According to US Census data, only 5% of US households earned $250,000 per year or more in 2020 (median salary being $67,521). How these better income spend their money? And are there certain areas where they try to budget and save money? Based on interviews with high earners and financial planners with high income clients, GOBankingRates uncovered a few common areas where some of America’s top earners refuse to splurge.
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1. Branded clothing
Designer clothes are the first item that Holly Johnson – budgeting expert, freelance writer and author of “Zero Down Your Debt” – refuses to buy. Johnson has been earning a six-figure income since quitting her job to write full-time a decade ago. In 2021, she earned $422,000 from her writing.
“I refuse to spend money on luxury items with brand names, such as handbags or designer clothes,” she said. “I buy most of my clothes from Target or Goodwill, mostly because I think new clothes are wasteful and bad for the environment. … We also buy most of our kids’ second-hand clothes, and that don’t really bother them.
2. Luxury cars
As founder and president of Lynx investment advice in addition to being a Registered Investment Advisor, Peter Tanous regularly works with clients who earn over $250,000 a year. Although the spending habits of high-income people vary, he noticed that many choose not to spend money on luxury cars.
“I’m surprised how many very, very wealthy customers don’t buy high-end automobiles like Maseratis or Porsches, let alone Rolls Royces or Bentleys,” Tanous said. “Those I know drive regular cars and SUVs that are functional and comfortable. They do not need to advertise their privileged financial situation.
Tanous’ observations match Kat Tretina’s experience. As a financial writer and co-founder of Academy of Freelance WritersTretina earned $210,000 in 2021 and is on track to earn $250,000 this year from her freelance writing work.
“I refuse to spend money on cars,” Tretina said. “I used to work for a pharmaceutical company, and everyone was trying to maintain that image, so every year when bonus time came around, you’d see brand new Mercedes in the parking lot. And that seems like a great way to never have money in the bank, so personally I always buy a cheap, usable car and pay cash.
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3. Huge houses
Kyle Bloyd, Senior Financial Advisor and Vice President of Revolutionary Financial Groupsaid many of his high-income clients stick to a budget, regardless of income.
“Most don’t spend on luxury homes or cars, but some do,” he said. “I noticed that those who fund them usually. Those who finance generally have a lot more assets and those who pay cash have a lot less assets. I suggest letting the assets grow. Some even use the investments to cover their mortgage and cars, so they don’t have to spend money.
4. Travel sports for children
Travel sports are another area where Johnson refuses to spend the money – and for more than one reason.
“Travel sports have gotten completely out of control in our region, both because of the cost and the time investment required,” she said. “We know of many couples with children who spend their weekends in motels in separate states to attend games and tournaments, so their family time is limited.”
But that doesn’t mean Johnson never splurges while traveling. On the contrary, she and her family enjoy cruises and trips to unforgettable destinations like Italy, Norway, Denmark and Sweden.
5. First class air tickets
Flying first class may be a desirable choice for some, but not for many high-income Tanous customers.
“When traveling as a family, the very wealthy typically choose economy class on planes, bypassing their ability to travel first class,” he said. “When asked about it, the most common response is, ‘We sit down together and we get there at the same time as the guys riding in front. “”
6. Expensive jewelry
Several high earners listed jewelry as another item they refused to pay for.
“I’ve never had expensive jewelry in my life,” Johnson said. “I still have the $400 engagement ring my husband gave me 17 years ago, and I buy all my earrings at Kohl’s.”
Tretina agreed, saying she just wasn’t “a jewelry lover” and would “be just as happy with a $10 ring from Claire’s.”
7. Big holidays (sometimes)
Many high-income Bloyd clients limit their vacation spending when their investments aren’t performing well.
“While the market is down, they usually don’t pay for these cruises or other extravagant vacations,” he said. “Wealthy people generally think differently when they spend and try to be conservative when necessary.”
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