How to manage money like a billionaire

Many people may think that billionaires or rich people may use money extravagantly and have luxurious lives. However, one of the interviews with a financial planner who has been planning a lot for billionaires found out that these millionaires are very disciplined in spending their money and can manage their money well beyond our expectations. 

Wealth can build sustainability more than richness. Thus, billionaires need to have a great plan to manage their money to make the money grow and continue the wealth. This time, ACU PAY will tell you techniques on how to manage money in a billionaire style that is not taught in school. If you’re ready, let’s start!

These techniques are from the interviews of CNBC with Faron Daugs, a financial planner, the CEO of Harrison Wallace Financial Group.

According to 30 years of experience working with customers who have property worth more than 1 million dollars or more than 35 million baht, he found out that the money usage behavior and the money management of his rich customers are much different from what we thought. There are 5 things as follow;

1. Do not overspending

Spending money on something that makes you happy is not wrong if you have enough income and do not overspend till you do not have any money left for saving or worse; debt.

Even though the customers of Daugs’ have high income and can spend money on whatever they want, they usually spend money to buy themself some convenience and have never used money wastefully.  

For example, instead of buying a first-hand car, they will choose to buy a certified used car or fly in Economy Plus class which is much more cheaper than First Class, including using the same smartphones.

2. Make the most of credit card

Many may view credit cards in a negative way because they will cause us debts if we do not carefully use them. On the other hand, credit cards also have advantages if we use them correctly and can get some privileges in return such as exchanging the points in credit  for prizes, discounts or cashbacks. 

With these reasons, many of Daugs’ customers plan to spend their money via credit cards more than cash because they can receive those privileges in return. Also, they do not forget to pay for their credit cards debt at the full amount every month to avoid interests or fees.

3. Pay to yourself first

To save your money first before using it is another way to help you have  savings and feel more comfortable when spending money without worrying that you may not have enough money to use at the end of the month. 

Saving money before using it makes Daugs’ customers spend the rest of their money on what they want with the comfort that they will have short-term and long-term savings plans in reserve and increasing annual savings.

4. Always save money for emergencies

Another thing that’s very important in saving money is having an emergency fund to cope with unexpected events like illness, accidents, or unemployment. So having enough emergency savings to spend each month is very important.

Financial experts generally recommend emergency savings of 3-6 months. Most of Daugs’ customers have emergency savings of 6-9 months, but the amount they choose to save depends on their income and the level of convenience of each customer.

Nevertheless, Daugs advised not to keep the emergency money in a bank account solely, but to divide the emergency money into layers so that they will not lose opportunities to generate returns, such as:

  • Layer 1: Keep money in cash in the bank account for immediate withdrawal.
  • Layer 2: Keep money as a short-term fixed-income fund to generate more returns than bank deposits, but it still has liquidity that can be easily withdrawn.
  • Layer 3: Keep money as Index Fund to generate long-term return.

5. Have a strategic debt

Most of Daugs’ customers don’t usually pay for depreciable assets such as cars or other vehicles, but they pay for assets that are more likely to be valued or can be used to generate returns such as homes and housing.

Another important thing is that they will close their mortgage loans as soon as possible to reduce unnecessary interest payments that increase over time.

You can see that many millionaires have simple financial plans the same as the average person, including controlling their spending, having emergency funds, and investing in good debt can easily build sustainability for them. Let’s apply these techniques to ourselves, wealth can happen to us for sure.

จะเห็นได้ว่า เศรษฐีหลายคนมีการวางแผนการเงินที่เรียบง่าย ไม่ต่างกันกับคนทั่วไปเลย ทั้งการควบคุมการใช้จ่าย มีเงินเก็บสำรองฉุกเฉิน และลงทุนกับหนี้ดี ก็สามารถสร้างความมั่งคั่งให้กับพวกเขาได้ไม่ยาก แล้วลองนำเทคนิคดี ๆ นี้มาปรับใช้ให้เหมาะกับตัวเองดู รับรองว่าความมั่งคั่งเกิดขึ้นกับเราได้อย่างแน่นอน

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