To be a millionaire, one must truly spend like a millionaire. This week I have truly learnt the value in that lesson. I have always tried to be very cautious with my spending but at age 17 when you're a kid living the lifestyle I have grown up with, it can be really hard to cut back and figure out what you REALLY need and what you really don't. I learnt through reading Millionaire Teacher that most of the world's millionaires are self made men and women who do not spend on materialistic items they don't need, but rather spend like a common man and sometimes even like a pauper. To be a millionaire you don't have to live on clams, potatoes and pasta while riding 30 miles to and from work on your bicycle, but you certainly have to learn to not want a Venti Mocha Frappuccino from Starbucks every morning. Simple changes such as cutting your spending on coffee every morning or even down from three times a week down to one can be saved and then further invested to make not just a small profit in the short term but rather a large profit in the long run.
Suppose you buy a meal from Starbucks everyday of the week and it costs you $10 a day. Assuming making your own meal at home would cost half that per day, along with you cutting this down to three times a week, you would instead of spending $70 a week be spending $50. Now $20 saved is a lot of money, but imagine $20 saved every week for 52 weeks, thats an extra $1040 a year. Saving that much money is great, but what if you could make it even more? If you were to invest that same amount in an index fund averaging a 10% annual interest rate over 10 years you would turn your $1040 into $2697.49.
I have been trying to spend like a millionaire for just about a week or even less than that and the results are already incredible! By simply adding my loose change to a jar rather than using it as an excuse to buy more food at school I have already saved up more than $10 in a week. On top of that by eating more at home and spending less money on food outside my home I have saved myself an additional $20 this week.
What my father believes:
When I was asking my father for our bills and financial information regarding my expense report, I brought up the topic of spending like a millionaire to become a millionaire. My father agreed that the true path to becoming a real millionaire is through spending wisely and not just spending money because one has access to it. He believes saving what we can to have for the future is extremely important and that even people with big salaries need to save and learn to spend wisely if they wish to remain wealthy. He believes the truly wealthy people are exceptions in a world which is why aspiring millionaires are inspired by them. He himself has gotten his wealth through saving and cutting unnecessary spending rather than living an extremely lavish lifestyle when not needed. We also talked about how so many people try to portray the image of being a millionaire and even if they are millionaires how they wont remain wealthy very long due to the simple fact that they try and show the world the wealth that they think they have. This is very similar to how Mr. Hallam mentioned countless stories both in class and in his book, Millionaire Teacher, of people going broke after trying to show off their wealth rather than spending and saving wisely. My father believes that the people who use their wealth to show it off rather than save it and spend wisely do so to mask their own insecurities and their desire for recognition. My father also pointed out that all the self made millionaires that he knows in India are the people who drive very simple cars and who don't spend their money on things they don't need like Rolex watches. I found my fathers opinion to be pretty synonymous with mine.
Week's Expenditures: January 15th- January 22nd
Living: $2125 (8,500 a month rent for 4 people = $2125 a week per individual)
Transport: $50 (2,000 bus fee for 20 weeks worth of transport to and from SAS = $50 a week)
Groceries: $250 (500 a week, my mom said i'm half of that)
Food outside of the house: $40 (school food)
Phone Bill: $12.50 ($50 a month fixed plan = $10 a week)
Utility Bill: $283 ($850 a month for 3 people = $283)
Clothing: $36 (2 SAS tank tops)