Housing may be the key to bigger savings.
Earlier this week, a Reddit post ‐ from a 48-year-old woman claiming to be a millionaire despite having only low-paying jobs until about age 30 ‐ went viral, and in it she details some extreme frugality. She says she saves tea bags so she can make multiple cups from one bag, only eats out a couple of times a year, dilutes her dish soap with half water so it lasts longer and almost exclusively wears dark clothes as light colors stain too easily.
But she says there are two things on her long list of frugal habits that research shows really are the key to getting rich: Buying a very affordable home (hers, she says, was just $135,000 and in an excellent neighborhood) and driving an old car (hers is a 12-year-old Subaru, she says).
Indeed, research from TD Ameritrade ‐ which looks at people who save 20% or more of their incomes, called "super savers" ‐ shows that the single biggest difference between what super savers spent less on, as compared with the rest of us, was housing. Super savers spent just 14% of their incomes on housing, while regular folks dropped 23%.
What’s more, research released Monday by The Principal found that more than four in 10 people who fully funded or were very close to fully funding their 401(k) accounts said that one of the sacrifices they made to save so much was that they lived in a modest home. This -- along with owning older cars -- was one of the two top answers.