The Rich Are Stopping Spending Money on These Things, a Sign You Should Do the Same

There is a trend to save this year. Young proponents of “loud budgeting” have already made this clear, encouraging you to live within your means without being embarrassed. Although they enjoy fewer restrictions, the rich are also joining the trend and have started to cut down on some unnecessary luxuries.

In particular, wealthy people fear that after a tumultuous year marked by inflation, the housing crisis and a higher cost of living, the consumer spending historically associated with the upper class will drag them back into poverty.

A group of experts consulted by personal finance website GoBankingRates agree that high net worth consumers are getting smarter when it comes to spending their money. From ending his gym membership to sacrificing his exotic vacations, the rich “Prioritizing financial prudence in times of economic uncertaintyWhich shows a willingness to adapt,” he tells the website.

A home gym is better than a membership

“One trend I’ve noticed recently is that more and more wealthy people are getting rid of their gym memberships,” Jake Hill, CEO of debt advisor Datehammer, told GoBankingRates. “Many people, regardless of their financial situation, don’t use their gym membership enough to benefit.”

Typically, the wealthiest people, including CEOs of large companies or Hollywood celebrities, make sure to create their own wellness space within the home. Although the expense may be high, in the long run it is an investment that the whole family can enjoy and increases the value of their properties, in addition to saving a lot of money on low-use subscriptions.

Architect Douglas Burge, who has built hundreds of residences in the Malibu area of ​​California, told Business Insider a few years ago that most of his clients were looking to add custom spaces, As a spa, sauna room or gym, to make your homes look like a five star hotel.

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No more subscription to entertainment services

“Subscription fatigue” is real and it affects the rich, too. In 2022, The average American consumer spends more than $270 per month According to Harvard Business School magazine, 1 in 2 paid subscriptions, while nearly 75% of companies selling directly to customers implemented some type of subscription offering.

“Lately, I’ve been loving TikTok videos where people are sharing luxuries they’re getting rid of to save money,” attorney and personal finance expert Erica Kullberg tells GoBankingRates. “I’ve seen the same attitude toward entertainment subscription services.”

While many consumers choose to keep one or two of their favorite subscriptions (Netflix, Prime Video or HBO, for example), experts are seeing that many can no longer keep up with all of these services.

“(Unsubscribe) is a great example of a lifestyle change that can really turn things around. Every time you have a routine but non-essential expense that takes up space in your budget, you are taking your money away from places that can help grow your wealth,” explained Kullberg, who Suggest moving that money to high-yield savings accounts. ,

Modernize your home with smart technology instead of remodeling

In 2022, Americans spend an average of $22,000 remodeling their homes, according to home improvement website Houzz. But wealthy people prefer to spend that money on smart technology that can net them long-term cost savings and provide them with better home service.

“I’ve noticed that more wealthy people are cutting back on home remodeling and renovation,” the CEO of financial advisor Credit Summit told GoBankingRates. “Or they focus on smaller, more profitable projects to improve their homes. Financial uncertainty and inflation affect everyone, even the richAnd cutting something extra out of their monthly budget can help them keep more of their money.

In addition to Amazon Echo or Google Home, the wealthiest people lean toward modern systems like Lutron, Crestron, and Kaleidescape. According to Insider, the first offers energy-saving dimmers, switches, and curtains that can control between 50 and 10,000 devices; While Crestron offers integrated lighting controls, home security, and speakers; and Kaleidescape multi-room entertainment server technologies for home theater.

Cheaper holidays and fewer visits to the hairdresser

Vacationing in exotic locations is a traditional specialty of the wealthy, but some experts say they’re cutting back on that aspect this year, too.

“There is now a clear trend toward more cost-effective options such as neighborhood sites rather than luxury international trips,” said Harrison Tang, co-founder of online search engine Spokeo.

This reticence, Tang explained, reflects a cautious approach. The richest people try to reduce their financial risk and protect their assets., “This shift reflects a broader trend among the wealthy to prioritize financial prudence in the face of economic uncertainty, demonstrating a willingness to adapt,” he said.

“I’ve noticed that many wealthy people, in order to achieve greater financial progress, cut any type of recurring costs from their budgets that are a luxury, not a necessity,” said Kullberg, who sees this trend as a growing trend. This has been seen to happen, especially among the upper class women. , Among the cuts, Kullberg mentioned visits to beauty, hairdressing and nail salons.

Seuthe said these reductions are also seen in other discretionary expenses, such as hiring cleaning or pet care services. Most experts consulted by GoBankingRates say these savings are typically earmarked for an emergency fund.

emergency funding is priority

Most Americans say a $1,000 emergency expense would be too big a hit to their savings and they wouldn’t be able to afford it, according to new data released Wednesday by Bankrate.

A survey found that 56% of US adults lack emergency funds to handle an unexpected $1,000 expense And a third (35%) said they would have to borrow money somehow to pay for it.

“Since the pandemic and the economic crises that followed, the rich have realized that we can struggle even if we don’t have emergency funds,” Syed Latif, business advisor and CEO of SyedBNB, told GoBankingRates.

Latif depicted the ups and downs he faced in his vacation rental business. “They suffered huge losses during the lockdown, but fortunately they had strong business sense and an emergency fund to fall back on.”

“The rich are very good at creating and maintaining emergency funds. Many financial advisors suggest having six months’ worth of expenses readily available, such as in a savings account. But Some of us millionaires go even further And we save up to 25% of our money for emergencies,” he revealed.

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