7 Ways the Rich Save Money on Monthly Bills That the Middle Class and Poor Do Not
According to the 2024 Financial Literacy Survey by GOBankingRates, 13% of Americans currently don’t make enough money to cover their monthly bills, and 46% are barely making enough to get by. Then there are wealthier people who don’t have to stress about certain monthly bills that impact those who are in the middle class or considered poor.
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What are the different ways the rich can save money on monthly bills that the middle class can’t?
Paying For Monthly Bills Upfront
Someone with financial resources can pay for their monthly bills upfront instead of trying to work out a rate that gets divided into equal monthly payments. You can typically negotiate a lower rate for a gym membership or a subscription by paying an annual rate.
“A wealthier person may be able to negotiate a lower monthly price for a utility service by offering to pay for a whole year or contract period upfront,” said Erika Kullberg, an attorney, personal finance expert and founder of Erika.com. “This could also apply to something like rent, where a landlord may be willing to take a small cut in order to enjoy the security of a lump sum.”
Rich people can get volume discounts by covering expenses upfront so that they don’t have to stress about monthly payments. Middle-class people often wouldn’t be able to pay their home insurance or utility bills in one lump sum.
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Using Credit Card Rewards To Cover Expenses
Rich people can also save money on monthly bills by taking advantage of credit card reward programs, like cash-back options, to have additional funds to handle monthly expenses. A rich person can place their expenses on a credit card that earns these perks since they don’t have to worry about making their payments as they can transfer the funds over.
“Using high-end credit cards is a fantastic way to make significant savings through rewards and cash-back programs, which could be used to pay off monthly bills,” Kullberg said.
While a poor person would be concerned about placing everything on a credit card, a rich person knows that they’re getting cash back and they don’t have to worry about getting into debt.
Dividend Payments Cover Monthly Bills
“A great way to help offset the cost of your monthly bills is to invest in dividend-yielding stocks,” Kullberg said. “Wealthier people often look to these kinds of stocks, which regularly pay out returns to shareholders, as a way to both invest their money and also enjoy a source of passive income.”
A rich person can invest in dividend-paying stocks that automatically transfer funds into their accounts, which could be used to handle monthly expenses. Once you’ve accumulated a significant amount of wealth, you can live off the money.
Better Loan Terms
With a higher credit score, you can get a lower interest rate on loans, which can make a significant difference in a home mortgage or car loan. A middle-class or poor person could see their credit score drop by falling behind on payments or racking up too much debt. On the other hand, a rich person can pay their bills on time and build up an excellent credit score.
When applying for a home mortgage, every percentage point counts regarding your interest rate. For example, on a 30-year fixed rate mortgage for $242,000, you would pay $1,610 monthly with a rate of 7% compared to payments of $1,299 with a 5% rate. Therefore, rich people can save every single month on loan payments with lower interest rates due to their higher credit scores.
Energy-Efficient Homes
Rich people can invest in energy-efficient homes, such as solar panels, smart home setups or appliances. These significant investments can help them cut back on monthly bills since they’ll consume less energy.
With the average solar panel installation costing anywhere from $15,000 to $20,000, someone in the middle class may not have the funds for such an investment. However, it has been reported that a homeowner can save around $1,530 on annual energy bills by investing in a solar system.
Higher Quality Products That Last Longer
A rich person can spend the money on a higher quality product, so they don’t have to worry about monthly bills or replacing the item regularly. For example, a wealthy person can invest in a reliable vehicle so they don’t have to spend money on replacing it often or dealing with maintenance fees.
Not Having To Finance Purchases
The final way that the rich can save money on monthly bills is that they may not have to finance major purchases. A wealthy person could have the financial resources to purchase a vehicle or a home with cash so that they don’t have to borrow money or think about monthly expenses that could add up.
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This article originally appeared on GOBankingRates.com: 7 Ways the Rich Save Money on Monthly Bills That the Middle Class and Poor Do Not
