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We’ve all heard the advice to live below your means, especially when you’re struggling to make ends meet. But do the same rules apply while loading? After all, even billionaires like to be frugal.
GOBankingRates interviews self-made millionaires Tommy Mello, CEO and founder of A1 Garage Door Service, and George Yang, founder and chief product designer of YR Fitness, on how to live below your means. We talked about it.
“As a self-made millionaire, I have always believed that living below your means is the key to long-term financial success,” Melo said. Below, we explore why he and Yang adopt this kind of frugal thinking.
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prioritize needs over wants
“One of the first steps I took was to clearly differentiate between needs and wants,” Melo says. “I try to focus my spending on what I need, both at work and in my personal life.”
This means not getting caught up in luxury or impulse purchases that don’t align with your goals, he said. “By focusing on needs, we avoid unnecessary expenses that quickly add up.”
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Automate your savings
“I automate my savings so I can set aside a significant portion of my income before I even see it,” Melo said. This allows you to live within a predetermined budget and continually invest for your future.
“It’s easy to fall into the trap of spending what’s in your account, but by automating your savings, you remove that temptation and build wealth passively,” he said.
Invest smarter than spend
Rather than spending money on depreciating assets, Melo focuses on investing in things that increase in value, such as real estate or his own business.
This shift in mindset from spending to investing is very important. “Any money I decide not to spend can be used to invest and help build my wealth in the long run,” he said.
Reduce lifestyle inflation
“As my income has increased, I have been careful not to expand my lifestyle accordingly,” Melo explained. “I still drive a reliable used car and don’t splurge on the latest gadgets or luxury items.”
Instead, he reinvests that extra income into his business and other ventures, continuing to generate more wealth. “No matter how much your income increases, it’s important to keep your lifestyle modest.”
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Yang offered similar advice. “To avoid a deteriorating lifestyle, you need to set clear financial boundaries and stick to them no matter how much your income increases,” he said. “At YR Fitness, we emphasize the importance of budgeting and spending carefully, and encourage our team to adopt similar habits in their personal lives.”
One effective strategy used by Yang is to automatically increase your savings rate every time you receive a raise or bonus, rather than increasing your spending. “This allows my standard of living to remain constant even as my income increases.”
Additionally, Yang maintains a strict budget that aligns with long-term financial goals and allows for occasional splurges within a controlled framework.
This approach not only helps you avoid unnecessary expenses, it also keeps your financial goals front and center and prevents your expenses from escalating over time as your income increases.
“By living on a predetermined budget and investing the extra income, I was able to grow my wealth while maintaining a comfortable and modest lifestyle,” he says.
careful budgeting
“I track every dollar that comes in and goes out,” Melo explained. “Being conscious of my spending allows me to adjust my budget as needed and always live within my means.”
This habit will also help you identify areas where you can cut back if needed, allowing you to stay financially flexible.
surround yourself with like-minded people
Melo has found that surrounding himself with people who share similar financial values is incredibly helpful. “It’s easier to stick to frugal habits when your co-workers value the same things,” he said. “This community strengthens my resolve to live below my means and avoid a macabre lifestyle.”
Mello explained that living below your means is not about poverty, but about making smart choices that align with your long-term goals.
“By focusing on what really matters and being disciplined, I’ve been able to build and maintain wealth without falling into the traps of overspending and lifestyle inflation,” he said.
adopt a frugal mindset
According to Yang, living below your means starts with embracing a frugal mindset. “For me, this meant making conscious choices about where and how I spend my money, always keeping my financial goals in mind,” he said.
His company applies a similar approach to its business operations, with every expenditure carefully evaluated for its necessity and potential for return on investment.
“Personally, I avoid unnecessary luxuries and instead focus on spending my money on things that really matter, such as investing in my business and supporting my long-term financial goals,” he explains. did.
This disciplined approach has allowed him to build and maintain wealth over time without falling into the trap of lifestyle inflation. “By reducing our expenses, we were able to direct more resources to investments and savings, ensuring financial security and growth,” Yang added.
This practice also reinforces the principle that true wealth is not about how much you earn, but how much you keep and increase over time, he noted.
“By adopting a frugal mindset, setting financial boundaries, and taking practical steps to stay within your budget, you can achieve long-term financial success,” he says. said.
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This article originally appeared on GOBankingRates.com: I’m a Self-Made Millionaire: 7 Ways I Live Below My Means and Stay Frugal
