There’s never one way to become wealthy, but there are consistent habits among self-made wealthy people that may put you in a position to achieve financial gains. No matter your level of expertise, following these habits may increase your chances of success.
According to a study by Bank of America, more than a quarter of American millionaires didn’t inherit or have a head-start in affluence. They followed certain financial disciplines that led to their success. Let's explore some of these habits and how you might be able to implement them in your own life.
Don't Leave Money Idle
Most wealthy people don't work more for their money. They allow their money to work for them. As David Bach once said, "Regardless of the size of your paycheck, you probably already make enough money to become rich."
Knowing how to manage the money you have is a must-have skill. Placing money in a checking account makes sense when that money is being used to pay bills, but the rest of the money in the account is doing nothing for you. It’s sitting there collecting zero interest, not working for you.
Options that are open to you are Certificates of Deposits (CDs), Brokerage Accounts, High-Yield Savings Accounts, I Bonds and more.
Don't Live Above Your Means
Just because you can afford something doesn't mean you should buy it. At a time where many people live paycheck to paycheck, it’s good to identify your needs and wants.
A need is something necessary — like bills, groceries, etc. — while a want is more of a luxury — new television, eating out, etc. Before funding your luxury, you should prioritize your needs. To avoid living above your means, you should always ask this question: Is this important and necessary?
Developing a sense of responsibility will also help you avoid going overboard. You should avoid instant gratification at the expense of your future. Don't let the pressure of watching others spend their money on the items you desire affect your own spending habits.
We often focus on our income and forget how we spend that money. Tracking and understanding your spending habits can free your life from unnecessary expenses. It can also help seal loopholes and tighten your spending to focus on other aspects, like saving and investing.
There are several expense-tracking apps, available on your smart devices, you can use to monitor your spending. You can also use Microsoft Excel, Google Sheets or other spreadsheet software to help track your expenses. And there’s always the tried and true method of pencil and paper.
Another element of checking your expenses is budgeting. When you have a budget, you dictate where the money goes instead of wondering where it went. Once you know your expenses, you can create a budget that caters to your lifestyle while planning for the future.
Value Your Time
What is the value of your time? Answering this question helps you learn what to prioritize and what to eliminate. Anything that doesn't add some type of value in your life should be treated as a distraction. Value isn’t solely quantified in terms of money, but also happiness, love, making a positive impact and more.
One person may derive happiness from supporting others and another from a flexible career. We all value things in our life differently, and no one-size-fits-all formula exists.
Planning your time is also another aspect of valuing your time. Schedule meetings and organize your day before it even starts. Create time in your everyday to focus on what brings you the most value.
Continue Setting and Implementing Goals
Most times, when we make plans, we fail to follow through. Everyone makes new year’s resolutions, and most of those are forgotten by February.
Wealthy people make SMART goals. Specific, Measurable, Action-Oriented, Relevant and Time-bound.
The specificity of the goal and measurability go hand in hand. What do you want to achieve, and what can you measure to know you have achieved it? The action-oriented part refers to what you want and how you will do it.
For relevance, your goals should align with your current position. Taking each step at a time without overestimating your capability will help you accomplish your goals. And finally, you should set the time-frame you want to achieve the objective. Leave nothing to chance.
Nothing By Chance
Wealthy people are not successful by chance; they follow certain habits that help them to earn and retain money. These 5 healthy habits could also help you move a step closer to achieving your financial goals of success.