How the Rich Spend Their Money (and What They Don’t)

The spending habits of wealthy households have far more to do with restraint, compounding, and deliberate choice than with luxury. Here’s what the evidence actually shows.

Data shows wealthy households typically spend less than 40 percent of their income, directing the majority toward savings and investments rather than visible luxury. Their largest spending categories are housing, travel, education, and health. Their smallest are designer goods, new cars, and status signalling. Much of what the public assumes about rich spending habits is backwards. These patterns matter most once your income comfortably meets or exceeds your living costs, because at that point the question shifts from “how do I survive?” to “where does the surplus go?”

If you picture a wealthy person’s spending, you probably imagine a European car in the driveway, business class flights, and a wine fridge with something French in it. Some wealthy people do spend on those things. But the research on how genuinely rich households allocate their money tells a different, and far more useful, story.

A survey of high-net-worth individuals by Long Angle, covering US-based households with portfolios from US$5 million to US$100 million, found members spend roughly 37 percent of their after-tax income and save the remaining 63 percent. While this survey is American, the spending patterns closely mirror what we see among New Zealand high-net-worth households in our advisory work. The biggest categories are housing (28 percent), holidays, childcare, and food. Once net worth passes about US$25 million or income exceeds US$1 million, spending barely increases at all.

These findings are consistent across studies. A Ramsey Solutions survey of 10,000 millionaires found 94 percent live on less than they make, and none credited single-stock investing as a significant factor in their success. While Ramsey’s data is American, the behavioural patterns align closely with what researchers observe in other developed economies, including New Zealand. The UBS Global Wealth Report 2025 introduced the concept of “EMILLIs” (Everyday Millionaires, US$1–5 million in assets), a group now numbering 55 million worldwide, and noted their wealth is built primarily through consistent investing and property ownership, not high-income lifestyles.

In New Zealand, Stats NZ data paints a similar picture. To qualify as a top-1% household requires a net worth of at least $8.7 million, with the median sitting around $11.5 million. The wealthier the household, the less of its wealth is parked in the family home and the more is deployed across equities, bonds, and pension funds. Middle-wealth households, by contrast, hold 92 percent of everything in one residential property, creating the kind of liquidity gap we write about elsewhere on this site. The spending divergence between wealthy and typical Kiwi households is about where money flows after the bills are paid.

1. They Save First and Spend Second

Most people spend, then try to save what’s left. Wealthy households reverse the order. The Long Angle data shows those earning under US$250,000 after tax convert about 15 percent into free cash flow. For those above US$1 million, the figure exceeds 80 percent. Saving and investing are the default setting, built into the household cash flow before any discretionary spending is considered.

In our work with New Zealand households who have crossed the $2–5 million mark, this is one of the most consistent patterns we observe. They tend to live in decent but unremarkable homes relative to their net worth, keep cars for years, and funnel the surplus into diversified investment portfolios rather than upgrading their lifestyles every time income rises. Wealthy New Zealanders who built their wealth over 15 or 20 years almost always point to the savings rate, not a single windfall, as the primary driver.

New Zealand’s wealth data makes the point clearly. The top 20 percent of households hold 18 percent of their assets in stocks and bonds. The median household holds close to zero. The rich are not richer merely because they earn more. They are richer because a disproportionate share of their earnings is converted into income-producing assets, not consumed. A $250,000 household after-tax income means very little if $240,000 of it is spent. The couple next door earning $150,000 and investing $40,000 a year will overtake you, and they will do it quietly.

2. They Buy Time, Not Things

One of the clearest findings in behavioural economics is also one of the least intuitive: spending money on time-saving services increases life satisfaction more than spending on material goods. Research published in the Proceedings of the National Academy of Sciences, led by Harvard Business School’s Ashley Whillans, surveyed over 6,000 people across four countries and found the relationship holds regardless of income level. When people buy themselves out of tasks they dislike, they report feeling more in control of their day, and the happiness boost is statistically significant.

Wealthy households have internalised this. They outsource grocery shopping, cleaning, bookkeeping, and lawn maintenance, not because they are lazy, but because the arithmetic is obvious. If your time is worth $200 an hour in productive work, or even in rest, family time, or personal health, paying someone $40 an hour to mow your lawn is not an extravagance. It is rational. The same logic applies to professional services: an hour with a specialist tax accountant can prevent a misclassified mixed-use asset claim costing thousands in penalties or missed deductions.

In New Zealand, there is an ingrained “do it yourself” ethos, and paying someone else to handle tasks you could technically do yourself can feel indulgent. But wealthy Kiwis, particularly those running businesses or in senior professional roles, consistently trade money for time. You can always earn more money. You cannot manufacture another Tuesday afternoon.

3. They Spend on Experiences and Giving, Not Possessions

The Long Angle survey found holidays are among the largest spending categories for high-net-worth households. Education, health, and food come next. Designer goods and luxury cars barely register. A series of studies from Harvard by Michael Norton and Elizabeth Dunn reinforces this from the other direction: people report measurably greater happiness when they spend money on others than on themselves. The dollar amount is almost irrelevant; what matters is the proportion directed outward.

The stealth wealth phenomenon in New Zealand captures this well. Kiwi millionaires are far more likely to spend on a month-long road trip through the South Island, a donation to their local school, or a health screening they do not strictly need than on a European sports car everyone on the street will notice. The person ordering a flat white at the local café in a faded merino jumper might be worth $5 million. The person pulling up in a leased BMW might be worth negative $50,000. In New Zealand, spending visibility and actual wealth often have a weak, and sometimes inverted, relationship.

4. They Invest the Gap Relentlessly

For the wealthy, investing is not a side activity. It is the primary use of money after living expenses. Roughly two-thirds of all income among high-net-worth households is either invested directly or funnelled into structural savings such as mortgage principal repayments and retirement contributions. As net worth climbs, passive income gradually replaces active income. Among those worth more than US$25 million, 70 percent of income comes from passive sources.

In New Zealand, the compounding mathematics are particularly favourable. There is no comprehensive capital gains tax, which means a business owner who sells after years of growth, or a property investor who holds beyond the bright-line period, typically retains the full gain (subject to individual circumstances and the bright-line rules). A Kiwi investor holding a globally diversified equity portfolio directly also benefits from a lighter tax treatment on capital gains than counterparts in Australia, the United Kingdom, or the United States. The practical implication is straightforward: the gap between income and spending is the engine of wealth. The wider it is, and the earlier it opens, the more compounding does the heavy lifting. Wealthy households are not penny-pinching on lattes. They are engineering a savings rate so high the investment portfolio eventually dwarfs their earned income.

5. They Use Professionals and Avoid False Economy

Wealthy households are heavy users of professional advice. Financial advisers, accountants, lawyers, and tax specialists are standard fixtures, not considered optional. This is not a coincidence. The cost of a professional is nearly always dwarfed by the value of mistakes avoided.

In New Zealand, this matters more than many people realise. We regularly see successful business owners with seven-figure net worth whose company structures have not been reviewed since they were earning a fraction of their current income. Or couples approaching retirement with the bulk of their wealth in a single property and no plan for how to generate income from it. The distinction between liquid and illiquid wealth is something most households encounter only a few times in their lives, but the consequences compound for decades. Getting the structure right at 40 is worth far more than attempting to optimise it at 60.

The false economy trap works the other way, too.

Insurance is a good example. They insure adequately because the cost of being underinsured when something goes wrong vastly exceeds the annual premium. They maintain assets before problems arise, because a $500 service today prevents a $5,000 repair next year. These are not glamorous spending decisions, but they explain a lot about why wealth, once established, tends to stay.

6. What the Wealthy Deliberately Avoid

Almost as revealing as what the wealthy spend on is what they consciously skip. Research across New Zealand, Australia, and the United States consistently identifies the same categories:

• New cars on a cycle. Wealthy households buy quality vehicles and run them for years. The average new car in New Zealand depreciates roughly 40 percent in its first year. Wealthy buyers avoid this hit almost entirely by purchasing late-model used cars, or by holding new vehicles long past the point most people would trade up.
• Status signalling. High-end fashion, luxury watches, and visible brand logos are far more common among aspirational spenders than among the genuinely wealthy. The Ramsey Solutions data found millionaires spend an average of US$117 per month on clothing. Ninety-three percent use coupons.
• Financed consumer goods. Interest-free finance deals, phone plan bundles, and buy-now-pay-later schemes are designed for people spending future income. Wealthy households buy outright or not at all, keeping their cash flow unencumbered and their options open.
• Lifestyle creep disguised as reward. The promotion triggers a bigger house, which triggers higher rates, a longer commute, and a second car. Wealthy households have usually broken this cycle early. They let income rise and hold spending flat, widening the investable gap with every pay increase. For more on this, see our piece on how to avoid lifestyle creep.

The New Zealand Angle

Much of what gets written about wealthy spending habits originates in the United States, where household balance sheets, tax regimes, and cultural norms differ significantly. Importing those conclusions directly into a New Zealand context can be misleading.

New Zealand’s wealth composition is heavily tilted toward residential property, particularly for households in the middle of the distribution. For the top quintile, the picture shifts materially: pension funds, equities, and business assets make up a far larger share. This means the spending choices available to wealthy New Zealanders are shaped by a liquidity advantage most Kiwis simply do not have. A household with $3 million in diversified investments and a paid-off home has radically different options from one with $3 million tied up in a single house and a rental.

Many people who would comfortably sit in New Zealand’s top 10 percent (household net worth above $2.4 million) do not think of themselves as wealthy, largely because so much of their wealth is locked in property they live in. We see this regularly: a couple with a $1.8 million home and $400,000 in other assets technically qualifies as top-10%, yet they feel cash-constrained because almost nothing on their balance sheet generates income or can be accessed without selling the roof over their heads. Understanding the distinction between paper wealth and deployable wealth is arguably more useful than any list of what the rich buy or avoid. The real spending difference is not about brands or preferences. It is about flexibility, optionality, and the ability to make financial decisions from a position of strength rather than necessity.

Frequently Asked Questions

Do rich people actually spend less than they earn?

Yes, and by a wide margin. Multiple studies place the savings rate above 60 percent of after-tax income, and the Ramsey Solutions survey found 94 percent of millionaires live on less than they make.

What do wealthy New Zealanders spend money on?

Housing (typically modest relative to net worth), travel, education, health, and professional advice. Cultural norms and the tall poppy dynamic discourage visible luxury spending, so wealthy Kiwis tend to favour experiences and long-term assets over depreciating goods.

Is it true millionaires are frugal?

Intentional is a more accurate description. They distinguish sharply between spending with compounding value (investments, professional services, health) and spending with no return (status goods, impulse purchases). Frugality is a byproduct of this filter, not the goal itself.

How much do you need to be in the top 1% in New Zealand?

According to Stats NZ data (year ended June 2024), a top-1% household in New Zealand has a net worth of at least $8.7 million, with the median at $11.5 million. For individuals, the threshold is approximately $4.7 million. The top 10% household threshold starts at about $2.4 million.

How New Zealand's Rich Spend Their Money

The spending habits of the wealthy are not very exciting to talk about, which is precisely why they work. Save before spending. Buy time instead of things. Invest the surplus. Lean on professionals. Avoid depreciating assets dressed up as rewards.

None of this requires a seven-figure income. It requires a decision about what money is actually for, and the discipline to act on it consistently over years. The gap between spending and income is where financial freedom lives. For most people earning a good income, the answer is not “earn more.” It is almost always “redirect what you already earn.”

If any of this resonates, book a complimentary initial consultation with one of our advisers. We can help you map out what you life might look like over the next decade or more.