A childhood dream most people hold onto is one day becoming rich. The idea of acquiring millions of dollars seems like the best way to gain a ticket to eternal happiness. Unfortunately, many people who actually gain those riches, including some celebrities, realize their money can easily slip through their fingers if it's not properly managed. That's why those who have gained both fame and riches, yet still maintain their frugality, always come out on top.
There's absolutely nothing wrong with remaining frugal while possessing a lot of money. In fact, taking tips from stars who still live well within their means could help you stick to a budget when managing much less money.
Lifestyle Inflation Leads to Major Problems
One problem people often face when they gain access to riches quickly is lifestyle inflation. This means as you earn more money, you also increase the amount of money you spend.
For instance, a college student earning minimum wage at a campus job eats Ramen noodles and drives a hand-me-down car. Then, he or she graduates and begins earning a $60k salary. They run out and purchase a brand new luxury car, eat sushi every night and regularly drop hundreds of dollars on shopping sprees. That's lifestyle inflation.
It's not uncommon for people to create a new lifestyle when they see their finances inflate. The only problem is that some people overestimate how much they're actually bringing in and end up losing much of what they've gained.
There are some celebrities who are determined to not participate in lifestyle inflation, however, no matter how much they earn. They've shown the world that their riches will not end their frugality and you could follow their example to maintain your own economic lifestyle.
Wealthy Celebrities Who Are Great at Living Frugally
There is no doubt that gaining access to increased income can cause problems if the person receiving the money isn't financially responsible. However, some celebrities have decided they won't fall into the trap of losing everything they've gained because they've made personal finance mistakes. Here are just a few who believe frugality has, and will, continue to be their way of life:
- Eva Longoria: This Desperate Housewife is known for living a frugal lifestyle and is famous for handing out freebies as gifts to the 200 guests at her 2007 wedding. She said she gets her frugal thinking from her father who required his family to go camping with no food in order to truly live off the land–and save money.
- Sarah Jessica Parker: Parker has acquired a huge sum of money over her career, especially as the stylish and sassy Carrie Bradshaw from "Sex and the City." However, after growing up on welfare, she steers clear of the lavish items her character is known to purchase.
- Paul McCartney: Though this Beatles member is worth more than $1 billion, he is known for being so frugal that he sent his children to local state schools and even required guests at a birthday party for his ex-wife to purchase their drinks.
- Jay Leno: Leno is worth a lot of money but refuses to spend most of it due to being raised by parents who grew up during the Depression. In fact, the Tonight Show host has said he has yet to touch a dime of his earnings from the show, still living off of his comedian income.
- Sarah Michelle Gellar: Due to her upbringing by a single mom who was forced to work with a tight budget after her husband left, Gellar has adopted a frugal way of living. She told Self magazine in 2007, "I take my reusable bag to Whole Foods so I get a discount." She also makes a habit of printing dry cleaning coupons.
Some other celebrities known for being frugal include Teri Hatcher, Leonardo DiCaprio and Tyra Banks. Though they all have acquired a high income over the years, their attitude about money hasn't changed much from their childhood.
How to Adopt a Frugal Lifestyle
If you want to adopt a frugal lifestyle with your current income, no matter how big or small it is, there are some ways to make it happen. For instance, you could:
- Stick with a budget. Experts always suggest you find a way to organize your income so you know exactly what you're bringing in and how much of it you're spending. Even if the money is just pouring in, it's good to set up a budget to ensure you're not overestimating your income.
- Honor your spending priorities. The celebrities above have plenty of money to spend on anything that they'd like, but despite their enormous budgets, they have set up spending priorities and stick with them.
- Be realistic. Sometimes our eyes are bigger than our budgets when we know we have money just sitting around. Even the most frugal money managers fall victim to this sometimes. That's why it's important to be realistic about what you need versus what you want. Unless you truly need a $10k solid gold peacock, just don't buy it.
Gaining riches by no means requires you to give up a frugal lifestyle, but of course, you can still buy some of the items you've always wanted when you can afford it. By budgeting, you won't have to worry about tax trouble or declaring bankruptcy due to financial mismanagement.
Just keep in mind that being frugal can be bad when you take it too far, so try to find balance in managing your personal riches in a way that honors both your financial needs and desired lifestyle.
See more financial tips at Go Banking Rates:
- Are You Too Frugal? How to Know When Your Saving Habits Are Actually Harmful
- 6-Step Plan for Setting Up a Family Budget