- Fortune meets the millionaires who amassed their seven-figure fortunes through an underconsumption lifestyle, which has opened up doors for flexible working and early retirement.
How do the rich stay rich? Apparently, by acting like they’re not. In a world of fast fashion, TikTok trends and next-day delivery, it might be easy to splash a six-figure salary on all the latest consumables.
But the high net worth individuals and $100,000+ earners Fortune spoke to said the opposite: They try and keep their discretionary spending as minimal as possible, preferring the impact it has on their finances.
While their friends might enjoy eating out a couple of times a week, they choose to cook for themselves—in fact, they even buy frozen groceries because they’re cheaper than fresh.
Some choose not to own cars, mend their own ‘capsule’ wardrobes and find some of their children’s toys on Facebook marketplace.
These individuals—in some cases unconsciously—are living an ‘under-consumption’ or ‘low consumption’ lifestyle.
The phrase began to spread on social media sites like TikTok after individuals started sharing their weekly grocery shop or make-up cabinet to counter the infinite shopping hauls or wishlists often found on the app.
The advice from the ‘underconsumption core’ community included setting no-buy challenges or decluttering spaces packed with items you’re not using.
For the individuals Fortune spoke to, these habits are already second nature. And having lived the underconsumption life for most of their adult years, their bank balance is reaping the rewards.
‘I shop in the frozen section at Aldi’
Author and entrepreneur Shang Saavedra and her husband didn’t build a multi-million dollar net worth overnight. In fact, it was in their respective childhoods that they learned the value of frugal living.
Renting a four-bed home in the suburbs of Los Angeles, the pair share a 16-year-old secondhand vehicle and do their grocery shop at Aldi—predominantly in the frozen section.
Saavedra’s sons—aged five and two—often wear hand-me-down clothes, play with toys found on Facebook marketplace and enjoy free activities instead of the Disneyland trips their Californian peers often take.
While multi-millionaire Saavedra’s life has some hallmarks of a high-income household—her children attend private school, and she owns property in New York—these expenditures fit with her financial ethos: investing in education and assets that support her philanthropic endeavors.
Contrary to the majority of Americans—58% of which told a Harris Poll survey last year they worry about their finances during the festive period—Saavedra says her day-to-day expenses during Thanksgiving and Christmas predominantly increase because of philanthropic gifting.
The 39-year-old’s ability to share her wealth is courtesy of shrewd money decisions in her early career—when she held a director position at CVS, and analyst and consultancy roles at the likes of Victoria’s Secret.
Before marriage, Saavedra lived with roommates and then moved into a rent-controlled apartment with her husband in New York (a building where the plumbing often cut out), often using meal vouchers handed out by working late in their corporate roles.
They aimed to reduce their expenditures to a single income and save the rest, in preparation for having children.
Saavedra, now an entrepreneur helping hundreds of clients achieve their financial goals, told Fortune in an interview that the best way for people to try an underconsumption lifestyle is to “start with why.”
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“What is the end goal of underconsumption? If you just do underconsumption for underconsumption’s sake you’ll burn out and get unhappy very quickly,” Saavedra explained. “Because my husband and I oriented our consumption towards financial freedom and family it’s made it so worth it.
“Of course I still am tempted to go for luxury items and experiences, and every now and then we have a nice date night at a very nice restaurant—but understanding the reason why you want something … comes from a pain for an unfulfilled part of your life and oftentimes is a psychological need.”
‘I never buy new clothes’
What it takes to run a household is only getting more expensive. According to the U.S. Bureau of Labor Statistics, the average monthly household expenditure in 2023 was $6,440.
This is a steep increase compared to only a year prior—up 8.3%—and up 15.5% from 2021, when monthly expenditures sat at $5,577 a month.
Yet despite the fact Annie Cole owns assets totaling more than a million dollars—and is earning six figures—she has trimmed her spending down to a little under $4,000 a month.
Cole sold her Prius a couple of years ago, batch cooks meals for her and her husband, cuts her own hair and clothes shops three times a year at her local Goodwill—Cole last purchased new clothes a year ago, and with a gift card.
The couple travel using air miles and points accrued when Cole, 36, was traveling for a corporate role, spending their vacations enjoying free activities like hiking and swimming.
The approach has not only changed Cole’s outlook on how long she will work—retirement is pencilled in for her early 40s—but the nature of work itself.
“I’m so curious if I will actually want to retire,” Cole—who works as a contracted researcher and personal finance expert—tells Fortune. “Now that I’m working part-time I think about it differently. When I was working full-time I thought ‘I can’t wait to be work-optional’ but I almost feel like I’m living it now.
“I’m doing all the things I want to do and knowing that I could retire feels like a nice financial cushion of ‘Hey, you’re taken care of as you get older and in the meantime you have the flexibility to live and work differently.’ That’s a blessing in itself.”
Packed lunches and shared commutes
Dentist Robert Chin and his partner Jessica Pharar own a practice in Las Vegas. They commute the short drive from their home together to cut down on fuel, with their packed lunches in tow.
The couple transitioned into a lower-consumption lifestyle courtesy of rising costs and a firmer idea of what they wanted their finances to look like—despite the pair earning comfortable six figures.
Chin tells Fortune he now eats out one or two times a month instead of a few times a week, and shops at Costco to avoid inflationary grocery prices as best he can.
Unlike the other sources Fortune spoke to, Chin isn’t against buying new clothes but maintains that they must have a lifetime guarantee (from the likes of Patagonia) or that they will last for years.
The pair own a condo which they let out, but rent their current property to have the flexibility to purchase when the market begins to move again.
Their goal is simple: Flexibility—whether that means taking more time off together or potentially retiring earlier.
“In five years we’d like to have an associate or another practitioner both because the office has grown enough to support that and also because it affords us the flexibility to take time off more readily. It’s probably the biggest challenge of us being leaders in the business, our ability to take time off is really difficult because if we’re not here the practice doesn’t make money.”
This story was originally featured on Fortune.com
