It might seem strange looking to billionaires for financial advice. After all, they have literal billions of dollars or euros to their name, so they don’t exactly need to live frugal lifestyles.
On the flip side, however, there’s a reason they have so much money, and it’s not always by spending it.
Here are some tips by way of the world’s richer individuals.
Drive a modest car
The founder of retail company IKEA may be worth $3.5bn, but that doesn’t stop him from being cost-conscious. Ingvar Kamprad could easily afford some tasty vehicles from the Mercedes S65L AMG barge (€305,950) up to a Bugatti Veyron 16.4 (€2,093,220) yet for years he drove an old Volvo, buying a dependable car and then driving it until no longer safe to do so. He also flies economy class and regularly eats at IKEA.
Facebook co-founder Mark Zuckerburg (net worth of $34.8bn), meanwhile, continues to drive an Acura (Honda) referring to it as “safe and not ostentatious”.
Unless you’re a car enthusiast with the budget to match to secure your dream wheels, there’s no point in blowing money on a flash car with a large annual bill for tax, insurance and fuel. Use websites like HonestJohn.co.uk to compare cars for safety, fuel frugality and whether they’ll keep their value in the long run.
Distinguish between wants and needs
Next up is Warren Buffett, probably the most successful investor of the 20th century and a man with a net worth of around $72.3bn. Buffett bought his house in 1958, and still lives there today.
“There are things money can’t buy. I don’t think standard of living equates with cost of living beyond a certain point. Good housing, good health, good food, good transport. There’s a point you start getting inverse correlation between wealth and quality of life. My life couldn’t be happier. In fact, it’d be worse if I had six or eight houses. So, I have everything I need to have, and I don’t need any more because it doesn’t make a difference after a point. When you get to 10 times or 100 times or 1,000 times, it doesn’t make a difference [in quality of life],” he told a shareholder meeting.
Buffett also doesn’t believe in buying toys like yachts which he refers to as a “pain in the neck,” and he married his second wife in a ceremony at his daughter’s house.
The lesson here? Sure, that 79-inch TV would be nice if you want to watch Lord of the Rings as if you’re sitting on a Nazgûl’s back, but it’s not something you really need.
Karl Albrecht, one of the founders of Aldi, had a personal net worth of $25.9bn, and built the powerhouse discount chain of food stores with his brother Theo. Theo was kidnapped for 17 days in 1971 – Karl negotiated the ransom, some say over several days. He later wrote it off as a business expense, according to the legends.
We’re not saying you should try and squeeze every penny out of a ransom demand if you ever find yourself caught up in such a situation (and your sibling likely wouldn’t be too pleased), but being able to negotiate can help you save money, particularly when it comes to things like motor insurance or TV package deals.