A self-made millionaire, Graham Stephan has mastered the art of frugal living. The real estate agent, investor, money expert and popular YouTuber earns around $1.6 million per year, but you wouldn’t know that by his spending habits.
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In fact, Stephan claims he saves about 99% of his annual income, as his properties cover most of his living expenses. With an estimated net worth of $23 million, he could afford to live a much flashier lifestyle, but he chooses not to.
Remember, when it comes to frugal habits to save money, it’s not about making sacrifices as much as it is about strategizing what provides the most bang for your buck. Following a few of his money-saving or investing tips could be a game-changer. Here’s a look at seven ways to introduce Stephan’s habits into your lifestyle.
1. Cut Your Housing Costs
Housing expenses consume a large part of most people’s budget — 30% to 50%, according to Stephan. He recommended “house hacking,” which is essentially buying a home that allows you to collect rental income.
For example, he said you could purchase a multifamily home, live in one unit, then find tenants to occupy the others. You could also buy a single-family home with an additional dwelling unit or a finished basement and rent that out.
If you don’t have the money to buy something, he recommended “rent hacking.” This is when you rent a home and, in turn, rent other rooms out. Or, you could take the more traditional route of finding roommates to live with to save a lot of money on mortgage payments or rent.
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2. Buy Used Cars
Taking public transportation is the cheapest way to get around. However, if you want or need a car — even a luxury vehicle — Stephan advised buying one at the bottom of its depreciation curve, driving it for a few years, then selling it while you can still get around the same price you paid for it.
As a car guy himself, he said you can get the same enjoyment from an older luxury model without overspending. This works well for your car-loving heart and savings account alike.
3. Spend Money Mindfully
“It’s important to live life,” Stephan said. Therefore, he advises going out with friends and enjoying yourself but said you don’t have to spend a fortune to do that.
For example, if he’s going to a bar with friends, instead of buying pricey drinks all night, he pre-games at home, then orders water when he’s out. Or, when friends invite him out to dinner, he orders an appetizer instead of an entrée.
These quick and easy money moves allow him to have fun with friends without breaking his budget.
4. Travel With Credit Card Rewards
Exploring new places and seeing loved ones who live out of town is fun, and even necessary. In fact, Stephan said he enjoys traveling and likes to see his family in Canada twice per year.
However, he said he hasn’t paid for a plane ticket or hotel room in three or four years. This is because he’s mastered the art of a practice he called “credit card churning.”
Basically, he signs up for credit cards to get reward points and redeems them for free travel. Right now, he said he easily has more than half a million points to use for air travel — even first class and to stay in any hotel he wants.
5. Don’t Buy Designer Clothing
You won’t catch Stephan spending hundreds of dollars on luxury clothing items. Instead, he said he gets most of his clothes from Zara, H&M or even outlet and thrift stores.
He also avoids trendy items so he doesn’t have to replace his clothes before they’re actually worn out. This, paired with taking good care of his attire, allows to keep items in his closet for several years.
6. Stay Away From High-Interest Debt
High-interest debt — e.g., credit card debt, student loans — can hold you back. Therefore, the only kind of debt Stephan is willing to take on is a low-interest car payment or a low-interest, fixed-rate mortgage.
He also advised never to carry a credit card balance and never to finance anything you can’t afford. When it comes to taking on debt, if you’re paying more than a 5% interest rate, he said it’s probably best to just pay the balance off early.
7. Comparison Shopping
On average, men in the 30- to 50-year-old age group following a thrifty meal plan spend about $242.40 per month on groceries, according to the U.S. Department of Agriculture. However, Stephan only spends about $200 per month at grocery stores.
He shops at a variety of stores, comparison shopping and stocking up on his staples at the store with the best prices. Not solely sticking to one store allows him to score better deals.
Caitlyn Moorhead contributed to the reporting for this article.
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This article originally appeared on GOBankingRates.com: 7 Frugal Habits of Graham Stephan
