Living paycheck to paycheck may be a working class cliché often talked about in movies and on television, but many people—including our nation’s top earners in entertainment and sports—do live paycheck to paycheck. Part of it is the nature of the business, but for many of these folks, the problem is that their expenditures are often lavish and even over-the-top. These celebs, like many non-famous individuals, try to elevate themselves socially through beauty, high fashion, or cool toys, but being beautiful and having a great life doesn’t have to break your bank, which is something some frugal celebrities have figured out.
Not all celebs are savings savvy
Celebrities are not known for being frugal however. Most of the times when you see celebrities in the media, their saving strategies and good investments aren’t being highlighted. Almost everything we hear about is big salaries, huge excesses, and mounting expenses.
For instance, US Weekly estimates that one of LeAnn Rimes casual ensembles for everyday out-and-about wear cost $10,356 when you include the $4,200 Chanel bag she was carrying! Victoria Beckham’s annual clothing expenditures are estimated to be about $154,000, which is not a surprise—she regularly goes on shopping sprees where she spends upwards of $7,500. Then there is Sarah Jessica Parker who alleges she can do anything in her over 100 pairs of Manolo Blahniks–even run a marathon–which, when new, cost around $600 and into the thousands of dollars per pair.
It isn’t just clothes though! Jennifer Aniston recently spent $20,000 on lights alone for her Los Angeles mansion. Vince Young, a star NFL player, was at one time spending $5,000 per week at the Cheesecake Factory and taking $600 shots of Louis XIII after games. Actor Nicolas Cage spent $276,000 on a dinosaur skull. What’s more shocking is that he outbid Leonardo DiCaprio for the fossil, two years before his house was foreclosed on and it was revealed he owed $6 million in back taxes—yikes!
Special events are even more costly. Stars regularly strut the red carpet adorned in clothes worth more than your average home. It’s hardly unheard of for a celebrity wedding to run over several million dollars–when Tom Cruise and Katie Holmes were married in an Italian castle, People Magazine guesses that the wedding would cost $3.5 million to recreate!
This kind of lavish, anything goes spending is what we associate with celebrity. If you’re hauling in the big bucks, you blow the cash on anything you want, whether it’s a closet full of shoes, fancy drinks for friends, or decadent parties. We don’t expect our celebrities to be responsible, let alone good examples of frugal living.
After reading headline after headline about celebrity extravagance, we assume that every celebrity is spending every cent they get, but not all celebrities are big spenders. Some top celebs live shockingly normal and thrifty lives. What can we learn from these successful millionaires living as average, rational people? As it turns out, there’s a lot to take away from their good habits, and here are four shining examples.
1. Model and TV host Tyra Banks . . . reduces, reuses, and recycles!
Despite her net worth of $75 million, Tyra Banks is known for her frugal spending. “I’ll ask my accountant if I can afford something, and he’ll say, ‘What are you talking about?'” she told Forbes magazine. As Banks is a world renowned supermodel, TV producer and host, we might ask her the same question–Tyra Banks can afford anything she wants.
Despite her wealth, Banks is a master of money saving. When moving into her show’s new office, she hated the carpet, but she decided that replacing all the carpeting was too expensive. Instead, she painted the walls to match her vision for the room, designing the color scheme so she could leave the carpet as is. She may be the queen of “smizing”—a Tyra term for smiling with the eyes—but this is one model who’s pretty serious about saving.
She’s also more interested in what’s on her TiVo than designing her own outfits. She tends to wear very simple clothes and doesn’t chase designer trends, instead having a personal stylist pick out her combinations from her fairly modest closet.
Millionaire tip: Choose classic quality over fads.
In fashion, buy longer lasting, classic styles and build on a core collection so you can mix and match from day to day. You can save thousands of dollars over a lifetime by buying quality, affordable garments instead of trendy pieces that fall apart within a year or go out of style.
Many of Bank’s money saving techniques are more Middle America than Hollywood. Banks stockpiles soaps and shampoos from hotels she stays in, and she brings them home to use in her own bathroom. Her mother was interviewed about her daughter’s unusually frugal nature and told a story of finding Banks in the kitchen after a meal with friends, picking leftover meat off of chicken wings to use in an omelet the next day.
Millionaire tip: Reduce, reuse, and recycle everything.
Use food leftovers in a different dish to eliminate food waste. Our food budget is usually about 11-16% of our income, which allows for some big savings if we plan meals to use everything we buy at the grocery store and nothing less.
The most startling fact about Tyra Banks may be that she doesn’t use a Blackberry or iPhone to track her life. She has a regular paper notebook with different tabs for the multiple people and projects she’s involved with professionally. She carries it with her everywhere and takes notes by hand. When she sits down to meet with someone about a project, she flips to their page in the book. She says her handwriting has been getting tinier and tinier to save paper. If Banks, who makes $18 million a year, can live without extra gadgets, so can we.
2. Comedian and TV host Jay Leno . . . spends only a small portion of what he makes.
Jay Leno credits working two jobs when he was younger as inspiration for his current approach to money. The talk show host says that he puts all his income from The Tonight Show into savings and only spends the money he makes from his stand-up comedy. Back in 2004, he had reported that he had “yet to touch a dime” of the salary he made from his late night talk show.
Persistence is a cornerstone of frugality, and Leno knows it. Before his fame, the fast talker used his people skills to get a job at a Mercedes-Benz dealership. After being told by the boss they weren’t hiring, he didn’t give up. “Monday morning, I returned. I went to the car-wash bay, said ‘I’m the new guy,’ and started washing cars. After three or four days, the boss saw me and asked, ‘What’s he doing here?’ The car-wash guy goes, ‘He’s a hard worker.’ I said, ‘I figured I’d work here until you hired me.’ And I got the job. That attitude has always worked for me, “Leno said in a Parade Magazine article about his approach to work and money.
Millionaire tip: Work for it.
Set aside money from a second job, investment income, or side gig to maximize your savings fast. When that hard-earned money is earmarked for your savings account, it’s going to be harder to justify pulling it out of the bank to spend on things you don’t need.
3. TV and movie star Zooey Deschanel . . . set herself a reasonable budget and maintains no high-cost debt.
America’s newest sweetheart Zooey Deschanel is another celebrity with a surprisingly frugal lifestyle. The star of the hit sitcom New Girl, Deschanel makes almost $100,000 monthly from the show alone. The actress also plays in a band and acts in film; in 2011 she made $9 million from her various ventures. Her income will likely only rise as her top TV show has been renewed for another season. However, she only spends $22,550 a month—while this is a lot of money for most folks, this seems like peanuts compared to other celebrity spending. With her relatively low expenditures, she’s been able to accumulate $3,916,300!
When her lawyer filed paperwork for her divorce from Ben Gibbard, he accidentally made public her monthly budget. This mishap gives us a rarely intimate glimpse of an A-list celebrity with responsible spending habits. Only 40.2% of her assets are in her bank accounts—the rest is invested in a combination of stocks, bonds, and real estate. At the end of 2011, she’d paid off her three credit cards—a Citi Mastercard, a Chase Visa, and an American Express—which is something that can help any of us save money. It’s important to note that she also donates to charity at a rate of about 6.6% of her monthly expenditures.
Millionaire Tip: Diversify your assets.
Invest your money as well as keeping savings, and don’t carry unnecessary credit card debt.
Deschanel has clearly never fallen prey to a phenomenon known as lifestyle inflation. When you have a sudden influx of cash flow—a promotion, a new job or a second source of income—it is human nature to expand our expenditures to max out our resources. Just because she is making more and more money doesn’t mean she is going to start spending more and more. The money isn’t burning a hole in her pocket, like it was with Nicolas Cage who just had to have that dinosaur skull.
4. Oscar winner and critically acclaimed actress Jennifer Lawrence . . . is concentrating on making money rather than spending it.
Jennifer Lawrence is a model of frugal living as another starlet who avoided lifestyle inflation. The Hunger Games actress does her own shopping and clips her own coupons, a far cry from the Hollywood norm of personal assistants and shoppers to do your household management for you.
Her wealth and fame haven’t gone to her head, and she prefers to live in the same apartment she had when she moved to LA before getting big. She’ll be making a cool $10 million for her next Hunger Games film, but still admits embarrassment at paying $4 to valet park her car.
Millionaire tip: Don’t be a victim of lifestyle inflation.
Wait and think about big purchases. Upgrading simply to upgrade isn’t necessary, whether it’s a house, a car, or just a new TV.
Tyra Banks, Jay Leno, Zooey Deschanel, and Jennifer Lawrence may be pulling in annual salaries most of us only dream about, but their financial literacy is sound. They all save much more than they earn and carefully consider expensive purchases. Banks, Deschanel, and Leno all have diverse income streams from multiple business ventures, but give Lawrence time—she’s young, only 22 years old. Pressure to live it up with fellow celebrities must be considerable, yet these four manage to keep a level head and live fairly normal lives.
Smart entertainers know that fame doesn’t pay well forever, and the entertainment business can be cruel. Jay Leno wrote, “If the execs can fire you when you’re No. 1, they can fire you when you’re No. 2. Remember, show business is a nice place to visit, but trust me, you don’t want to live there.” These penny pinching celebrities may seem out of place, but they are actually very smart for planning for their future. We should use them as inspiration—if a multimillionaire with constant temptations to overspend like their peers can live a frugal life and plan for a rainy day, so can we.
Thomas Stanley would probably approve of their spending habits. Most of the concepts here have long been touted by famed author, Thomas J. Stanley, who most notably wrote The Millionaire Mind and The Millionaire Next Door. Stanley, has some very interesting things to say on celebrity-style spending. He pointed out that many more millionaire households live in homes with a value of $300,000 or less that live in homes valued at or over $1 million, and he has also highlighted that a shocking 86% of luxury cars in America are driven by non-millionaires.
Stanley’s insights highlight why we should follow the example of our four frugal celebrities. The truly wealth-conscious people that could easily afford a prestige vehicle or a high end home don’t buy them because they aren’t a sound investment; these are typically bought by people who are just acting rich and living beyond their means. Being frugal by living below our means, avoiding lifestyle inflation, and saving money is the key to long term financial success over our lifetimes.
Do you know of a frugal celebrity we missed on this list?