images

Source: GOBankingRates, US News & World Report


And instead of buying a smartphone, he uses a flip phone.

CNN

Source: Business Insider


Buffett also famously pays only $18 (R256) for a haircut.

Source: Marketwatch


And he doesn't pay much for food — he spends no more than $3.17 (R45,19) on his daily McDonald's breakfast and gets dinner at the modest Gorat's steak house, where the menu items range from $3 (R42) to $41 (R584).

The Washington Post/Getty Images

Source: Business Insider


Then there's "Canada's Warren Buffett," the billionaire Jim Pattison, who earned his nickname from his own relatively frugal lifestyle. Pattison is worth R96 billion ...

Phillip Chin/Getty Images

Source: Business Insider, Bloomberg


... but, like Buffett, he keeps his wheels modest, driving a Dodge Ram 1500 Laramie truck around his hometown. The pricing for the 2019 model ranges from R451,675 to R804,923.

Angela Weiss/ACMA2012/Getty Images

Source: Edmunds, Bloomberg


His frugality partly stems from his upbringing: Pattison was born during the Great Depression and grew up poor, wearing hand-me-downs and living in "Vancouver's gritty east side."

Bettmann/Getty Images

Source: Bloomberg


"Most of the time, I didn't have the money to buy anything that was any good, so I had to buy stuff that nobody wanted," Pattison told Bloomberg.

Phillip Chin/Getty Images

Source: Bloomberg


The billionaire Richard Branson — who's now worth R75 billion — also has modest roots. He's frugal when it comes to luxury items, largely because he grew up in a middle-class family.

Getty

Source: The Guardian, Business Insider, Bloomberg


"The idea of having a possession that is there just as pure luxury, and is not actually paying its bills is something which I'd be embarrassed about," he previously told The Guardian.

Source: The Guardian


You wouldn't find a lot of expensive artwork hanging in any of his homes — he prefers to buy watercolours at reasonable prices.

Jason Merritt/Getty

Source: The Guardian


He also doesn't spend much on clothes.

Vincenzo Lombardo/Getty Images

Source: The Guardian


To Branson, the biggest luxury isn't money: "If we're talking about personal luxuries — and the luxury of being your own boss — the biggest reward is the amount of time one can find for family and friends."

Vincenzo Lombardo/Getty Images

Source: The Guardian


Like Pattison and Branson, Charlie Ergen's frugal habits at work and home also take root in the way he was brought up. Ergen stepped down as CEO of Dish Network in December 2017 and has a net worth of R156 billion.

Source: Business Insider, Business Insider, Bloomberg


"My mom grew up in the Depression," he told the Financial Times. "I don't have a mahogany desk."

Source: The Financial Times


Every day, he brown-bags his lunch, which consists of a sandwich and Gatorade.

Kim Kulish/Getty Images

Source: Business Insider


Despite her R65 billion net worth, Judy Faulkner, the founder of Epic Systems, also resists the lavish life: "I never had any personal desire to be a wealthy billionaire living lavishly," she wrote.

Courtesy of Epic Systems

Source: Business Insider, Bloomberg


She reportedly has owned only two cars in the past 15 years and has lived in the same Madison, Wisconsin, suburb for nearly three decades.

Source: Business Insider


Mark Zuckerberg — the sixth-richest person, with a net worth of R906 billion — also lives a relatively low-key lifestyle.

Getty

Source: Business Insider, Bloomberg


His daily uniform consists of a simple T-shirt, a hoodie, and a pair of jeans.

Drew Angerer / Staff

Source: Business Insider


And he and his wife, Priscilla Chan, famously chowed down on McDonald's shortly after their backyard wedding in 2012.

Source: Business Insider


He's also been spotted driving relatively inexpensive cars, including an Acura TSX, a Volkswagen hatchback, and a Honda Fit, all of which are valued at or under R427,000.

Getty Images/Kevork Djansezian

Sources: Business Insider, CNBC


Jeff Bezos is also known to live modestly.

Alex Wong/Getty Images

Source: Business Insider


With a net worth of over R1 trillion, Bezos is the richest person, but he used to drive a 1987 Chevy Blazer. As of 2013, he was driving a Honda Accord.

Getty

Source: Business Insider, Bloomberg


But billionaires, CEOs, investors, and businesspeople aren't the only ones who live frugally. Some celebrities don't act like they have millions to their names.

jacoblund / Getty Images

Consider Tyra Banks, who has always been more of a saver than a spender. One estimate puts the businesswoman, model, and producer's net worth at over R1 billion.

Source: Business Insider, INSIDER


"While a lot of models were partying it up and going shopping and buying a closet of designer clothes or staying at the top hotels during fashion week, I was at the DoubleTree or Embassy Suites, saving my money, and bought a house at 20 years old," she once said.

Emma McIntyre/Getty Images

Source: MONEY via Business Insider


"I was always more interested in experiences over things," she told Money magazine. "Things didn't make me happy. I saved, saved, saved. But I saved to a fault."

NBC/Getty Images

Source: MONEY via Business Insider


Her accountants told her she needed to spend money and had her set up a frivolous account, in which she had to budget to spend money on "stupid stuff".

James Devaney/Getty Images

Source: MONEY via Business Insider


With the exception of his well-known car collection, Jay Leno — who has an estimated net worth of R4 billion — is also quite the saver.

Roy Rochlin/Getty Images

Source: Business Insider, Money


He has always tried to hold two jobs, spending the money from one job while saving money from the other.

Tasos Katopodis/Getty Images

Source: Business Insider


Early in his comedy career, Leno also worked at a car dealership. He saved his comedy money and spent his car-dealership money.

Alberto E. Rodriguez/Getty Images

Source: Business Insider


When he hosted the "Tonight Show," he saved all of his "Tonight Show" money — reportedly as much as R427 million per year, according to CNBC — and spent only the money he made from stand-up-comedy touring.

Paul Drinkwater/NBC via Getty Images

Source: Business Insider


Likewise, Jennifer Lawrence, who was born to a middle-class family, has always been thrifty.

VALERIE MACON/Getty Images

Source: Business Insider


"I was raised to have value for money, to have respect for money, even though you have a lot of it," she previously said.

Mark Davis/Getty Images

Source: Business Insider


Even after her rise to fame and consequently hefty payouts — she received R213 million for the 2018 film "Red Sparrow" and was one of the highest-paid actresses that same year — she lived for several years in the same three-bedroom apartment she got when she moved to Los Angeles.

Juan Naharro Gimenez/ Getty Images

Source: Business Insider, Variety, Forbes


And she's been spotted driving a Chevy Volt, which has a R555,000 price tag.

Source: Business Insider


She also loves to clip coupons. "I still look for bargains when I go to the market," she said in an interview.

Raymond Hall/Getty Images

Source: Business Insider


The actress and singer Kristen Bell also loves coupons — she's previously said she exclusively shops with them.

Getty

Source: Business Insider


She's particularly a fan of Bed Bath & Beyond's 20% off coupons. "I may or may not have stolen them out of my neighbours' mailboxes sometimes," she told Conan O'Brien.

Alberto E. Rodriguez/Getty Image

Source: Business Insider


And her wedding with Dax Shepard famously cost just R2,023 including the petrol to get to the courthouse.

Source: Business Insider


That's pretty frugal for someone who reportedly earns R1 million per episode of the TV show "The Good Place" — and that's not counting her undisclosed earnings from the movie "Frozen," which grossed more than R17 billion at the box office.

NBC/Getty Images

Source: The Cheat Sheet

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