Let’s be real, most multi-millionaires did not obtain their wealth overnight. Instead, their wealth was the compounding effect of years and years of healthy financial habits. The direct result of prioritizing saving and frugal spending habits over materialism and knee-jerk reactions with money. In this article, we cover five money habits of the wealthy that helped them get to where they are today and how you can implement them yourself.
Money Habits of the Wealthy #1: They establish savings goals early on.
Most self-made millionaires set aggressive savings goals early in life. They work towards maxing out their retirement accounts each year early on in their careers. They build and maintain a healthy emergency fund, and they look for ways to create additional streams of income.
Saving is easy if you automate the process. Set up regular automatic transfers to cash savings accounts and retirement accounts. Have a portion of each direct deposit paycheck go directly into your savings account so you are not tempted to spend it. Time is your friend. The earlier and more often you save, the better the end result will be.
Habit #2: They are frugal.
Ever heard of the term “the millionaire next door?” Most of us think that being a millionaire involves living a flashy lifestyle, but this is simply not true for most. Most millionaires are unnoticeable because they look like your next-door neighbor. They might have a nice house or beautiful things, but it’s usually with a motto of quality over quantity.
They get as much use and life out of what they buy as they possibly can. They know what’s important to them and can prioritize expenses accordingly.
You can be more frugal by reviewing your spending on a weekly basis. If you can understand where most of your disposable income goes, then you can look for opportunities to squeeze more value from the expenses you already make. You could shop in bulk, for example, or make coffee at home, just to name a few.
Habit #3: They avoid the lifestyle “creep.”
The lifestyle creep is when you raise your standard of living to match your level of income. It is one of the biggest pitfalls that keep people from building long-term wealth.
As your income grows, the emphasis should be on saving and investing before spending. When you get a raise, automate that additional amount to go into savings and investments or paying off debt. The more money you can put towards your financial goals, the sooner you’ll achieve them.
Habit #4: They are always learning
If you look at some of the most financially successful people in society (e.g, Bill Gates, Warren Buffett, Jeff Bezos, etc.), one characteristic they share in common is their voracious reading habits. They have an insatiable desire to learn.
Bill Gates reads about 50 books per year while Warren Buffett spends 80% of every day at the office reading. Between physical books and the internet, we have access to a nearly infinite well of knowledge on nearly any topic.
To improve your financial well-being long-term, take the time to invest in your education of basic financial concepts. The more you know and can grasp, the easier it is to make well-informed and smart financial decisions.
Money Habits of the Wealthy #5: They surround themselves with the right people.
This may not be as obvious as the other habits, but it is unquestionably as important. Whether we like it or not, the people closest to us do have an influence and impact on the decisions we make in our lives, including financially. Financially successful people know how to surround themselves with others who share similar goals and visions as they do and possess the traits and habits they aspire to.
In your own life, the most important of these people is definitely your spouse. Being able to engage in open and honest communication with your spouse around your joint finances and being on the same page with financial goals can make or break your long-term success.
What does your financial future look like? Are you establishing the right habits to put you on track? If a push in the right direction is what you need, schedule a free consultation with us to see how we can help!
Forefront Wealth Partners is an independent financial advisory firm that provides creative problem solving to our clients. In a world where change is accelerating and the future uncertain, we provide simplicity and confidence concerning financial, tax, and legal strategies. Our process involves a deep relationship, focusing on meaningful outcomes and dynamic planning.
The information given herein is taken from sources that IFP Advisors, LLC, dba Independent Financial Partners (IFP), IFP Securities LLC, dba Independent Financial Partners (IFP), and its advisors believe to be reliable, but it is not guaranteed by us as to accuracy or completeness.
This is for informational purposes only and in no event should be construed as an offer to sell or solicitation of an offer to buy any securities or products. Please consult your tax and/or legal advisor before implementing any tax and/or legal related strategies mentioned in this publication as IFP does not provide tax and/or legal advice. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation, or needs of individual investors. This report may not be reproduced, distributed, or published by any person for any purpose without IFP’s express prior written consent.