Save. Spend. Splurge.

Wealthy people hold assets, the rest are in debt.

Know what else wealthy people do?


  • Don’t own most of their net worth in real estate (e.g. their primary residence)
  • Don’t want to be a slave to anyone or any company and have the attitude to boot
  • Don’t go into debt for consumer spending (e.g. clothes, electronics, vacations)
  • Don’t leave huge chunks of their savings sitting in high-interest savings accounts
  • Don’t believe that the only way to go through life is to be in crippling debt for anything, including houses
  • Do make more money and look at increasing their net worth (e.g. they negotiate their salaries)
  • Do take the time to learn how to manage their money (e.g.budgetinvest it in index funds, ETFsstocks such as dividend paying ones)
  • Do take calculated risks
  • Do understand that  student loans (that lead to dead end jobs), homes and cars are debt traps if they aren’t careful
  • Do spend their money and enjoy it, but within reason

And those who aren’t wealthy?

They do the opposite of the above, and blindly follow those who “know better”.


Because it’s the easier way out to go into debt for a flashy new car or an overpriced home than it is to really consider that you are buying a depreciating asset (car), and a home basically returns zero to your net worth (or less) over the long-term, if you take on a huge mortgage you can’t really afford and spend 30 years trying to pay it off while living on beans and rice.

Which side would you rather be on?


  • SP

    Source? 😉

    Most of this is common sense. But I don’t think the first one (real estate) is particularly true, except for the fact that their net worth may be so high that their primary residence is just not a large chunk of it. I’d guess (without a source on my side either) that most wealthy people also don’t rent. So they do something in between, and buy a home they can afford.

    • save. spend. splurge.

      Source is partly here market watch and from reading / observations of high net worth individuals as written up in articles. I guess we can cite The Millionaire Next Door for a lot of that.

      Bingo — primary residence / house is not a huge part of their net worth because it’s a small percentage AND they took something they could afford, pay for and pay off.

      • Chris Grande

        @save. spend. splurge.: there are alot of stealth wealthy people who own real estate as investments. Not now but before the Fed juiced rates for the past 12 years, houses were quite cheap (as a multiple of average salary (~3xs or less). Now with 2 income couples and zero rates, houses are 4-5xs a 2 income multiple in the good markets.

        So those over age 50 who bought some real estate in the 80s or 90s (and I have met many that own 1 or 2 “extra” houses, have done quite well for themselves (I live in the Boston/USA are).

        To your point, they didn’t load up on their primary residence and sink all their money into that. Many have nice but not extravagant primary residences. And they own 1+ multi-families that yield good rent.

        • save. spend. splurge.

          If they bought them at a low yes but what is the option now?

          • Chris Grande

            @save. spend. splurge.: depends – everyone wants to live in the cool” areas so the demand is nuts. Millennials and their parents are all over the same real estate (both age groups want to be forever 21:)

            One option – try less popular but up and coming areas to buy. For investors, I don’t know. As long as the Fed keeps US rates at 0%, rich people may continue to cash purchase homes at a 3-4% cap rate (yield on property).

            Otherwise, IMO serious disruption is coming to markets. I think the markets can not handle an increase in rates in any amount so opportunities might present themselves. But this is just my hypothesis

  • Ramona

    I think having your home is pretty important (especially for our offspring), so I’d get into debt for it. I did get in debt for a car, which was silly, if you ask me, but a home might be worth the hassle. Sure, not ‘too much home’. We are lucky though, our folks went through it for us, so we don’t have to.

  • Sarahn

    Yep I can’t help but agree with others, and in Australia, without a property owned outright at retirement will be a problem. How long will you live on whatever retirement savings and the shares you may have.

    I agree te consumer debt and buying cars that depreciate.

  • E

    Our net worth is mostly our duplex purchased recently. Hopefully, more we save more it changes. I don’t want to worry about making monthly payments and hope to retire in my mid 50s.

  • Sylvia @ Professional Girl

    I definitely want to be able to amass a small fortune and can only do that by taking calculated risk and looking at ways to increase my cash flow. Sometimes its hard and I get so impatient and want to see my net worth double from last month. I know that it’s a long journey and I will get there. Just have to learn patience.

  • Annie

    This is so true. While I don’t own a car or a house (I haven’t purchased a home here because I found a cheap place to rent while I decide if I’m staying in this area), I strive to spend less than I earn and save a little every month. My last big purchase was my laptop, which I consider an investment because I write books for a living. I spent $1,000 last year on this laptop, a printer, and software but if I keep it for just five years it will have helped me to earn over $40,000. I consider that a good investment, especially since last year was the first year I invested anything other than hosting fees into my writing business.

    In the past my vehicles were all purchased for cash and used until they died except for the last one, which I sold so that I could write a book about living car-free (that book is in progress).

    My friends don’t understand how I can live on a portion of the money that they do and while I don’t intend to live on a shoestring forever, I will always keep my expenses smaller than my income. It simply makes sense.

  • Taylor Lee @ Engineer Cents

    I agree that people buy way-too-expensive-for-them homes sometimes, but ownership and inheritance of real estate remains one of the best wealth accumulators and wealth transfer mechanisms accessible to the middle class today.

    • NZ Muse

      @Taylor Lee @ Engineer Cents: Agreed. Especially in NZ. Owning your own home is also actually an issue of health as well as stability. As someone recently forced to move (yes I was glad to leave that shitty place but the timing was terrible and I was so stressed I came pretty close to having a breakdown given all I was dealing with at the time) this is HUGE for me. This is my home city, where I plan to stay, and I want a stable home – especially for my future kids.

      Unfortunately RE is spiralling out of reach of the middle class here and it’s going to increase the gap between the haves and the have nots. And needing to pay rent throughout retirement will be a nightmare for many.

Post a comment

Your email address will not be published. Required fields are marked *