Lessons frugal billionaires can teach entrepreneurs

A good number of affluent people, many deduce, are stingy.

The ultra-rich who don’t flaunt their wealth because Forbes will do it on their behalf, those whose money exceeds the budgets of entire countries, are said to be difficult to dish out money.

An article by Yahoo! Finance quoted research by Experian Automotive showing that “for people with a household income of more than $250,000 (Sh30.3 million), 61 per cent don’t drive luxury brands. They drive Toyotas, Fords, and Hondas like the rest of us”.

A majority of them do not live flashy lives. They do not care about the perception people have of them. If anything, it seems their aim is to convince people that they are “normal”, that they are relatively unchanged by those excessive riches. There is an exception though.

Floyd Mayweather, an American boxing promoter and former professional boxer, whose net worth stands at an estimated $500 million (Sh60.5 billion), is not shy to parade his dollars.

Piers Morgan

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Embattled rapper and producer Kanye West, now famously known as Ye, recently reminded journalist Piers Morgan in an interview that he was not just a billionaire but a multi-billionaire, then in the same interview reminded the British interviewer that he (Ye) was richer than Morgan.

Mark Zuckerberg, the founder of Facebook and now the owner of American multi-national technology conglomerate Meta, whose net worth makes him one of the richest men in the world, has always been known for his trademark grey t-shirt look.

For years, he was used as an example of humility. Of not overdoing dressing. Of not flaunting his wealth. Simple grey t-shirt over jeans. While musicians and sportspeople are known to promote their brands by flaunting their lifestyles - glitz and extreme showboating - it is a common belief that the real moneyed tread on tiptoes lest they create noise and raise attention.

On The Guardian, a subscriber once asked: “Why are poor people more generous than wealthy people?”

One respondent answered: “I hope you won’t think this reflects the way I feel about it, but surely the question could be: Why are generous people poorer than stingy ones?”

Another one quipped: “How do you think they became poor?” It is believed that the rich got to where they are by being stingy, or painfully frugal.

They knew that saving that coin every day was going to be a quintessential contribution to the accumulation of worthwhile savings in the future. They have the discipline not to spend unless they have to.

The richest people in the world have, however, gained popularity for their willingness to donate to charity and other honourable causes. What they are often unwilling to give is handouts to people on the streets, or to friends, it appears.

In July, Bill Gates announced that he was donating $20 billion (Sh2.4 trillion) to the Bill & Melinda Gates Foundation, “while reiterating his pledge to give away “virtually all of my wealth to the foundation” and eventually drop off the list of the world’s wealthiest people altogether”, CNBC wrote. In the end, these rich people are willing to give, just to organisations established for charity. To individuals, not quite.

Warren Buffett, one of the most wealthy and successful businessmen in the world with a fortune of Sh13.2 trillion, is known for his frugal ways. The “Oracle of Omaha” still lives in a five-bedroom house he purchased in 1958 for Sh3.8 million. 

Wealth creation

One of the people reacting to The Guardian post said that poor people don’t know that they have to be frugal to become rich.

The tightening of the belt and spending only when there is real need to, and the cutting of unnecessary philanthropy, support wealth creation.

Another said that poor people have suffered more in life than rich people and therefore, in empathising with their ilk, are more willing to give. “Therefore, they are sensitive to their brother’s plight. Rich people are insulated from much of the suffering of this world, causing them to become less sensitive,” they said. Decades-old analyses of this belief by The Times indicated that the rich only manage to stay rich or to get richer, by focusing on the smallest details, including the least of outflows, in their businesses.

The little amounts others will be happy to give to their friends feel like huge amounts to these people and they want to preserve as much as possible.

“To get rich and stay rich, your relationship with money has to be love-hate - love to have it, hate to see it go. Rich people are generally detail-obsessed control freaks who have accumulated bazillions by noticing things (that the world needs Mike Oldfield and cardboard milk cartons, for example). So, noticing things like people helping themselves to their cigars naturally drives them mad,” the column read.

The spending habits of the rich are, however, dependent on factors such as their upbringing, the industries they operate in and the motivation behind spending, research shows.

Celebrities are some of the flashiest people on the planet. They are their own brands and they want to keep their brands relevant by keeping themselves in the limelight and therefore creating constant debate.

Such people will want to appear affluent even when they are not. It markets them. However, business magnates may not be interested in having their names trending out there.

What they are interested in is how well their businesses are doing and if the name of the business is reaching more potential customers.

While you want to know the artist behind a song in the hope that you will check out other songs by the same artist, you might not know the founder of Uber. This person must be a rich one, we’d suppose, but they are mostly not interested in you knowing them; as long as you know and appreciate Uber, they are sorted.

A quote that coins make clinking sounds while notes are silent is associated with the relative silence of the wealthy. For their safety, and to avoid unnecessary attention in public, some will eternally keep in the shadows.

A study by the University of California also showed that richer people were generally meaner.