Everyday Americans weren’t the only ones hit hard by the recent recession. In fact, affluent citizens have also made changes to cope with the relative hardships presented by the downturn.
As millionaires have come to the realization they need to learn to stretch their money a bit further, many have modified their luxurious lifestyles to compensate for the financial crisis.
Introducing ‘Fractional Living’
Studies have shown that the average yacht owner is on board approximately 30 days per year, while the average owner of a vacation home or summer home spends about three weeks per year there. In the current financial landscape, it sometimes doesn’t make financial sense to own something that gets such infrequent use.
With a more thrifty mindset, the wealthy are resorting to “fractional living” — an increasingly popular approach to personal finance. Fractional living means that instead of owning an asset in its entirety, you would pay a fraction of the cost and share the property with others. Fractional living allows you to enjoy the asset when you have the time or the need, without paying full price.
The common items that millionaires choose to share include luxury cars, yachts, private jets, vacation homes, and designer handbags.
The Lifestyle of a ‘Fractional Millionaire’
Through fractional living, millionaires are taking a page from the handbook of traditional frugality. We know it conventionally as “renting.”
Everyday people often turn to Netflix or Blockbuster for their movie nights, choosing to pay for a membership instead of purchasing each DVD permanently.
For items such as supercars and designer handbags, millionaires pay an annual membership fee and a per-use “rental” fee in order to take the Ferrari for a spin or the latest Prada handbag for a nice evening out. They can enjoy the expensive toys without having to deal with insurance, maintenance, storage, or any of the other hassles that often come with full ownership.
A More Rational Spending Model
The emergence of these luxury clubs and partnerships has allowed millionaires to sustain their grand lifestyle while opening the use of luxury items up to people who might not have been able to purchase them on their own.
Millionaires are making a smart choice and chasing the experience instead of the glory of ownership. Fractional living fulfills this goal at a fraction of the price.