I once went down for a late afternoon snack in my building's cafe on Microsoft's Redmond campus and Steve Ballmer, at the time CEO of Microsoft, was standing at the pastry case trying to decide which muffin he wanted. It was just me, SteveB and a barista.

The muffin SteveB was eyeing was the classic "raisin? blueberry? chocolate chip?" conundrum we've all faced before. He asked the barista, whose English unfortunately wasn't very good, what type of muffin it was. She didn't quite understand, so instead, he started to point to the mystery muffin. I remember standing there at that moment wondering if the barista had any idea who she was serving.

I also remember, having had the opportunity to meet SteveB in person a couple other times, that he didn't look in a particularly good mood. I imagine he'd just had some stressful meeting, a long day, etc.

After pointing to the muffin and the barista admitting she wasn't sure what type it was, it was clear SteveB had spent enough time on pastry selection and said he'd simply take the mystery muffin.

The muffin was $2. SteveB dropped a $20 on the counter, took the mystery muffin, and hustled out of the cafe.

A college professor of mine attended the UN's Conference on Women held in Beijing in 1995. He reported being in line behind Warren Buffett and Bill Gates at the recently-opened Beijing McDonald's. Warren and Bill both apparently have a card that allows them unlimited free McDonald's. They were trying to get the staff of the Beijing Mickey D's to accept their cards, even though the staff had no idea who they were or what the cards said. They were apparently pretty adamant about it, including asking to speak to the manager.

This story was told to me 20 years ago. The professor who told it is pretty reliable, but I nonetheless accepted it might be a bit apocryphal. However, Warren has since acknowledged he and Bill have such cards, though apparently his is limited to Omaha: http://www.cnbc.com/id/21528623 . They must have been trying to use Bill's in Beijing.

Two of the world's richest people apparently eat a lot of free McDonald's, and go to the trouble of carrying the card around that allows them to do so.

UPDATE April 2017: Wow! Bill Gates seemingly just confirmed the story (although he says they were McDonald’s coupons rather than a free card, and that it was in Hong Kong), and says Melinda Gates just found a picture! See here: Warren Buffett’s Best Investment

I think y'all will be dreadfully disappointed to see the reality of the billionaire lifestyle up close. I live around Palo Alto, and it is really not unusual to see Tim Cook out shopping for groceries or biking, Larry Page taking his kids around to one event or another. They both strike me as pretty normal people who are trying to not live apart from society. I am sure both have services available as needed for their personal lives, but most mega-rich in Silicon Valley (Larry Ellison being the exception) seem to live pretty ordinary day-to-day lives. So my answer - pretty much like every other person living in America. Keep in mind that no Silicon Valley billionaires were born rich, and that they prefer to keep living the lives that they always have had, if with more zeros in their bank accounts.

My family is very close friends with Mexico's top billionaire, and one time my cousin and I asked him to join us after my father's funeral at a small reception my aunt organized. So we went to his car, knocked on the armored window (he drives his car with no chauffeur) and told him my aunt's plans. He promptly answered with a “what should I bring?” And my cousin replied with nothing. However he looked down the street and quickly saw a street vendor and says “I know, I'll bring Sweet Potato (a dessert in Mexico known as Camote, that's basically cooked sweet potato in steam, served with a hefty portion of condensed milk), so he leaves his car, walks down the street (his bodyguards after him, but discreet) and goes to the guy selling the potatoes, asked for two orders, the guy asked if with all the toppings, he concur with his head, pulls out a two hundred peso bill, tell the guy to keep the change, and smiling to us, returns to his car.

We still wonder if the vendor knew who the hell that guy was.

My great aunt was the personal assistant to Orin Lehman (of the Lehman Brothers family) for close to 40 years. He simply had an "account" anywhere he went to eat, shop, etc. They wrote it down and were paid later by an assistant.
My great aunt tells a story of the one time he took a taxi rather than a private car and had no idea how to pay. She said she didn't think he owned a wallet and had never handled cash or a credit card. He was completely baffled. In the case of the taxi, whichever underling was with him paid and my great aunt squared it up afterward. ETA: All bills were paid back from Lehman's account.
As a total aside, he was a lovely man to work for, she says, and continued to send her a gift at the holidays (or rather her replacement did) from the time she retired until when she died, almost 20 years later.

My parents are high net worth individuals (liquid and illiquid assets in excess of $140 Million). For most small ticket items they pay cash, as they don’t want to leave records of their spending patterns or have their names in store databases (they are a bit paranoid about privacy, I must admit). For higher end items they use credit cards (and even though they both have Centurion cards, they prefer to keep them for emergency, to buy super expensive items, or mostly for the great concierge services, not for day-to-day payments. In case of the latter they use non-impressive Chase debit or VISA cards).

Also, they do buy expensive items sometimes, but they would almost always do so through a special private appointment or other discreet ways. For example, my dad has recently purchased a collector’s watch ( > $70K) and a special person hand-delivered it to the hotel room he was staying in. The payment was done beforehand through a bank transfer, pre-arranged by my dad’s personal assistant.

This is second hand, but from other interactions with this person I believe it to be true.

I lived in Bangor, Maine just down the road from Stephen King. He is ungodly rich, but really is just a very down to earth guy, if a bit strange. Writing those books will do that to you.

A good friend of mine worked at the local convenience store that Mr King went to fairly often. On one occasion Mr King came in and wandered around the aisles for a bit. His wife was away and he wanted to eat so he picked up three cans of Manwich. When he went to the counter he pulled out a stack of Maine State Lottery tickets. The jackpot at the time was probably worth about $200,000. After checking all the tickets he seemed genuinely frustrated he didn't win anything. A weeks worth of royalties would be worth more than a big winning ticket.

He would normally just pay with cash or a card just like anyone else. He is just a normal (if slightly crazy) person just like anyone else.

I always had amazing respect for him. While working at the United Way I would see him come in and make HUGE anonymous donations to service groups in the area that needed help. He did it because he wanted to help. He is a true class act and a very normal human being, despite being worth a lot of money.

I had the pleasure of working for one of America's richest in his personal family office (hence choosing to be anonymous here). That's how many of them operate in their day-to-day purchases and cash management: They have a family office of one to many staffers who take care of everyday and special needs.

This particular person also happend to have a regular credit card or two that they used for eveyday purchases but also being quite the creative and disorganized kind, heavily relied on his team around him to take care of those things.

That that person's life also happened to be highly organized by his family office so he rarely ever went anythere without support or planning. There was and is probably not that much need to pay for things in the moment.

I think the misconception revolves around the term "billionaire." These are people whose on paper net worth is largely tied up in stock, real estate and other illiquid assets. But Bill Gates does indeed receive a biweekly paycheck, and a very generous one. That money is probably direct deposited into a series of accounts that cover his day-to-day living expenses. He almost certainly has an assistant or a financial manager who writes checks to cover all of his monthly financial commitments, which we can safely assume are expensive and complicated.

Regular U.S. bank accounts are only insured up to $250,000, so people who make excessive amounts of money must have multiple bank accounts, or hold large amounts of liquid assets in other financial instruments.

Very wealthy people also take advantage of financial tools like the American Express Black Card, which requires high annual spending but provides very generous rewards. They may do a majority of their spending on a card such as this one. And as others have noted, the CEO of a major corporation is most likely not buying his own groceries. This is where assistants and partners come in. But they do pump their own gas and they do get the check at dinner, at which point I bet they whip out a very exclusive credit card.

When Jackie Kennedy wrote checks to pay her bills, the vendors would keep the checks bearing her signature as souvenirs instead of cashing them. Of course that played hob with her checking account. She finally resorted to giving money to a personal assistant, who then wrote checks out of her own account.

After Jackie married Aristotle Onassis, she simply forwarded all her bills to his office. Reportedly she spent a million dollars in the first year of their marriage alone (in 1968 dollars, remember), which drove him crazy. He must have forgotten, if he ever knew, that both her father and JFK complained about her profligate spending. JFK even said that if he didn't have other income, they'd be broke because she spent the equivalent of his presidential salary each year they were in the White House.

Particularly famous billionaires like Bill Gates probably don't buy a lot of everyday items themselves, for security reasons. You're not going to see Bill wandering around in a Best Buy picking out a new television, for instance. Nowadays, he could buy it online, but he's more likely to delegate a lot of the purchasing to an assistant on his payroll.

More anonymous billionaires can get away with going out in public, so the question becomes whether it's worth their time. Paying someone to buy your groceries might make your groceries cost twice as much (or more), but a couple hundred dollars to be able to sit at home for an hour and do what you'd rather be doing is easily worth it when you have that much.

But say it's something they want to buy in person? Credit, mostly. More than a couple hundred in cash is inconvenient to carry around.

It depends….

I just finished writing this for another question: What do you think about the saying: “If you have to ask (the price), you can't afford it” as a person of wealth?

It all depends on who it is and what country the billionaire is from. Amercian billionaires who are self-made, will be more “down-to-earth,” and will carry something, be it a credit card or some cash. I say “down-to-earth” because go to old money, where you’re talking about generations of wealth, life changes dramatically.

Many old money wealthy families do not carry anything with them. They go through life either having everything billed to the family office or there will be a money person with them who pays for everything. The later is very common for the very wealthy in the Middle East.

From my experience, most billionaires to not care about prestige cards. My experience with some older European money people would be the opposite, they don’t need to show their wealth, because it is already known.

The Centurion Card someone listed here is for Upper Lower and Upper Middle Class individuals (those worth $4M-$20M), not billionaires.

I knew a millionaire who lived on a self sustainable 'manor miles away from the nearest town. He grew ALL his food in this farm. He had dozens of servants. He had a well dug to drink water he grew potatoes, tomatoes, lentils, rice. He had thousands of camels sheep, chickens ostriches, deer antelope every kind of animal. He even grew his own barley and hops and brewed his own liquor. All this was on less than a hundred acres of land. It was the most amazing way of life. He only traveled out of his farm for business. He has a large family and seems so content. he his in his fifties but looks so vigorous and robust.

Dear friend, I was also mingling around the same question for a long time and here's the answer I found.

The billionaires like Bill Gates spend money using mostly specialised credit cards issued to them by large banks.

They usually appoint financial advisor who takes care of all their needs.

Any confidential or personal expenses they spend using their credit cards.

Picture

They carry less cash in their wallets and all emergencies and any urgent needs are dealt by thier financial advisor cum funds manager.

Footnotes

I guess it depends on how much time they have. After reading the anecdote about SteveB and the muffin, I thought,

"I don't make a billion dollars, and on a bad day, I will drop a twenty on a stupid muffin to avoid an argument!"

Even if that may not be true, I will certainly walk away. So I am thinking it's not really about dropping extra cash, but how much time a person has.

I think what we really value most in life is time. Time is money, time is well spent, or time is wasted. You can be fashionably late, or firably so. The early bird gets the worm, right?

So if we have time to swipe our debit or credit card and tip, drop a twenty dollar bill, or count out correct change, it all matters more about time than payment.

Most wealthy individuals have a family office. In order to afford a small staff usually comprised of an attorney, CFP/CPA, a couple of book keepers and a certified officer who oversees their family trust, takes a net worth north of $400Million if they intend to do it correctly. It is this Family Office structure that manages all of their expenses, investments, cash, insurance and all money matters related to their family's interests.

Just so you get an idea of the benefits extended to F.O.'s, I have a friend who's been at the helm of a wealthy (very famous) family in Miami and their F.O. has checking and credit cards at a major bank with no money in it. The bank covers all expenses and they tally up at the end of each month. So identity theft for example won't fly if it doesn't get approved by F.O. staff.

I grew up with an aunt and uncle that are billionaires that used regular Chase credit card at the Ralph’s and 7–11. That's it.

By that's it, I mean that's it. If a place just happens to be cash only, they would look at me almost every time. That being the funtemental difference between a billionaire and someone who is not even close. I would never leave the house without a little bit of cash, they wouldn't think twice about things get paid for.

And yes, they have a Centurion credit cards too. They apparently only use it at nice restaurants, and for big ticket items. Turns out when you're filthy rich, privacy and anonyminity are preferable to perks.