How To Save Like A Millionaire

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Saving money can be tough, especially if you’re not used to it.

But what if I told you that you could save money like a millionaire?

Most millionaires didn’t become wealthy simply by making a lot of money.

They need to save their money too, otherwise they would be living paycheck to paycheck.

In this post, I share with you the best ways for how to save like a millionaire.

Trust me when I say some of the ideas on this list will shock you.

So whether you’re just starting out on your financial journey or you’ve been saving for years, these tips will help you get even more out of your hard-earned dollars.

The end result of your hard work could easily see you with a million dollars or more nest egg.

How To Save Like A Millionaire

#1. Make Saving Money A Priority

The first step for how to save like a millionaire is to make saving a priority.

Too many people put off saving until after they have paid all their bills.

The problem with this is there is rarely any money left to actually save.

Or, they simply forget to save.

Millionaires on the other hand know that to get ahead financially, you need to have savings.

First with an emergency fund, and then general savings and even long term savings.

So they make it a priority to save.

They save right when they get paid, usually through automatic savings plans.

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They also tend to have extra money taken out of their paycheck and have a direct deposit into a savings account.

Or they have it invested into a retirement account like a 401k plan or an individual retirement account.

Your Action Step

You need to making saving a priority.

Set up an automatic transfer with your bank, it’s easy to do.

Just pick an amount to save and the date you want the money transferred and sit back and let it grow.

#2. Start Saving Early

A millionaire knows the more time you have to save and invest, the more your money will grow into.

So they make it a habit to put money away as soon as they get their first job.

Here is a great example of the impact of putting it off.

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Sarah saves $1,000 a year starting at age 25 and earns 5% on her money.

In 40 years, she has close to $127,000.

Kelly on the other hand, waits to save until she is 35.

She also saves $1,000 a month and earns 5%.

But since she started later, her savings only grew for 30 years.

She ends up with close to $70,000.

That delay of 10 years cost her nearly $57,000!

Your Action Step

Follow the same path here and make sure you start saving as early as possible.

The more time you have for your money to grow, the more your wealth will grow.

#3. Understand Compound Interest

An important concept that a millionaire knows the power of is compound interest.

This is what makes your savings grow into larger sums of cash.

It basically works like this.

Your savings earns interest and while it earns interest, the interest is also earning interest.

While at the start, when you have a small amount saved, the interest you earn will also be small.

But as your wealth grows, compounding happens faster and faster, increasing the size of your nest egg.

If you follow the tip above and save and invest early, compound interest could allow you to reach financial independence.

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Your Action Step

Make it a point to understand how compounding works and don’t get discouraged in the beginning when you earn very little.

Give it time and stick with and you will be amazed at what happens.

#4. Save A Good Amount Of Your Income

Another thing successful people do is they save a good portion of their income.

In fact, many save 20% or more every month.

And this adds up over time.

For example, let’s say you make $40,000 a year and are able to save 20% or $8,000.

In 20 years you have $160,000 and this isn’t even counting any interest you earn.

Wealthy people know that while earning a return on their money is important, the more important thing is to save as much as possible.

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Your Action Step

You need to start saving as much of your income as possible.

If money is tight and you can only save 5%, then do this.

Don’t see the 20% number and because you can’t save that you should just give up hope.

Start saving with what you can and then every year, increase this amount by 1%.

Here is how this looks.

Assume you make $40,000 and save 5% or $2,000.

The next year, you increase this to 6% or $2,400.

Keep doing this each year until you are saving 20% of your income.

#5. Have A Plan

Saving money is great.

But if you don’t have a plan or savings goals, chances are in time, you will stop saving.

It won’t be fun anymore because there is no plan for the money.

But when you have goals for your money, like a mini-retirement so you can travel the world in your 50s, early retirement, or even a vacation house, you are more likely to save over the long term.

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Your Action Step

Take some time to write down your financial goals.

Then take a break for a few days and revisit your list.

If the goals you wrote down still interest you, you have a plan.

The next step is to keep your plan visible so you see it and are reminded of it.

Finally, review the plan annually.

Don’t be discouraged if a few years later your goals change.

Life isn’t set in stone.

Learn to roll with it and you will be successful and happy.

#6. Understand The Power Of The Stock Market

If you want to reach millionaire status, you are going to need to put some of your income to work in the stock market.

There is no way you will be rich if you only keep your cash in a bank savings account.

Even if you use a high yield savings account, you won’t end up rich.

That is unless you have a job that pays you a million dollars a year.

You need to invest in the stock market because the higher return you get makes a huge difference over the long run.

Your Action Step

Become a millionaire by investing in the stock market.

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Don’t get overwhelmed by all the investment options out there either.

Pick a couple of index funds based on your risk tolerance and then choose an amount to invest on a regular basis.

#7. Focus On Building Your Net Worth

To become a millionaire, you have to overcome the idea of focusing on your salary.

Too many people think if you earn six figures, you are wealthy.

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This is not true.

You could easily earn this salary, spend it all, go into credit card debt, and have nothing to show for it.

What you need to do is track your net worth.

This is a true picture of your overall finances.

By taking the assets you own and subtracting out the liabilities or the debts you owe, you see your current financial situation.

The result is your net worth.

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Your Action Step

Don’t fall into the trap of thinking you need a high paying job to become wealthy.

You can become wealthy and build a high net worth even on an average starting salary.

The key is to follow the tips in this post to make it happen.

#8. Track Your Spending

One of the best ways for how to save like a millionaire is to track how you are spending money.

This will help you see where all your money is going.

Rich people are very intentional with their spending and they know every penny that comes in and goes out.

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They don’t want any surprises so they track everything.

Your Action Step

Start tracking your spending today.

There are a few different ways you can do this.

You can use an Excel spreadsheet, download an app like Tiller Money or even write it down in a journal.

The key is to be consistent with it so you have an accurate picture of where your money is going each month.

Once you know where your money is going, you can make changes if needed.

For example, maybe you are spending too much money eating out and want to reduce this amount.

Or maybe it is your grocery budget that needs to be reduced.

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Either way, by tracking your spending you know where the problem areas are so they can be fixed.

#9. Pay Less For Things

In order to save money like a millionaire, you have to get the most out of your money.

One way to do this is by paying less for things you use regularly.

This could mean using coupons when shopping, or asking for a discount if the item is damaged.

For example, I was at a bookstore and saw a book I wanted.

It was the only copy and the spine and front cover were dinged up.

I asked if I could get a discount, thinking at most I might get 5%.

To my surprise, the manager gave me 15% off.

Other ways to pay less are to comparison shop between stores to see who offers the lowest prices.

When I was doing some home improvement projects, I was going to the hardware store and paying $7 for a tube of caulk.

One day I walked into a dollar store to buy a greeting card and saw they have caulk for $1, so I started buying my caulk there.

Finally, consider buying generic or store brand items.

The quality is the same but the price is much lower.

The bottom line is millionaires understand what things cost and they look for ways to pay less for the same thing.

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This helps them with accumulating wealth each and every day.

Your Action Step

You should never do is pay full price for an item.

In fact, there are very few instances when you should.

It is easy to save money no matter where you are.

If you are shopping online, open a second browser and search for the store you are shopping at along with “coupons” or “coupon codes”.

You will get a list of sites you can look through to try to find a discount.

When I do this, I am successful 90% of the time.

Understand that many times I am saving 10%, but this is better than nothing.

If you are shopping in store, ask the cashier if they have any coupons or discounts they can apply to your order.

You may be surprised at how often they can.

Another option when in store is to ask for a discount if you pay cash.

Many stores will offer 5% off when you pay in cash because it helps them to save on the credit card processing fee.

Finally, if you shop online, make sure you shop through a cash back portal like Swagbucks or Rakuten.

Both partner with many online retailers and offer up to 25% cash back.

And with a lot of retailers offering in store pick up, you can buy online, earn cash back, and then pick the item up if you don’t want it shipped.

#10. Buy Quality Items

A millionaire knows when it makes sense to pay more for quality items.

They don’t go for the cheapest priced item all the time because in some cases, this can cost them more money in the long run.

I learned this from experience.

A few years ago, I needed some new t-shirts.

I could have bought the $20 ones but instead opted for the $8 ones.

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What I didn’t account for was the lower priced shirts were much thinner and after wearing and washing them a few times, the thin material started to get holes.

I chose to replace them with more $8 shirts and fast forward a year and they developed holes too.

In the end, I spent $24 on three shirts that got holes when I could have paid $20 for a shirt that lasted me longer.

Your Action Step

Don’t make the mistake of only looking at the price of the things you buy.

Pay attention to the quality, especially if you plan to use the item a lot or for a long time.

While it will cost more money upfront, you will save in the long.

And of course, use the earlier tip here as well to try to get the best price on the items you buy.

#11. Shop Used

While it is great to have brand new items, they cost can quickly add up.

If you shop the used market for some goods, you can save a substantial amount of money and get items that are in like new condition.

There are many places to shop for used items including consignment shops, thrift stores, garage sales and online sites.

Just remember the number one rule when shopping used is don’t pay more than you would if you bought it new.

Your Action Step

Before you buy something, spend some time looking the item up on Facebook Marketplace, Craigslist, and eBay.

You might be surprised to find items in excellent condition for a lot less than buying new.

The catch to this is you might lose out on any warranty if you don’t have a purchase receipt.

#12. Sell What You No Longer Use

Millionaires understand that when you get rid of things you no longer use, it is a form of saving.

These items were taking up space in their house and collecting dust.

Now they are getting some cash back for them which can be used to buy new things or invested.

Your Action Step

Go through your house one room at a time and look for things you no longer use, want, or need.

If the items are worthless, then simply throw them in the garbage.

If they have value and are in good condition, you can either try selling them or donating them to a charity.

No matter what you do, you will learn valuable lessons by decluttering your house and making a little money in the process.

#13. Look Long Term

One major difference between millionaires and other people is how they look at the things they buy.

For instance, millionaires look long term and take all costs into account.

Poor people look short term and only look at upfront costs.

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Take a new car.

Non-millionaires will walk into a car dealer and tell the salesman they can afford a $500 monthly payment.

The salesman will put them in the highest priced car that they can work into a $500 monthly payment, even when other less expensive cars would work.

A millionaire on the other hand, goes to the dealership knowing they don’t want to spend more than $40,000 on a car.

They take into account purchase price, dealer fees, taxes, and interest charges if they are financing the purchase.

The end result is the millionaire spends a lot less on a car compared to non-millionaires.

And while we are on the topic of vehicles, don’t make the mistake of thinking that the average millionaire drives around in fancy cars.

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The reality is they drive average cars, like Toyota’s and Honda’s.

And in many cases, they make it a point to buy used cars, not new cars, to save even more.

Your Action Step

Begin to look at the long term when you make purchases.

Don’t make the mistake of only looking at the purchase price as many times this is only part of the overall costs.

By learning to take a longer term outlook, you can save yourself tens of thousands of dollars.

#14. Educate Yourself

One of the best things millionaires do to save money is educate themselves.

This includes doing market research when looking to buy something, like a television for instance.

They seek out the pros and cons as well as user reviews to see if it is a quality item.

But education doesn’t end there.

They stay current on personal finance news, including tax laws and changes when it comes to investing.

This education helps them to make smarter moves with their finances, helping to boost their returns, and save more money.

Take inflation for example.

Many people only make investments in a high yield savings account because they are afraid of losing money in the stock market.

But what they don’t understand is earning this low amount of interest actually does cause them to lose money.

Not in the sense that their principal balance decreases, but in purchasing power.

If the cost of goods increases by 3% and your savings only earns 0.50%, you are falling behind financially.

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Your Action Step

Don’t think you need to get a degree in finance here.

Just pay attention to business and tax news.

Read the articles that sound interesting.

Even better find websites and online forums where personal finances are discussed and spend a little bit of time each week reading them.

When it comes to educating yourself on the things you buy, you can simply do an online search for the name of the item followed by “review” or “pros and cons”.

You might also want to check out Amazon and read the review there too.

Just make sure you understand that some of the reviews can be fake, so if most people say the item is junk but one or two people say it is the best thing, you know odds are it is not great.

#15. Learn To DIY

This isn’t to say you have to become a master plumber, but you should learn how to do basic repairs and maintenance around your house.

Calling in a professional is costly.

Not only do you have to pay for any parts that need replacing, but you also have to add in the cost of labor.

When you do things yourself, you don’t spend money on the labor cost, which can run upwards of $100 an hour.

Plus you get a sense of accomplishment, knowing you did it yourself.

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Your Action Step

Before you call in a professional, jump on YouTube and watch some videos about the issue you are having.

Then assess if it is something you can handle or if you really do need a professional.

YouTube has videos on just about everything, so don’t think it won’t be worth your time to search.

And if you decide you have to use a professional, consider a handyman first.

If they are skilled in the area you need help, their labor rate is going to be much lower than a professional.

Also, make sure you tip them well if you go this route.

This will ensure they make you a priority when you call, so you don’t have to wait.

#16. Understand Time vs. Money

Another critical way that millionaires save money is by understanding the concept of time vs. money.

Here is what this means.

In the summer months, the grass needs to be cut.

While you could do it yourself, it will cost you $20 an hour to pay someone else to cut it.

Is it worth your time to pay someone else to cut the grass?

Put another way, is your time more valuable than $20 an hour?

What could you do with that extra time?

Bring in more income, ideally more than $20 an hour?

Spend the time building relationships?

Another example is having a financial planner.

Paying someone to manage your money isn’t needed as many people can do it themselves.

But if the market drops and you are likely to get scared, having someone to help you ride it out is worth the cost.

The key is to look past the money you are paying and see what you get out of paying for the service.

Your Action Step

Start looking at the decisions you make in the lens of time vs. money.

Is your time worth it to do everything or is it more valuable to you to pay someone else so you can focus on something different?

#17. Fight Against Lifestyle Inflation

One of the biggest traps people fall into is lifestyle inflation.

This happens when you get a better paying job and suddenly you are able to afford things you couldn’t before.

You start eating out more, going out on weekends and buying nicer clothes.

When you got the better paying job, you envisioned yourself getting ahead.

But because you are spending all your new found money on more things, you are in the same place as you were before, with very little savings.

Millionaires work hard to avoid this situation.

It’s a main reason why they save a percent of their income and not a dollar amount.

When you save a percentage, it automatically increases as you earn more.

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Your Action Step

Try your best to ignore increases in income.

When you get your first paycheck, do the math to see how much additional income you are bringing in and then set up an automatic transfer to your savings for this amount.

If you are diligent with this, when your income increases in the future, you will be able to maintain a high savings rate.

The same idea holds true with windfalls.

If you get an inheritance or tax refund, don’t spend the entire thing.

Save a good portion of it and spend what is left over.

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#18. Don’t Try To Keep Up With Others

One of the biggest mistakes people make is trying to keep up with others.

This is also known as ‘keeping up with the Joneses’.

They want a better house or bigger car because someone they know has it.

What they don’t realize is that person likely has more debt than them as they are simply trying to keep up with someone else.

Millionaires focus on their own path and not what other people are doing.

Your Action Step

Work hard to not feel the need to show your success to others.

It can be easy to fall into this trap, especially when you have worked hard to get where you are.

But if showing your success means going deeper in debt, it’s not worth it.

Understand what gives you value in life and then spend your money on these things and ignore everything else.

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#19. Use Debt Wisely

While most people think debt is evil, if you are smart about it, you can use it to help you build wealth.

For example, when you buy a house, the house appreciates in value over time.

As a result, you will have an asset that is worth more than you paid for it.

To buy a house, you need to take out a mortgage.

You are incurring debt but after the debt is paid off, you have a valuable asset.

The same is true about education.

You go into debt to get a higher education that you can turn into a higher salary.

These are things that are known as good debt.

But if you take on too much good debt, you can get into trouble.

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Your Action Plan

Don’t be scared of debt, but at the same time, respect it.

Don’t buy a house you cannot afford.

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Don’t take out $100,000 to pay for college if you aren’t 100% certain it is what you want to do with your life.

Also if the salary you earn won’t allow you to repay the debt and live, then it’s not a smart idea to take out that amount of money.

#20. Take Advantage Of Tax Breaks

One of the best ways to save money is to take advantage of tax breaks.

A millionaire makes sure they use every deduction and credit they can so they keep more of their hard earned money.

This includes things like charitable donations and writing off business expenses.

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Don’t mistake this for thinking they don’t pay taxes.

They do pay taxes, they just pay the lowest amount based on the rules of the tax code.

Your Action Step

At the end of the day, there are many things you can do proactively to lower your tax bill.

Make a list of all the deductions and credits you are eligible for.

Some common ones include mortgage interest, student loan interest, medical expenses and charitable donations.

You should also consider hiring a tax professional to help ensure you are not missing anything.

Tax time is stressful enough as it is, so do yourself a favor and take the time now to be prepared for filing your taxes.

#21. Spend On Experiences Not Things

Millionaires understand that experiences are what truly bring you happiness.

Sure a brand new Mercedes will make you feel good for a short period of time, but after the newness wears off, it won’t matter anymore.

But imagine going on a trip to Europe with your family and friends.

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That is something that will stay with you for a lifetime.

Your Action Step

Start thinking about how you can spend money on experiences instead of things.

This doesn’t mean you have to go out and do something expensive, but rather find ways to enjoy life with the people you love.

Take a weekend road trip, cook dinner at home instead of going out and go for a walk in the park.

These are things that will make you happy and won’t cost much money to do.

By doing this, your overall quality of life will improve tremendously.

Final Thoughts

There are the best ways for how to save money like a millionaire.

To many, this list is surprising because millionaires are very much like the everyday person.

The main difference is they have different mindsets when it comes to money.

Start implementing these tips into your life and you will see a change in your bank account in no time.

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