The word “millionaire” is a HOT term in the blogosphere right now — and it has been for a long time.
It’s also “in” for marketers to add the “million-dollar” descriptor into their branding in hopes it’ll increase credibility and attract more buyers. Never mind if it’s true or not if it works, right?
All sarcasm aside, it’s no secret that just about everyone who’s not yet a millionaire wants to be one. It’s an alluring goal.
Many people dream of the mansions, multiple luxury cars, yachts, and fancy dinners they’d buy “if only” they were a millionaire.
But not everybody who wants to be a millionaire knows what a millionaire is.
So before we get into how millionaires spend their money, let’s define what a millionaire actually is.
A millionaire is a person with a net worth of $1 million or more. Net worth is the value of everything a person owns, minus all debts.
What doesn’t make someone a millionaire?
- Personal income doesn’t make someone a millionaire.
- Business revenue doesn’t make someone a millionaire.
- Appraised home value doesn’t [necessarily] make someone a millionaire either.
The term “millionaire” applies only to an individual whose net worth is $1 million or more.
Can you spot your local millionaire?
Most millionaires are actually pretty hard to spot.
Although my husband and I hit the $1M mark in April 2017, we joke that most people we run into in our travels probably think we’re broke drifters — because we do not look the part.
It’s likely that a lot of people in your life who look like they have a lot of money probably don’t.
Many “rich” people have simply cultivated a lifestyle that appears rich. Keeping up that appearance requires a lot of money.
Such an individual could have a negative net worth, yet they drive a Range Rover and live in a McMansion. Meanwhile, the millionaire next door lives in a three-bedroom house and drives a Hyundai.
Money stops mattering as much
Although it’s a common misconception that millionaires spend their money on luxury vacations, clothing, houses, and cars, what I’ve learned in growing my own net worth — and speaking with other millionaires — is that after a certain point, money stops mattering as much as it once did.
Earning the first million is the hardest, and once you’ve got systems in place for that money to replicate itself on autopilot, time begins to matter so much more.
In my own life juggling business and family obligations, I find myself zeroing in on the annoying things that take up way too much of my time and figuring out ways to reduce or eliminate the time spent on those things.
A far cry from the stereotypical “millionaire,” I knew I wasn’t alone in valuing time more than money — so I decided to track down other individuals with a $1M+ net worth and ask them how they spend their money.
Their responses are summed up below — they may surprise you!
(Note that while many real-life millionaires donate generous sums of their earnings to various not-for-profit organizations, that is not the focus of this particular article.)
Millionaires spend money to maximize their time
Because time is more valuable than money, I’ve personally spent thousands of dollars on full-body laser hair removal and permanent makeup so I don’t have to spend so many hours each week on personal grooming.
Bobbi Rebell Kaufman, author of How to Be a Financial Grownup spends money to maximize the quality time she spends with her kids. “We spend on extra tutoring and private lessons for our kids. Because my time is limited, I’d rather spend my time with them doing something ‘active’ like bike riding in the park,” says Kaufman.
Parenting tests your limits no matter how much money you make. Scott Alan Turner spends money to have time away from his kids. “We spend money on babysitters,” says Turner. “When I go to a restaurant, I enjoy my food hot. When you have twin toddlers that need their food cut and decide they need to use the bathroom as soon as your entree arrives, you quickly discover what a cold hamburger tastes like.”
Robert Farrington of The College Investor maximizes his time by doing all of his grocery shopping on Amazon Fresh. “I have two kids, and the time spent loading them into the car, getting out at the store, shopping (and praying we don’t have any meltdowns), then loading up to come home honestly isn’t worth it.”
While Amazon Fresh prices are on par with most retailers, there’s a cost attached for the convenience. But for Farrington, it’s a small price to pay to have family essentials conveniently delivered to his doorstep exactly when he needs them.
Millionaires spend their money on frugal travel
Michelle Schroeder-Gardner of Making Sense of Cents spends her money RVing full-time with her husband and two dogs. “We sold our house in 2015 and have been traveling since. Being a minimalist not only saves me time but allows me to enjoy the better things in life — not being consumed by material things, exploring the outdoors, and spending more time with family.”
There’s that “time” thing again!
Jim Cirillo of Reinvention Revolution also spends money on travel. “I attend trade shows both in and out my expertise. I find it really opens up my mind to understanding myself, people and trends in the world, and it helps my investing.”
Doug Nordman spends his money on slow travel. “We actually don’t spend that much money, but we have a lot more time to spend seeing the world — while we still can.
Some millionaires spend money to have their extended family join them while they see the world.
Joe Olson from Adventuring Along is one such millionaire. “I spend money to get more time with friends and family and deepen those relationships,” says Olson.
“We rented and paid for a large house in Bali last Christmas for family to get-together, and this summer we did the same thing in British Columbia. It’s worth it to us to spend money to get them to come visit so we can all vacation and spend time together.”
The takeaway? Millionaires don’t spend money the way many people think
Not all millionaires spend frivolously. Many self-made millionaires are just everyday people.
While there are certainly plenty of “rich people” who choose to spend money on expensive cars, gigantic houses, and lavish luxury hotels, there are also plenty of real-life millionaires in the world who use money as a tool to maximize their time, deepen their relationships, and see the world — just like everybody else.
Opinions expressed here by Contributors are their own.