4 Frugal Maneuvers Elon Musk Used To Build His Wealth
Written by
Heather Altamirano
Edited by
Amber Barkley
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Known for his innovative advancements in technology and space industries, Elon Musk is the world’s richest man with a net worth of over $363 billion, per Forbes. While he built his immense wealth through his groundbreaking work and radical thinking, his shockingly frugal mindset also helped him secure the top billionaire position.
Despite his mega riches, Musk has a thrifty approach to business and his personal lifestyle, which he keeps modest. Here are four economical habits that are glaringly opposite of his global status, which he used to build wealth.
He Doesn’t Live in a Flashy House
As the richest person on the planet, Elon Musk can buy whatever he wants, including a collection of luxurious mansions, but instead, he lives in a humble $50,000 ranch-style house in Texas and unloaded his real estate portfolio, according to Architectural Digest.
At one time, Musk owned multiple properties, including six homes in California, per the outlet, but sold them all. In 2020 he announced on Twitter, now X, he was getting rid of most of his things. “I am selling almost all physical possessions. Will own no house.”
The reason? “Freedom,” he simply stated when a fan asked why.
The asking prices for his properties at the time totaled over $100 million, Architectural Digest reported — a tiny amount compared to Musk’s overall wealth, but still money he could then use to fund investments to increase his wealth, if he chose to do so.
No Budget Cuts Are Too Small
When Musk bought Twitter, now X, for $44 billion in 2022, he wasted no time slashing the budget. He got rid of top executives within hours and laid off half of the staff within days, CNN reported, but he didn’t stop there to save money.
According to the New York Times, employees resorted to bringing their own necessities to work that an office should supply, because Musk stopped paying for Twitter’s janitorial services. In the New York office, trash cans toppled over with garbage and bathrooms ran out of supplies.
The less money spent, the more is left to scale up the business.
Musk Doesn’t Mind Sleeping on the Couch
During a speech at the University of Southern California, Musk shared a story about how he started his first company with his brother. An apartment wasn’t affordable, so they rented a “small office and slept on the couch” and “showered at the YMCA.”
And his die hard work ethic and obsession to save money hasn’t changed. As he currently heads the Department of Government Efficiency, Musk will sleep on the couch or floor of the office from time to time while he completes his job of cutting government spending, People reported.
He Won’t Pay High Manufacturing Costs
Musk is famous for refusing to pay what he deems as high manufacturing prices for his businesses.
“He used to be a deity,” Jim Cantrell, SpaceX’s first vice president of business development, told the New York Times. “But you know he’s just a business guy. And he wants to cut everything to the bone.”
When Musk founded SpaceX, he believed he could make less expensive rockets than the U.S. government, but when Cantrell told Musk the fuel tanks for the first rockets would cost around $1 million, he was outraged.
“It so offended Elon,” Cantrell said. “His words to me were, ‘If it costs that much, I will eat my ball cap.'”
Chester Crone, an executive at Moog, which makes high-performance parts for spacecraft, told the New York Times a similar story. Crone sold devices to Musk for one of SpaceX’s first rockets, and after their initial purchase, Musk asked for the price to be drastically reduced.
“We don’t want it for $100,000,” Crone said SpaceX executives told him. “We want it for $10,000.” When he declined, Crone was asked if SpaceX could buy the design to manufacture the part, but Moog nixed the idea.
“At the end of the day, if he doesn’t like the price point that he’s getting from a supply maker, he will figure out an alternative,” Crone said.
Final Thoughts
While Elon Musk’s sparing habits have certainly saved money, there have been consequences.
After Musk fired four top executives hours after taking over Twitter, he was sued for withholding severance payments, according to the New York Times. There was also trouble when half of the staff was let go, leaving the remainder with a smaller knowledge pool, as well as fewer people to keep the site running.
X, formerly known as Twitter, was sold to Musk’s xAI for $11 billion less than his original investment.
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