- 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 world’s 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 $100,000 to $1 million and a group of high- and ultra-high-net-worth individuals.
She found that six behaviors, 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 world's 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 behaviors, which she called "wealth factors," are related to net-worth potential, regardless of age or income.
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.
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.
Source: "The Next Millionaire Next Door"
Several of the world's 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 billionaire Warren Buffett, who's worth $82.8 billion and is the world's third-richest person. Not one for lavish purchases, he spends relatively little money.
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 about $276,700 in today's dollars.
Source: Business Insider
He also drives a modest set of wheels — a 2014 Cadillac XTS, which had an original MSRP of $44,600 in 2014.
Source: GOBankingRates, US News & World Report
And instead of buying a smartphone, he uses a flip phone.
Source: Business Insider
Buffett also famously pays only $18 for a hair cut.
Source: Marketwatch
And he doesn't pay much for food — he spends no more than $3.17 on his daily McDonald's breakfast and gets dinner at the modest Gorat's steakhouse, where the menu ranges from $3 to $41.
Source: Business Insider
Then there's "Canada's Warren Buffett," billionaire Jim Pattison, who earned his nickname from his own, relatively frugal lifestyle. Pattison is worth $6.57 billion ...
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 $31,695 to $56,495.
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."
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.
Source: Bloomberg
Billionaire Richard Branson — who's now worth $5.28 billion — also has modest roots. He's frugal when it comes to luxury items, largely because he grew up in a middle-class family.
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 watercolors at a reasonable price.
Source: The Guardian
He also doesn't spend much on clothes.
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."
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 currently has a net worth of $11 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.
Source: Business Insider
Despite her $4.59 billion net worth, Judy Faulkner, founder of Epic Systems, also resists the lavish life: "I never had any personal desire to be a wealthy billionaire living lavishly," she wrote.
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 in the world, with a net worth of $63.6 billion — also lives a relatively low-key lifestyle.
Source: Business Insider, Bloomberg
His daily uniform consists of a simple T-shirt, hoodie, and jeans.
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 $30,000.
Sources: Business Insider, CNBC
Jeff Bezos is also known to get around modestly.
Source: Business Insider
With a net worth of $136 billion, Bezos is the world's richest person, but he used to drive a 1987 Chevy Blazer. As of 2013, he was still driving a Honda Accord.
Source: Business Insider, Bloomberg
But billionaires CEOs, investors, and businessmen aren't the only ones who live frugally. Some celebrities don't act like they have millions to their names.
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 $90 million.
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.
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."
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."
Source: MONEY via Business Insider
With the exception of his well-known car collection, Jay Leno — who has an estimated net worth of $350 million — is also quite the saver.
Source: Business Insider, Money
He's always tried to hold two jobs, spending the money from one job while saving money from the other.
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.
Source: Business Insider
When he hosted the "Tonight Show," he saved all of his "Tonight Show" money — reportedly as much as $30 million per year, according to CNBC — and only spent the money he made from stand-up-comedy touring.
Source: Business Insider
Likewise, Jennifer Lawrence, who was born to a middle-class family, has always been thrifty.
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.
Source: Business Insider
Even after her rise to fame and consequently hefty payouts — she received $15 million for the 2018 film Red Sparrow and was one of the highest-paid actresses in the same year — she lived for several years in the same three-bedroom apartment she got when she moved to Los Angeles.
Source: Business Insider, Variety, Forbes
And she's been spotted driving a Chevy Volt, which has a $39,000 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.
Source: Business Insider
Actress and singer Kristen Bell also loves coupons — she's previously said that she exclusively shops with them.
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 neighbors' mailboxes sometimes," she told Conan O'Brien.
Source: Business Insider
And her wedding with Dax Shepard famously cost just $142, including the gas to get to the courthouse.
Source: Business Insider
That's pretty frugal for someone who reportedly makes $125,000 per episode of the TV show The Good Place — and that's not counting her undisclosed earnings from the movie Frozen, which grossed over $1.2 billion at the box office.
Source: The Cheat Sheet