How Managing Your Money Like the Amish Could Make You a Millionaire
The Amish are best known for their plain clothing, simple living, and lack of modern technology. They’re also likely the only financial planner you’ll ever need.
The Amish way of life lends itself to a healthy personal finance situation. So much so that when the recession hit in 2008, they barely blinked. Lorilee Craker, author of Money Secrets of the Amish: Finding True Abundance in Simplicity, Sharing, and Saving, notes that many Amish people can put so much savings aside that placing a $400,000 down payment on a $1.3 million farm can be done without a sweat — all while raising 14 children and running multiple businesses.
She told The Post and Courier, “[The Amish are] not stressed out like we are. They’re not wondering, ‘How am I going to make my car payment?’ They’re secure. They sleep peacefully because they know there’s money in the bank.”
Very few other Americans could say the same. Luckily, the financial best practices and money management strategies the Amish employ are quite do-able with a little thought perspective. Here’s a rundown of eight highly successful strategies the Amish use to build wealth and how you can do it too.
1. Avoid lifestyle inflation
Material goods hold little value in the Amish community. Sure, Amish millionaires are quite common, but it doesn’t mean they spend frivolously. One of the most admirable ways the Amish community manages money is their ability to avoid lifestyle inflation.
The average American is tempted to splurge on a new tech gadget or fancy vacation when they come into a bit of money. The Amish, on the other hand, aren’t swayed by splashy advertising campaigns, and FOMO (fear of missing out) syndrome. Instead, their eyes are on the bigger picture, often choosing to purchase high-quality goods that are made to last.
Craker says “They just don’t have that desire to acquire things. It’s so much more important to have a farm to pass on to their children. Our culture is all about, “How can I get the latest iPad?” They don’t think that way at all.”
2. Buy in bulk and grow what you can
Another key to securing Amish-like finances is to find your inner “feinschmecker”, which is a term used to describe an Amish foodie. These people are frugal feinschmeckers because they eat good, fresh food on a budget. Craker tells MarketWatch, “They’re super-green. They were eating organic, fresh farmer’s market food before it was hip to do so.”
If the Amish can become millionaires while organically feeding a household of six to nine children, you can do it too. Living on a farm means they can grow their own food. Everything else, they buy in bulk. This is a surefire way to save money each month and stay healthy.
Clearly it works, as the Amish obesity rate rests below 10% compared to the national average of 36.5%. If you reside in an urban area, consider community-invested agriculture shares (CSAs) or cow pools to live more sustainably and economically.
3. Start a business
Amish are extremely savvy business owners. Unemployment is next to nil in the Amish community, and their small business five-year survival rate nears 95%. Though they likely wouldn’t describe themselves as hustlers, they are known to be avid side hustlers working multiple jobs to help them build wealth.
A lack of modern technology doesn’t stop them from starting profitable businesses such as produce farming, woodworking, and taxidermy. Highly profitable trades like construction and metal manufacturing are always in demand, setting them up for years of financial security.
The average American can take a page from the Amish playbook by creating your own job security with a profession that’s likely to experience growth moving forward. Entrepreneur lists a few of the year’s most profitable small businesses here.
4. Save more than the average American
Imagine getting richer just from the interest accrued on your savings. This fantasy-like scenario is a common reality for the Amish, considering they save nearly triple what the average person does. It’s a struggle for most Americans to save even 4% of their income, but the Amish can stock away nearly 20% with minimal effort.
Finding ways to hoard more cash is one way you can retire a millionaire. The Amish almost always buy second-hand items, but you don’t have to be that drastic. Consider buying a used car instead of new or generic grocery items over name-brand products. These simple strategies can save countless dollars through the years.
5. Go back to investment basics
Most financial advisers will tell you that a diversified account filled with stocks, bonds, and other funds is your best chance at making money down the line. But, if cars and electricity are out of the picture for most Amish people, you can bet complicated investment strategies are too. Stocks and bonds are pointless purchases for them as they mostly only invest in real estate and their own businesses.
Amish landowners often sit on massive fortunes for generations, which is sure to be a comforting thought should the market ever crash again. But buying a 100-acre farm is not completely necessary. Consider investing in a rental property for additional income instead. Or, simply move your money into a high-yield savings account to get the most return on investment.
6. Be the ultimate DIY-er
Borrowing money is almost taboo in the Amish community. Rather than take out loans to fund a large expense, they find a way to earn extra money or avoid spending it at all. The Amish are notorious for cutting out the middleman when it comes to expenses. Their thrifty nature makes fixing things around the house themselves a common chore and buying secondhand their first resort.
Even the unlikeliest of handymen and women can save some serious dough by doing certain household repairs themselves. Why pay for something that can be done for free?
7. Avoid credit cards
Most members of the Amish community avoid credit cards like the plague. Their lack of credit card debt allows them to sleep quite soundly each night, but their commitment to financial resourcefulness is easier said than done for most Americans. In fact, the average American carries almost $16,000 in debt spread across multiple credit cards.
The Amish trade and barter services to stay in the black while also forging costly interest payments accrued on substantial debt. They also — brace yourself — don’t buy what they can’t afford, a concept that becomes much easier when you commit to the savings and investment strategies used by the community.
8. Leave a small footprint – go green
There’s a widespread initiative to go green and save money. The Amish do this particularly well. Not only are they thrifty, but their deep-rooted desire for general frugality ends up helping the environment and saving money simultaneously.
Some strict communities live without electricity and heat their homes with firewood, coal stoves, or gas lighting. But non-Amish communities can save money each month by committing to less primitive measures such as recycling nearly everything, doing more household work yourself, and wasting less. Almost nothing is thrown away within Amish communities.
Dawn from SmallFootPrintFamily suggests ways to save money by going green in a blog post. Line-drying laundry, cooking from scratch, shopping at thrift stores, using washable rags instead of paper towels, and buying reusable water bottles are all easy ways to save a buck.
Follow Lauren on Twitter @la_hamer.
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