Building Wealth: 7 Financial Habits to Make You Rich
Money concerns can be a major source of stress for people who are living paycheck to paycheck. There’s always another expense or bill that needs to be paid, leaving you to feel as though you never have any savings. Wouldn’t it be nice to just say goodbye to those money worries? You can. In fact, there are simple things you can do to ensure you’re building wealth. It doesn’t take inheriting a large chunk of money or landing a super high paying job (although that would be nice) to do it. It all comes down to your money habits — how you choose to spend and save could be the difference between living large or just getting by.
1. Set big goals for yourself
Determine an amount to work toward having in your savings. You need to have a goal in mind in order to achieve it, and when it comes to building wealth, you need to think big, according to Money Crashers. Commit to saving $100,000 (or more) over the next five years. You could also set goals that get you on the fast track to paying stuff off. Think of goals such as paying off your mortgage in a short time, or saving enough to be able to pay for all of your purchases in cash. Whatever it is, make sure it will have a significant impact on your finances.
2. Automate, automate, automate
You’ve got your big goal set, right? It’s now time to figure out how you can help yourself achieve it. It can be really easy to give into temptation and spend more than you should. To ensure you don’t do that, automate your savings. According to Daily Worth, you should set up recurring transfers on a regular basis from your checking account to both your savings and investment accounts. You could also consider setting up auto deductions from your paycheck to your employer sponsored retirement plan. The sooner you can get your money out of your checking account and into other accounts, the more likely you are to not spend it.
3. Review your subscriptions
Periodically check all of your subscriptions, particularly the ones that are automatically deducted from your credit cards each month. “You’d be surprised at how many subscriptions we all have and how many go unused. You could create some significant savings each month just by looking at those things,” David Blaylock, a financial planner, told LearnVest. Simply taking inventory of your subscriptions and services is an easy habit that doesn’t take much time, but can easily save you a lot.
4. Pay for needs, not wants
Make sure you’re staying within your budget when it comes to major expenses, such as your house and car. It may seem nice to have the biggest and the best of everything, but it’s not necessary — particularly if you are struggling to pay for it all each month. Business Insider writes that if you’re paying $400 a month for an SUV that’s also a gas guzzler, consider swapping it for something else. Ask yourself: Do you really need an SUV? Would a minivan help save you some money each month? While you’re at it, take a look at some of the other areas in your life where you may be upgrading unnecessarily. Is your mortgage making you house poor? Are you spending too much on designer clothes? If the answer’s yes, it’s time to start reevaluating.
“Never ever pay full price for something. Always look for ways to get a cheaper price. Talk to the store manager. Wait and shop on days when clearance sales are running. If you’re an avid Target shopper, you probably already know their clearance schedule,” per Business Insider. An easy way to keep yourself from paying full price is by shopping around. The next time there’s something you need, search around and try to find it on sale. Better yet, try and negotiate a more reasonable price. Looking for something to do with the money you saved? Business Insider suggests adding it to your savings pile or putting it toward other investments.
6. Start couponing
You may not think that a $1 coupon will make much of a difference, but over time the money you save by using coupons adds up. According to Forbes, people who use coupons religiously report saving as much as 40 percent on a regular basis when it comes to their groceries and household items. Coupon clipping will take less than an hour a week and can make you $50 an hour (when you think about it in terms of what you’re saving.) It doesn’t matter how much you’re saving — even if it seems small. If you’re paying less, you’re making progress.
7. Live like you’re poor
What happens when you combine all of the items on this list? It results in you living like you don’t have much money, and that’s okay. Living like you don’t have money ensures the exact opposite — that you’re working toward building wealth. “Have you ever met someone who is unassuming and modest and then were surprised to later learn that they are actually rolling in dough? I had an older client who was stuck in 1983: he wore ugly brown suits and running shoes, drove a beat-up baby blue Volvo station wagon, and lived in the same modest house he bought 40 years ago,” per Daily Worth.
Surprisingly, this man was actually a successful entrepreneur and multimillionaire, who made himself even richer because of his responsible saving habits. There are many millionaires out there who don’t feel the need to buy mansions or drive expensive cars. They’re millionaires because they refuse to spend frivolously. Thinking “less is more” will eventually amount to you having a lot more.
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