Becoming wealthy and staying that way takes a certain level of discipline. Sure, an occasional splurge won’t put you in the poor house, but frequent frivolous spending on things that aren’t necessities can quickly put a serious dent in your wallet. The frugal habits necessary to achieve financial success and maintain it are often lessons learned early on.
In this article, meet seven entrepreneurs, business leaders and famous faces, including Google’s David Cheriton, Berkshire Hathaway’s Warren Buffett and Hollywood’s Hilary Swank, whose modest living -- from clipping coupons to clipping their own hair -- has helped them amass and/or maintain vast fortunes.
As Knight Kiplinger wrote in his classic column The Invisible Rich, “the biggest barrier to becoming rich is living like you’re rich before you are.”
Estimated net worth: $1.3 billion
How he struck it rich: An early private investor in Google
Frugal habit: When having dinner at a nice restaurant, he saves half of his meal for the next day.
In addition to knowing how to make a good meal last, the Stanford University professor -- who played an integral role in the founding of Google -- has also been cutting his own hair for the past 15 years and drives a 1986 Volkswagen Vanagon.
Cheriton’s been pinching pennies his whole life. “Many of my frugal habits come from my parents, who grew up during the Depression and passed along the same careful habits,” he told Kiplinger. “My rule is never spend in a way that I can’t explain to my parents without apology or embarrassment. It’s kind of a personal version of ‘never do anything you don’t want to see presented on 60 Minutes.’”
Estimated net worth: The Obamas’ assets are valued between $2.6 and $8.3 million.
How she struck it rich: Combined wealth with her husband and author, President Barack Obama
Frugal habit: Shops at Target
The First Lady is thrifty, too. She was spotted shopping at a Target store in the Washington, D.C., area last summer. What did she buy? It’s reported that Mrs. Obama picked up dog food and toys for the first family’s pet, Bo. In addition to finding ways to save on everyday household items, the First Lady is also known to cut costs when it comes to fashion. Despite having access to practically any high-end designer line she wants, Mrs. Obama sometimes chooses to wear clothing from discount stores, such as H&M. She appeared on the Today show last year wearing a $35 dress from the retailer.
Estimated net worth: $44 billion
How he struck it rich: Founded Berkshire Hathaway, the noted investment holding company
Frugal habit: Has lived in the same modest home for 54 years.
Buffett could easily afford to live in a mansion much bigger than his 6,000-square-foot, five-bedroom stucco house in Omaha, which he purchased for $31,500 back in 1958. Yet, the multi-billionaire prefers the simple life in small-town America.
In his annual letter to Berkshire Hathaway shareholders last year, Buffett discussed the housing recovery and said, “The third best investment I ever made was the purchase of my home.” (The first two: wedding rings he bought for his first and second wives.) Buffett added, “For the $31,500 I paid for our house, my family and I gained 52 years of terrific memories, with more to come.” Today, the average price of a five-bedroom home for sale in Omaha is $391,983, according to Trulia.com. That’s more than 12 times the amount Buffett paid.
Estimated net worth: Ranges between $190 and $250 million
How he struck it rich: Comes from a wealthy family and co-founded the private equity firm Bain Capital
Frugal habit: Buys golf clubs at Kmart
The GOP presidential candidate has quite a few surprising, budget-conscious spending habits -- several of which were revealed in a New York Times article last year. They include using JetBlue to snag cheap airfare, tackling home renovations himself and buying his golf equipment at Kmart. You heard it right. Romney, who is worth about a quarter-billion dollars, is always on the hunt for “blue light specials.” A family friend was quoted in the same article saying that one of Romney’s mantras is, “Just because you can afford something doesn’t mean you should buy it.”
Romney promises similar frugality within the federal government if he is elected President this fall. He proposes to cap government spending at 20% of gross domestic product. That would involve spending cuts of about $500 billion per year starting in 2016.