A Trusted Friend in a Complicated World

15 Money-Saving Habits Self-Made Millionaires Have in Common

Updated: Jan. 31, 2024

Ready to reach millionaire status? You'll want to steal these money-saving tricks from self-made millionaires.

smart piggy bank
bob_bosewell/getty images

Start saving smarter

Learning how to save money like a self-made millionaire can mean the difference between stressing to dress and dressing to impress. It can help you retire younger so you’re able to see more of the world sooner. It can mean finally building that dream house. And more than anything, it can mean having the money when you truly need it.

But let’s face it: Not all of us are natural savers. We waste our money on frivolous supermarket buys we’re convinced we have to have in the moment. We don’t bother with high-yield savings or investment accounts. And we have a tendency to try to keep up with the Joneses. In other words, we could really use the help of a self-made millionaire who not only knows the tricks to getting rich but is also skilled at saving. Luckily, we talked to some financial geniuses who were willing to share their expert tips on the money-saving strategies all self-made millionaires share.

Whether you’re planning to retire at 30 or are opening your first savings account, these are the money-saving habits you should borrow from self-made millionaires to become one yourself someday.

Get Reader’s Digest’s Read Up newsletter for more money tips, humor, cleaning, travel, tech and fun facts all week long.

High angle view of a pie chart made of colorful building blocks and red calculator on pink background
the_burtons/Getty Images

They follow the 50-30-20 rule

Forget complicated budgeting or uncomfortable belt-tightening; the secret to saving big might boil down to three simple numbers. Kimberly Palmer, a personal finance expert at NerdWallet, says that many a self-made millionaire follows the “50-30-20” rule.

Using this formula, they put aside 50% of the money they earn for savings and necessities such as rent and groceries, 30% for lifestyle purchases like new clothing and 20% for fun activities like concerts or eating out. By regularly and intentionally setting aside a fixed amount of savings, the self-made millionaire builds a nest egg faster.

Ready to try it for yourself? To get started, download a budget app to help you divvy up your income accordingly. “You might find that with some adjustments, such as shifting your food spending toward groceries and away from takeout and restaurants, or cutting back on monthly subscriptions, you can take steps toward reaching your wealth-building goals,” Palmer says.

Piggy bank stuffed with hundred dollar bills on blue background with hard shadow
MarsBars/Getty Images

They automate their finances

Budgeting is a smart move, but there are times when it can backfire, according to nine-time New York Times bestselling author David Bach, the founder of FinishRich.com. “You’re too busy, and you will just get frustrated and fail,” he says.

Instead, self-made millionaires automate their financial lives so they can’t fail. That includes setting up a regular deposit into their savings accounts as well as arranging for a regular 401(k) contribution to be automatically withdrawn from their paychecks.

Bach also recommends using autopay for many of your bills, including car payments, mortgage payments and credit card bills. Doing so helps you avoid missing a payment and getting hit with those pesky late fees, saving you money in the long run. Just make sure to leave out any of these bills you shouldn’t put on autopay.

economic growth chart made of gold coins
J Studios/Getty Images

They spend less than they earn

Believe it or not, “self-made millionaires don’t necessarily look like millionaires on the outside,” according to Palmer. Rather than spending money on flashy vacations or new clothes, “they often spend less than they earn so they can put their money into savings and investments,” she says.

To maximize your savings like a self-made millionaire would, Palmer recommends taking stock of your personal spending and cutting back on categories that matter less to you. For example, if you enjoy taking a big vacation every year, consider cooking lunches and dinners at home to curb your spending at restaurants. On the flip side, maybe you would rather have a smaller clothing budget and create a capsule wardrobe to free up spending for dining out with your friends.

Plenty dollar shape object in a shopping cart
Toshiro Shimada/Getty Images

They avoid “want spending”

Another way self-made millionaires avoid spending more than they earn? They never fall into the trap of “want spending,” according to Tom Corley, an expert on wealth creation and author of Rich Habits. “According to Census Bureau data, there are approximately 30 million people who make more than they need but who are, nonetheless, one paycheck away from poverty,” he explains. “These individuals engage in something called want spending.”

Are you a “want spender”? Corley’s research found that some of the biggest indicators include:

  • Surrendering to instant gratification, forgoing savings in order to buy things you want now, be it a 60-inch TV, nice vacation, expensive car or fancy pair of shoes
  • Spending too much going out to eat or ordering in
  • Incurring debt in order to finance your standard of living

Essentially, want spenders create their own poverty by rationalizing their desire to spend in various ways, whether it be by planning to make more money in the future or relying on the economy improving down the line. That’s why self-made millionaires shun spending money on their wants and focus more on their needs and savings. That said, if you do want to make a purchase that you didn’t budget for, here are some quick ways to earn extra cash.

paper brain on blue background
MirageC/getty images

They’re smart spenders

Impulse purchases can happen to the best of us. No, you didn’t need the trucker hat at the gas station on your long, boring road trip. And yes, stuff like that, when made a habit, adds up. To prevent extraneous spending and save more money, Corley suggests a few specific strategies that self-made millionaires followed in his research:

  • They buy in bulk. “If done properly and with the right items, buying in bulk can save your household money and reduce waste,” he says. Toilet paper, soap, laundry detergent, paper towels and shampoo are items proven much cheaper when bought in larger sizes. Prioritize food items like applesauce, canned goods or yogurt, which can be portioned into glass jars and saved for future use.
  • They create a meal plan. “If you can sketch out a menu for the week that utilizes similar ingredients, you’ll have a more focused trip to the grocery store, and you’ll end up throwing less away weeks after it’s been shoved to the back recesses of the refrigerator,” says Corley. “Making a conscious effort here saves you money, and it keeps food waste out of landfills.” For other smart tricks to save money on groceries, consider following a budget grocery list and learning how to find coupons.
  • They reduce energy costs. “Lowering your energy consumption is low-hanging fruit when it comes to cutting monthly expenses,” he explains. This can be as simple as swapping incandescent bulbs for CFLs or LEDs to lower your utility bill.

save money for investment concept Toy car and stack of coins
tuk69tuk/Getty Images

They prevent lifestyle creep

Whether you tried out a new side hustle idea or learned how to negotiate for a higher salary, you’re now bringing in more money. But be careful! It’s all too tempting to splurge on a bigger house or fancier car as your income grows. “It’s a common habit among many who suddenly find themselves making more money,” Corley says. But self-made millionaires avoid increasing their standard of living in order to match their growing income—a money-burning practice called lifestyle creep.

In fact, Corley’s research found that a whopping 64% of self-made millionaires lived in a modest, middle-class home; 44% purchased used cars; 41% spent less than $3,000 on their annual vacation; and 28% mowed their own lawn to save money.

Here’s why lifestyle creep can hurt you financially: “Once you spend your money, it’s gone,” Corley says. “When you hit a bump in the road, such as a job loss, you are then forced to sell your stuff. If the stuff you purchased depreciated in value, you get pennies on the dollar.”

As a good rule of thumb, he recommends spending no more than 25% of your annual net pay on housing costs and 5% on car costs, no matter how much you earn.

Studio shot of row of folded dollar bills with red gift bows
Westend61/Getty Images

They don’t lend money to friends or family

The self-made millionaire knows that your love for your family and friends shouldn’t be measured by your generosity, but sometimes that’s exactly what it comes down to. You’re inevitably left in an awkward bind: If you don’t provide a loan, there can be tension, but if you do, you may never get the funds back and might find yourself resenting your pal. “You will lose both your friend and the money, and you’re not a bank,” advises Bach.

Say you do lend them money. Did you come up with an agreement for a timeline for repayments? When it comes to friends or family, setting such boundaries can be difficult, but it’s even more awkward to continuously ask for the money back.

If self-made millionaires absolutely must lend money to someone near and dear, they make sure the loan isn’t open-ended. Bach recommends coming up with a timeline and sticking to it. You can also take advantage of companies that specialize in peer-to-peer lending, like Zirtue, which formalizes loans between family members and friends.

stack on money in paper clip on pink background
the_burtons/getty images

They’re frugal, not cheap

Although it may seem counterintuitive, buying cheaper products is not a common money-saving habit among self-made millionaires. In fact, Corley’s research found that 66% of poor people admitted to being cheap. “Cheap, to them, meant spending their money on the cheapest product or service available,” he explains. But cheap products break or deteriorate at a much quicker rate than quality products, which means you end up spending more in the long run.

He also points out that, when looking for services, those who provide cheap ones are typically inexperienced or not very good at what they do. “If they were good, they would be able to command higher prices. Cheap service providers can get you in a lot of trouble, especially when it comes to taxes, legal representation or even just getting your car fixed. Cheap service providers are able to keep their fees down by paying their staff lower wages. This means they are not getting the best staff or are settling for inexperienced staff.”

Being cheap won’t make you poor, but it will mean you save less money because you’re constantly shelling out for new products or services to replace the low-quality ones you bought in the first place. Self-made millionaires focus on buying fewer, higher-quality products that will last a long time. Of course, there are a handful of exceptions to this rule, including the things money experts tend to buy cheap.

colorful venn diagram on blue background
MirageC/getty images

They don’t play the comparison game

Keeping up with the Joneses is more tempting (and common!) than you might think. According to a recent NerdWallet survey, 83% of Americans say they overspend due to social pressures from seeing others dining at expensive restaurants or taking fancy trips abroad. “It’s easy to get caught up in overspending, especially when you see peers or neighbors spending more than you on cars, houses or vacations,” Palmer says.

But when rich people feel green with envy, Palmer says, they put things into perspective—and keep in mind that what they’re seeing may not be the entire picture. “It’s important to take a step back and realize you might not want the same things they have, or they might be creating financial stress for themselves by buying those things,” she says.

Dollar banknotes in black wallet on blue background
Makhbubakhon Ismatova/Getty Images

They pay themselves first

By setting aside a portion of their income every day, week or month—in other words, “paying yourself first”—self-made millionaires take one of the most important steps toward building wealth, according to Bach. “You’re going to work 90,000 hours over your lifetime; you should keep at least an hour a day of the income,” he says.

He recommends setting aside an hour’s worth of your income each day and then saving and investing it—preferably automatically to begin earning some passive income and reach that high-roller status.

Miniature house standing on stacks of coins. The concept of real estate, mortgage, home insurance, home purchase and sale.
TanyaJoy/Getty Images

They find a passive income source

Speaking of passive income, self-made millionaires save even more money by investing their savings in an account that creates passive income through accumulated interest, such as a high-yield savings or investment account. There are several types of accounts to consider, and ultimately, the one you choose will depend on your financial goals.

“No strategy is a one-size-fits-all approach, since everyone’s financial situation is unique and different,” Palmer says. She recommends speaking with a financial advisor to learn the right strategy for you and to avoid the most common retirement-planning mistakes.

yellow credit card on pink background
Javier Zayas Photography/getty images

They put away the credit card

Credit cards can sabotage even the best of savers, according to Corley. “Credit card use can easily get out of control,” he says. “If you rely on credit cards to pay for ordinary living expenses, that means you are living beyond your means.”

Not only are there high interest rates on credit card debt, but paying with plastic could also trick you into spending more money. In a study published in the journal Marketing Letters, MIT researchers found that shoppers spend up to 100% more when paying with a credit card—and were even willing to pay twice as much for an item as those who paid in cash.

The 100-day credit card money-saving challenge could help you break bad spending habits, according to Corley. Essentially, the goal is to go 100 days without using your credit cards for purchases. The result? “Having to use cash or your ATM card forces spending awareness and restricts how much you can spend,” Corley says.

Colorful pencils with copy space on pink background
bmanzurova/Getty Images

They design their dreams

What do you want your life to look like in five, 10 or 20 years? Self-made millionaires always know their answer to this question, Corley says. He calls this dream-setting or creating a clear vision of your ideal future life. From there, you should set and pursue financial goals that will help you accomplish those dreams. “Dream-setting is a springboard for creating the goals you’ll need in order to help you get to your destination,” he says.

For example, if you want to earn a master’s degree so you can get a job with a higher salary, you can set goals like setting aside two hours every day to study for the graduate record exam (GRE). “Goals are the transportation system to your ideal future life,” Corley says. “Once you have a clear vision of your destination, the goals you’ll need to achieve will magically manifest themselves out of thin air.”

Cute gold colored piggy bank wearing a graduation cap and standing next to a roll of dollars. Education cost theme
Catherine Lane/Getty Images

They invest in themselves

There’s no question that saving and investing your money is key to accumulating wealth fast. But according to Corley, the first (and most important!) money-saving habit that self-made millionaires practice is investing in themselves—whether that means reading for at least 30 minutes a day, listening to podcasts during a long commute or seeking out career mentors.

Exactly how should you invest in yourself? The self-made millionaires in Corley’s research focused their daily reading on content that was directly related to the dreams and goals they were pursuing. Here are some places you can read for free online so you can invest in yourself without setting back your savings goals.

Piggy Bank Climbing a Ladder
Nora Carol Photography/Getty Images

They never give up

Maybe it sounds cliche, but it’s the type of mindset that will keep you above water. “No matter what happens, no matter how many times you fail, as long as you get up and try again, you haven’t lost,” says Bach. So commit to the sort of money-saving tricks a self-made millionaire would follow, but give yourself a break if you fall off the wagon. Dust yourself off and recommit to your saving strategies.

Need more money-saving ideas? These almost-effortless ways to save money are a great place to start.

About the experts

  • Kimberly Palmer is a personal finance expert at NerdWallet.
  • Tom Corley is the author of the book Rich Habits and co-hosts the podcast Rich Habits Poor Habits. Since 2004, he’s been studying the daily habits of the rich and the poor to better understand what works and what doesn’t.
  • David Bach is the nine-time New York Times bestselling author of books including The Automatic Millionaire and The Latte Factor. He’s also the founder of FinishRich.com.

Sources:

  • NerdWallet: “Most Americans Have a Monthly Budget, but Many Still Overspend”
  • Marketing Letters: “Always Leave Home Without It: A Further Investigation of the Credit-Card Effect on Willingness to Pay”