I was listening to a podcast and the host had made the statement "The Wealthy Hate Waste". This struck a chord because I realized that wealthy people don't spend money frivolously.
You might be thinking, "What about those athletes or entertainers who buy 20 cars, 80 room mansions, in ground fish tanks, etc.?" I don't count them in the group I'm referring to because in most cases it wasn't true wealth accumulation that made them their money. They are actually just highly paid for their talent or skill, which is rightfully deserved, but to me it is not an indication of a person who has really built wealth. For a lot of those people, they are for the first time in their lives getting some money, and their lack of discipline and the euphoria of it all causes them to spend it unwisely.
When talking about wealth, I'm referring to the man or woman, who through practical financial discipline, has done the things necessary to accumulate a significant net worth (business building
and ownership, wise investment decisions, asset portfolios, and the like). Think of the people that William Danko and Thomas Stanley profiled in their financial classic, "The Millionaire Next
They spoke of how millionaires drive older model cars, live in modest size houses, and just manage their money wisely. Although they could probably afford to buy more, expensive items, they choose not to. This is definitely true for me. In fact, when I first started on my wealth journey, I used to think that I was being cheap because of my not wanting to spend a lot on certain things. As my net worth grew, I started considering myself "selectively frugal". But hearing that statement on the podcast summed it all up in a nutshell for me: I truly hate waste.
Now I can't say that what you and I consider waste is going to be the same exact things, but here are some examples for me:
Clothing - I can easily find good quality clothing at a discount retailer spending less than $200 for 2-3 ensembles, whereas I know people that might only buy a shirt or pair of pants for that same amount. Are they wrong? I won't necessarily say that, but for me, I do consider it wasteful.
Groceries - We will pay more for the healthy and organic items, but for everyday staples, we don't mind going for generic or store brands. I know people who, for image sake, will only buy the leading advertised brand, paying the premium to do so. Are they wrong? I won't necessarily say that, but for me, I do consider it wasteful.
Auto - We drive older model cars and refuse to have a car note. Once again, I know people who must have the latest model and choose to lease it so that they can get a new car every one to two years. Are they wrong? I won't necessarily say that, but for me... (you know the rest)
As I mentioned, what you and I consider waste might differ, but my main point is this: as you are building your net worth and keeping track of where your money is going, it's important to keep in mind whether something is waste or not. Because if it is, it will only take away from your wealth instead of adding to it.