They live like paupers to spend like kings – and the simple habits that separate Australia’s wealthy from the rest of us might surprise you!
Picture this: Australia’s richest woman, Gina Rinehart, worth $38 billion according to the 2024 Financial Review Rich List, walks into your local Woolworths. She’s comparing unit prices, checking for markdown stickers, and possibly even using a coupon app on her phone. Sound unlikely? Think again.
The reality of how wealthy Australians behave would surprise most people scrolling through Instagram fantasies of luxury lifestyles. While we’re conditioned to believe wealth equals flashy spending, the truth is far more mundane – and far more achievable, which is good for most of us!
The Great Wealth Illusion
We live in an age of financial theatre. Social media feeds overflow with luxury handbags, exotic holidays, and champagne brunches. Yet behind the scenes, those genuinely building wealth are doing something entirely different: they’re living like they’re broke.
Recent research from Finder reveals that among Australian investors – the people actually building wealth – 59% regularly buy discounted groceries, 44% consistently eat home-cooked meals, and 34% regularly compare and switch household bills. These aren’t struggling families clipping coupons out of desperation; these are people systematically building their financial future.
The Grattan Institute’s 2024 analysis shows that the typical Australian earns far less than most people assume, yet those in the highest wealth quintile have managed to accumulate an average net worth equivalent to four average Australian homes. How did they get there? Not through lottery wins or inheritance, but through habits so boring they’d make terrible television.
Lessons from The Millionaire Next Door
The seminal study “The Millionaire Next Door” shattered decades of assumptions about wealthy behaviour when it revealed that most American millionaires don’t live in mansions or drive luxury cars. Instead, they live in modest homes, drive reliable used cars, and shop at discount retailers. The Australian wealthy follow remarkably similar patterns.
Dr. Thomas Stanley, co-author of the study, discovered that the typical millionaire lives in a neighbourhood where homes cost less than $400,000 (in 1990s dollars), drives a Toyota or similar reliable vehicle, and has never spent more than $400 on a suit. These findings revolutionised our understanding of wealth accumulation.
The Warren Buffett Philosophy
Warren Buffett, consistently ranked among the world’s wealthiest individuals, still lives in the same house he bought in 1958 for $31,500. His famous advice captures the essence of wealth building: “Do not save what is left after spending; instead, spend what is left after saving.” This isn’t just folksy wisdom – it’s a mathematical reality that compound interest rewards those who start early and stay consistent.
Buffett’s approach to spending is legendary. He famously eats breakfast at McDonald’s, choosing between items that cost $2.65, $2.95, or $3.17 depending on how the stock market performed the previous day. “If I’m not feeling so prosperous, I might go with the $2.65 breakfast,” he joked in an interview. Yet this frugal mindset from someone worth over $100 billion illustrates a crucial point: wealth isn’t about spending money – it’s about keeping it.
The Australian Reality Check
Australia’s wealth distribution tells a fascinating story. According to McCrindle Research, only households in the fourth and fifth quintiles have net wealth exceeding the average capital city house price of $809,349. Meanwhile, Knight Frank’s 2024 wealth report shows that to join Australia’s wealthiest 1%, you need a net worth of $7.18 million – down from $8.41 million the previous year, but still a substantial sum.
Yet here’s the kicker: most of these wealthy Australians didn’t get there through high incomes alone. They got there through habits that anyone earning a median income could adopt.
Eight Habits That Build Wealth
As with most aspects of life, simple habits usually underline whatever is worth achieving. Wealth creation is no different. Studying the wealthy reveals a patterns of habits built over time lead to the attainment of financial independence and even wealth.
1.Automated Discipline
Wealthy individuals consistently save a portion of their income, often starting early and automating contributions to retirement accounts. One Sydney based certified financial planner working with millionaire clients notes that his self-made millionaires invariably started by reducing debts to increase cash flow and building their emergency funds.
The key insight here is automation. Wealthy people don’t rely on willpower to save money – they make it automatic. They set up systems where money is invested before they can spend it, removing the daily decision-making that derails most people’s financial plans. Australian author of the Barefoot Investor, Scott Pape, also recommends automation. In his book he says,“I have all my investments on autopilot, automatically buying a set dollar amount… and I check my share prices just four times a year… That way you can do something more productive with your time.”
2.Strategic Frugality
The wealthy practice what researchers call “strategic frugality” – they’re ruthless about cutting costs in areas that don’t matter to them while spending generously in areas that do. They might drive a 10-year-old Honda but invest heavily in education or business opportunities.
In a recent article in The Australian with a self-made millionaire financial planner, he shared that his wealthier clients, …”will purchase a certified pre-owned car versus buying a brand new one; they will search for good deals on vacations; they may upgrade to economy plus on an airline but won’t pay for first class; they will keep their cell phones as long as they are working and don’t feel the need to upgrade to the latest model.”
3.Investment Simplicity
Most self-made millionaires invest using surprisingly simple strategies. They favour index funds, which are low cost and don’t require active management, or they invest in blue chip dividend-paying stocks. Ronald James Read was a janitor and gas station attendant from Brattleboro, Vermont, USA. He lived simply, drove a second-hand car, wore a flannel shirt and cap, and was known around town as modest and unassuming. He died in 2014 at the age of 92. When the community learned that he had left $6 million to a local hospital and $2 million to the town library, jaws dropped. No one—except perhaps his financial advisor—had any clue he was a multimillionaire. Read began investing in his 30s or 40s and held his stocks for decades. According to The Wall Street Journal, he had over 90 stock holdings when he passed. His approach? Patient. Unemotional. Steady.
4. The Power of Compound Habits
Morgan Housel, author of The Psychology of Money, says “The most powerful force in investing is not returns, it’s time. A small return for a long time beats a big return that doesn’t last. Scott Pape regularly drives home the importance of understanding the ‘eighth wonder of the world’, compound interest. In a poignant example aimed at children, Pape illustrates how starting early—even with modest sums—can snowball into millions through compound growth. He writes:
“That’s the power of compound interest. That’s the power of time… With enough time, you can’t help but build enormous wealth.” His point is that it isn’t high intelligence or financial wizardry that achieves long term wealth, but rathe it is just time working through disciplined, automated investing that truly builds wealth.
5. The Reading Habit
Wealthy people read voraciously, but not romance novels or thrillers. They consume educational and self-improvement content. They understand that knowledge is the ultimate appreciating asset. Warren Buffett famously reads 500 pages daily, claiming it’s the key to building knowledge, which compounds like interest. Bill Gates, Founder of Microsoft was once the richest man in the world. In an interview with CNN, he talked about some of his wealth creation habits, highlighting the importance of ongoing education. “I try to read about 50 books a year. Reading is still the main way that I both learn new things and test my understanding.” He’s a committed note-taker and has blogged hundreds of book reviews on everything from climate change to health care on LinkedIn and other platforms.
6. The Debt Elimination Priority
Before they build wealth, the wealthy eliminate debt. High-interest debt, particularly credit card debt, is wealth’s enemy. A dollar saved in interest charges is a dollar that can be invested. Most millionaires became debt-free early in their wealth-building journey, freeing up cash flow for investment. Just as compound interest works in investing, small frugal habits compound over time. The ultra-wealthy often embrace everyday habits like packing lunches, skipping overpriced coffee runs, using coupons, creating detailed budgets, and steering clear of high-interest debt.
David Bach, author of “The Automatic Millionaire,” coined the term “latte factor” to describe how small daily expenses can derail wealth building. A $5 coffee might seem insignificant, but invested in an index fund returning 7% annually, that same $5 daily becomes $125,000 over 30 years.
7. Finally, Taking A Long-Term Mindset
Perhaps most importantly, wealthy individuals think in decades, not months. They understand that wealth building is a marathon, not a sprint. This long-term perspective allows them to ride out market volatility and benefit from compound growth over time. The wealthy seem to avoid any attraction to fast returns and ‘hard to believe’ secrets to financial freedom. Why? Because they practise the other six habits outlined here and have evidence they work!
Your Wealth-Building Action Plan
The beauty of these wealth-building habits lies in their accessibility. You don’t need a high income to start – you need the right systems and mindset.
- Start with Automation Set up automatic transfers to savings and investment accounts. Even $50 weekly, invested consistently, creates substantial wealth over time. The goal is to remove the daily decision from saving – make it automatic and non-negotiable.
- Embrace Strategic Frugality Identify your values and spend consciously. Cut ruthlessly in areas that don’t matter to you, but don’t scrimp on what truly brings value to your life. The wealthy aren’t cheap – they’re intentional.
- Invest Simply Avoid complex investment strategies that require constant monitoring. Low-cost index funds, quality dividend-paying stocks, and diversified ETFs provide market returns without the stress of stock picking.
- Eliminate High-Interest Debt Credit card debt charging 20% interest will destroy wealth faster than almost any investment can build it. Make debt elimination a priority before serious wealth building begins.
- Think Long-Term Develop a 20-year perspective on wealth building. This longer timeframe allows you to ignore short-term market volatility and benefit from compound growth.
- The Mindset Shift
Building wealth requires a fundamental mindset shift from consumer to investor. Instead of asking “Can I afford this?” ask “What is the opportunity cost of this purchase?” That $50,000 luxury car might cost $400,000 in investment returns over 20 years.
The wealthy understand that every dollar has the potential to work for them if invested wisely. This perspective transforms spending decisions and accelerates wealth accumulation.
The Final Paradox
Here’s the ultimate irony: by the time you’ve built significant wealth through these boring, disciplined habits, you can afford to buy almost anything you want. But by then, you probably won’t want to. The habits that build wealth also tend to build contentment with a simpler lifestyle.
As financial advisor Suze Orman notes: “A big part of financial freedom is having your heart and mind free from worry about the what-ifs of life.” The wealthy sleep well not because they can buy anything, but because they don’t need to. The path to wealth isn’t secret or complex – it’s just not glamorous enough for Instagram. While others are posting their purchases, the wealthy are quietly building their portfolios. And ultimately, that’s a much better long-term strategy. If a question about money keeps you up at 3am, then take a proactive approach to building up sustainable habits to building prosperity. Money in midlife isn’t just about accumulating, it’s about defining wealth as time, choice, and peace of mind. That’s the real wealth equation.
Don’t Let the Old (Poor) Man In!
There’s a reason the podcast Don’t Let the Old Man In resonates with thousands of men in their 50s. It speaks to the quiet war many fight against obsolescence, irrelevance, and a determination to navigate life’s crossroads with clarity and confidence. And likewise, if you’re reading this, you haven’t given up. You’re still curious. Maya Angelou once said, “If you’re always trying to be normal, you will never know how amazing you can be.” Midlife career change isn’t about being extraordinary. It’s about being aligned—with yourself.
Pod O’Sullivan is the host of the Don’t Let the Old Man In podcast. Listen on YouTube, Apple, Spotify or wherever you tune in. Find more thoughts on living gracefully (and disgracefully) in the second half of life at The Wisdom Vault, on LinkedIn, Substack and even (!) Instagram.
