What secrets about managing money do the rich know that the average person doesn’t?
I spent five years trying to answer that question.
I asked 233 millionaires 144 questions and discovered the rich have certain very specific money habits that were instrumental in helping them accumulate their wealth.
1. Know Where Your Money is Going
Look at your bank statement and credit card statement every month.
You’ll uncover expenses for things you were not even aware you were paying for, such as club memberships, subscriptions, recurring charges for products or services you don’t even use.
Oftentimes these recurring charges are the byproduct of some “free” promotion you signed up for.
The problem is those promotional periods end and when they do, that’s when the charges begin.
2. Annual Expense Review
Many expenses change over time.
Insurance costs, such as life insurance, can actually drop when the life expectancy tables are internally adjusted by your insurance company’s underwriting department.
You’ll never know unless you reach out to your insurance agent to find out.
Also review your health insurance to make sure you’re not inadvertently paying for dependents who left the nest, are on their own, and have coverage through their employer.
Cable and Internet costs often change when certain channels are added or dropped.
You may be paying for channels you were not even aware were part of your package.
Calling your cable or Internet provider to secure the lowest fees available should be an annual process.
Periodically shop cell phone plans.
Increased competition in the cell phone industry is driving down monthly rates. Make sure you are not paying more than you have to.
3. Avoid Spendthrift Friends
Most people were not taught the habit of living below their means by their parents. 
As a result, it is very likely that some of your friends are dragging you down with their reckless spending.
A night out on the town can sometimes turn into an unexpected $300 night and vacations can turn into investments.
Think long and hard about the affect your friends are having on your spending habits.
If you hang out with spendthrifts, you could become one yourself.
Our habits are influenced by those we associate with.
The self-made millionaires in my study made a conscious effort to associate with like-minded individuals.
Make sure you are associating with individuals who share your desire to live below their means.
4. Purchase Good Quality Used Cars
New cars lose value as soon as they come off the lot.
Buying good quality used cars allows you to take advantage of this loss in value anomaly prevalent in the auto industry.
44% of the rich in my study purchased good quality used cars.
Typically these are cars coming off a lease.
They may be two or three years old. At 125,000 miles most cars will require some annual repairs.
Expect to incur about $1,500 a year in repair costs when you hold on to cars beyond this 125,000 mileage mark.
That is still significantly less than you would spend on a loan or lease for a new car.
5. Use On-line Coupons – Online sites like Groupon, Living Social, Fab and many others offer discounts of 50% or more on restaurants, products and groceries.
Thirty percent of the self-made millionaires in my study used coupons.
Why pay more than you have to on groceries or other expenses?
6. Keep Housing Costs Between 25% – 30% of Your Monthly Net Pay
Contrary to what you’ve been led to believe, most of the rich do not live in McMansions.
Sixty-four percent of the rich in my study lived in modest homes.
7. Save 20% of Your Net Pay
Automate your savings by having 20% of your net pay sent to your savings account every pay period.
This will force you to live below your means because you will be forced to live on the remaining 80% of your net pay.
8. Never Gamble Your Savings
There’s no such thing as getting rich quick without exposing yourself to unnecessary risk.
The power of compounding with safe investments can grow your savings and make you wealthy.
Saving just $250 a month over 40 years will produce $381,505 at a 5% return.
9. Allocate Your Savings Using The Bucket System
Bucket #1 is your Retirement Savings Bucket.
Bucket #2 is your Specific Expense Bucket (i.e. saving for a down payment on a home, wedding costs, birth of a child, etc.).
Bucket #3 is your Unexpected Expense Bucket (i.e. home repairs, car repairs, medical costs, unemployment, etc.)
Bucket #4 is your Cyclical Expense Bucket (birthday gifts, holiday gifts, vacations, back to school, etc.).
10. Establish Savings Goals Per Bucket
Earmark a certain percentage to set aside for each bucket.
For example, if you save 205 of your net pay the allocation might look like this:
- 10% for Retirement Bucket
- 4% for Specific Expense Bucket
- 3% for both Unexpected Expense Budget and Cyclical Expense Bucket.
Saving money is a process. 
Accumulating wealth is a process.
It’s all one big process, this thing we call financial success.
But if you don’t have a process or adopt good money habits you will never be able to save.
It just won’t happen.
When you develop good money habits you feel like you are finally in control of your life. It’s empowering.
