10 Frugal Habits Of Everyday People Who Become Financially Independent While Working A Typical 9-To-5
These small habits make all the financial difference.
AdrlnJunkie | Getty Images Signature | Khosro | Canva Pro "Money talks, wealth whispers," as the saying goes, and we've all heard the stories of the Average Joe who lives a modest life with a regular job who turns out to be an undercover millionaire. So, how do they do it? A finance expert shared some of the habits that can help lead to financial independence, even if you're a normal "working stiff."
10 frugal habits of everyday millionaires with a typical 9-to-5 job:
Years ago, there was a book called "The Millionaire Next Door" that changed much of the conventional wisdom about the rich. It confirmed that far more of them are savvy penny-pinching normies than "blue blood" mansion-dwelling gazillionaires.
That's a simplistic view, of course, and that book came out in 1996, a time so wildly economically easier than our own it might as well be another planet entirely. Still, there are things we can all learn from these undercover millionaires, especially in these times when penny-pinching is a necessity for most of us.
Finance expert and YouTuber Austin Williams recently dug into this topic in a video. "There are two types of millionaires in this world," he said. "The first is the entrepreneur who came up with an idea that allowed them to reach a million dollars. The second are middle-class people who work average jobs with average salaries that made good financial decisions over a long period of time." Here are 10 things these savvy Average Joes and Joannes do to get there.
1. They don't look like they have a lot of money
This isn't about cosplaying as impoverished, but rather about living modestly "in order to save and invest more money," Williams said. I have a friend, for example, whose lifestyle led me to believe for years that his very niche, humble, small business had left him broke. Joke's on me, because it turns out he's a millionaire via this exact path — living cheaply so he can invest, invest, invest. He retired at 40, and I hate his guts. (Just kidding, he's wonderful.)
2. They choose an affordable, reliable car
As anyone with a passing understanding of finances will tell you, cars are a terrible investment — not only do they depreciate the minute they're started up for the first time, but they require constant maintenance and years-long loans with interest to even afford.
So, Williams said the savvy "middle-class millionaires" among us choose them based on affordability and reliability, not style or trends, "in order to not let this expense control their life." My retired-at-40 friend has never owned a car with fewer than 100,000 miles on it that he couldn't buy outright, for example. Worked for him!
3. They live below their means
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"Many people think that in order to make a million dollars, you must find ways to increase your income," Williams said, "however, middle-class millionaires focus on decreasing their spending" instead.
This is a tall order, of course, especially in today's economy. But financial experts say that taking a close, uncomfortable look at your monthly spending usually reveals SOME area where the belt can be tightened, even if it's just daily coffees or an extra streaming subscription. "They focus on budgeting, tracking their expenses, and living below their means in order to stretch their money as far as it can go," Williams said. Even just $10 saved a month is a place to start!
4. They pay themselves first
For most of us, our instinct when we get each paycheck is to pay all our bills and then apportion whatever's left over to our discretionary spending and, hopefully, savings. But financial experts, Williams included, said this is the opposite of what we should be doing.
"...Middle-class millionaires… pay themselves first, or set aside some money before paying their bills," Williams explained. Experts suggest even as little as $50 put directly into an interest-bearing savings account each payday can be a great way to start saving up an emergency fund, and then once that goal is reached, to begin saving toward other needs and goals, whether it's investments, a house, or an entrepreneurial venture.
5. They avoid debt
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Williams said middle-class millionaires also avoid debt like the plague, because "they understand that debt makes you behind, inflates the price of everything, and prevents you from reaching your goals."
This, of course, is another tall order nowadays. But experts say this is part of the "pay yourself first" mantra. Once your emergency fund is saved up, you can begin taking that small $25 or $50 from each paycheck toward debt payments. It sounds daunting when you've got such a huge debt load, but thinking of it as a long game that can be won over time is the first key to tackling it.
6. They take advantage of every benefit their employer offers
"Middle-class millionaires are employees with average salaries," Williams explained. "However, despite that, they focus on taking advantage of every benefit their employer offers them," from 401(k) matches, HSA contributions, vacation time, and all the others. Each of these has financial advantages that add up over time and often have tax benefits, so passing over them is like leaving money on the table.
7. They invest outside of just a 401(k)
Williams said middle-class millionaires don't just stop at employee benefits either. "They focus on growing their money in the stock market through other investment accounts like a Roth IRA and a brokerage account," he says. Many brokerages these days have very low minimum investments, and many "micro-investing" apps allow investments of as little as $1.
8. They take ownership of their finances and investments
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This is perhaps the most daunting aspect of all, because when you've never had money, the world of investing can seem like trying to read an ancient language while drinking from a firehose. Especially if you have financial trauma or are "bad with money," it's easy to just ignore this stuff, make sure the bills are paid, and keep it pushin'.
But we also live in a time when resources for learning these things are absolutely everywhere. Books, online courses, and social media creators who specialize in teaching people the ropes — the information is out there. And Williams said these average millionaires "take ownership over their investments and educate themselves" because "they understand that you are the person who cares about your money the most."
9. They practice patience
Williams said that one of the key differences between middle-class millionaires and the rest of us working stiffs is that the former don't expect quick results. They play the long game, tackling the above pieces of advice during their 20s, 30s and 40s to reach their goals rather than expecting to be a millionaire right away. Most, he said, "are older people in their 50s and 60s" who "practice patience and trust the process."
10. They learn to be content
This just might be the biggest key of all. Williams said that being able to "consistently make good financial decisions over a long period of time" requires accepting what you have instead of constantly chasing more, which is, of course, antithetical to the American way of life.
However, by shifting this mindset, paying yourself $25 or $50 into a savings account every paycheck becomes a lot easier when you're not constantly trying to accumulate more and more. And you end up winning out in the end by having more money to buy and do things that truly matter.
John Sundholm is a writer, editor, and video personality with 20 years of experience in media and entertainment. He covers culture, mental health, and human interest topics.
