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The poor and the middle class are forced to spend money on certain things. They simply do not have much of a choice.
In my rich habits research, I found that the wealthy have more freedom of choice is not locked in certain expenses, like those in the middle class.
The rich do not spend their money on cheap products
Families with poor and middle class have limited budgets. This forces them to buy cheap products that often need to be replaced in a few years due to limited quality.
Conversely, the rich advice to buy the best quality products that can last an entire lifetime. For example, one of the self -made millionaires in my study refused to buy cheap golf noise. Although this millionaire did not buy many golf noise over the years, every purchase he made was expensive and of the highest quality. He told me he’s wearing the same golf noise for over twenty years.
The rich do not spend their money on cheap services
Like cheap products, the poor and middle class often do not have a choice, but to seek out the lowest price in paying for certain services.
However, the rich refuse to use cheap service providers as they understand that you get what you pay for when it comes to quality service. Poor execution does not last and may actually have to be repaired or corrected by another.
An example of this rejection of setting up for cheap services can be found in the tax preparation industry. The poor and the middle class will either prepare their own tax returns or find a cheap tax preparation service. Of necessity, it is a transaction purchase, with little or no tax planning involved.
Some of the millionaires in my study also happened to be clients at my CPA company. Many of these millionaires spend thousands of dollars a year working with our company in an attempt to reduce how much they pay in income tax each year.
The rich do not need to buy life insurance
The primary purpose of life insurance is to replace income lost due to the unexpected death of a spouse.
If the poor have life insurance, it is typically a nominal amount of life insurance that is delivered to them through their employer’s group plan.
Families in the middle class often have both employer defense life insurance and separate policies that are generally ten times each family inner’s annual compensation. This ensures that spouse and children will be able to economically survive the loss of an income -earning parent.
When you are wealthy, you do not need life insurance to replace your income. The wealthy have investments that provide significant passive income that they use to maintain their standard of living. If the wealthy has life insurance, it is typically owned by an irrevocable life insurance quiet (ILIT). The purpose of an ILIT is to provide liquidity to their property that buys the estate time to settle the hard assets such as real estate or an existing business
The rich do not need to buy cheap food
The rich do not make a habit of buying cheap, cheap food. They have the means to buy expensive, healthy, often high quality organic food. If they go out to dinner with their wealthy friends, frequently the frequent expensive restaurants, knowing that the food will be delicious because it is prepared by expert chefs who use only the finest ingredients.
The rich do not spend their money on lottery tickets and games
The poor and middle class buy lottery tickets or gamble because they hope to hit the jackpot and get rich. So this is a common extra cost for the poor and middle class.
The rich do not have to buy the lottery tickets or gamble to create a life in their dreams – they are already living that life.
One of the wealthy in my study that gamble would travel once a month to Atlantic City, with their spouse to gamble. He closed how much he was allowed to lose at the crap table for $ 500 each month. He gambles for the fun of it, not to hit the jackpot. $ 500 a month was reasonable if his mind considering the fact that he had collected about $ 7 million in wealth over the years, giving him about $ 330K a year in income.
The rich do not pay credit card interest or fees
The rich never pay credit card interest because they do not have balance on their credit card. And if they are charged a late fee, they will get the credit card company from giving up on the fee or taking their business elsewhere.
The credit card companies always waived the fees for the rich.
The rich buy do not expand car guarantees
Many people in the middle class buy expanded car guarantees whose costs are an insurance cost that increases their monthly car payment. They do this because they know they would fight to cover the expensive repairs required on their cars.
The rich can afford expensive repair costs and avoid these unnecessary insurance costs.
