The “secrets” to financial success seem to always be just out of reach of most people. Yet, somehow, there is a huge supply of financially successful people who enjoy a comfortable lifestyle and their numbers increase every day. Recently, I spoke to many well-off individuals and discussed some of the habits and skills they had to develop to get where they are today. Here are some of the things they told me, which they had in common.
1. They’re Willing To Make Sacrifices For Long-Term Goals
Financially successful individuals are willing to drive a used car, live in a small house, and work extra hours when they’re first starting out. That lets them use the extra money for savings and investments, which will get them closer to where they want to be.
Occasionally people live frugally their entire lives, even once they’ve amassed a large amount of wealth. At the end of the day, just remember to ask yourself “do I really need or even want it?”
2. They Make Paying Off Debt And Saving Money The Priority
I don’t think I need to tell anyone this – living in debt and with no savings makes you a slave to your job. If you want to achieve financial freedom you need to eliminate the debt and save up at least 6 months worth of expenses.
3. They Create Actionable Financial Goals
Instead of spending all their money or saving just enough to stay afloat, they create concrete goals that are specific enough to fit into their monthly budget or work towards as stepping stones to larger goals.
4. They Don’t Assume They’re The Smartest Person In The Room
They don’t walk into a room thinking they’re the smartest or best person there, and they’re willing to learn from everyone else. It’s important to never let pride get in the way of progress, and they realize that.
5. They Create Something Or Offer An Exceptional Service
Nobody gets rich by just being a consumer. In order to make more money financially successful people create something of real value or offer a specialized service (like a doctor or engineer). Often, they may do both.
6. They Do More Than The Minimum At Work And Home
It’s about going above and beyond the requirements of their daily life, even in their 9-to-5 job. They work on furthering their career, creating a business or side hustle, and keeping their budget in check.
7. They Make A Budget And Stick To It
Nowadays everyone understands the importance of a budget. The difference is that financially successful people will stick to theirs, even though it is inconvenient and hard at times.
8. They Don’t Just Save, They Invest
Investing your money is arguably the best way to reach your long-term financial goals.
Of course, investing isn’t the best idea for savings you want to use in the next few years as markets can fluctuate drastically. You may be down thousands one year, and up several the next. Remember to always keep your short-term savings, such as an emergency fund, in a less volatile medium (like a high yield savings account).
However, long-term savings like your retirement accounts are best served being invested as that is the best way to beat inflation and make you more money in the long run. As for which types of investments you make, and the type of account you put them in, that will vary based on your goals and what you’re starting with.
9. They Never Stop Learning
It’s perfectly normal to not be sure how to budget perfectly or know the best way to invest in your future, but financially successful people will aways push to learn more so they can better their current situation.
They may read books, take a class, watch youtube videos, or consult a professional. Whatever helps them learn what they need to so they can get to where they want to be.
10. They Cook – And Limit Takeout
Eating what you make at home should be the standard routine in your household. Not only for the enormous savings, but also for the potential health benefits. While fast food may be more convenient at first, once you fall into a routing of preparing your own food, you’ll save more, live a healthier life, and save time by not having to run out for food.
If you’re exceptionally bad in the kitchen, consider purchasing pre-made meals or easy to prepare lunches like a sandwich. Ease into it, and I’m sure you’ll find that you’re not as bad as you assumed!
11. They Review Bills And Bank Statements
They schedule a time every week or every month to go over their bills and statements in detail. Checking for inaccuracies like additional charges or fraud can save you a lot of headache when caught sooner.
Also, this helps ensure you’re sticking to your budget. Keeping an eye on your spending lets you know what bad habits you still need to break. If an expense isn’t important, try seeing if you can cut it out of your budget. Alternatively, try finding better or cheaper alternatives to some of your common expenses.
12. They Tell Themselves “No” When They Need To
Something most people struggle with is stopping themselves from purchasing something they want on impulse, especially if they have extra money. Unfortunately, habits like that lead to barely scraping by and potentially going in debt. Financially successful people don’t have trouble telling themselves “no” and stopping before an unnecessary or impulse purchase.
If this is a major issue for you, consider destroying all of your credit cards. If that seems too drastic, try only carrying cash when you go out.
13. They Appreciate What They Have, But Pursue More
While they are usually striving for progress, and to be in a better financial spot than they were in before (even if they are already doing well), they can stop and appreciate what they currently have.
Don’t let what you want get in the way of enjoying what you already have.
14. They Have As Much Run On Autopilot As Possible
While this may be cheating as it isn’t necessarily a habit, it’s essential for everyday life. In a way, it reduces the amount of good habits you need to make and gives you more of a breather.
When your payments are on autopilot, that frees you up to just perform checkups to ensure everything is going as planned. Have your bills automatically paid if possible, automatically transfer funds into a savings account every month, have your work deduct money from your paycheck for a 401(k) – anything that reduces the amount of work you have to do.
15. They Avoid Micromanaging Their Investments
As you monitor your long-term investments, you may notice that they go up and down drastically with the economy – don’t make a spur of the moment decision to re-allocate or withdraw them. It is never easier to withdraw your investments than when they are performing poorly, but that is the worst time for you to cash them in.
Most financial advisors recommend not withdrawing until you’re ready to retire. While there may be other cases where it is best to withdrawal early, you’ll be hurting yourself if you let the whims of the market dictate your decisions.
16. They’re Generous
They’ll donate to charities if it is something they believe in, whether it is with their time or money. When needed, they’ll also give advice to those who are willing to ask.
Such freedom and generosity is generally only allowed to those who have become financially successful.
17. They Never Buy Things They Can’t Pay For
Using credit cards to earn cash back or other rewards may be done, but they’ll never buy something if they couldn’t afford it without credit cards. As a general rule, they wait until they have the money – unless the money is better suited for something else, in which case they skip the purchase entirely.
When you really want something, particularly an expensive purchase, use aggressive budgeting to find a way to afford it.
18. They Plan For Their Retirement
They think far into the future. If you start while you’re young, you can have a lot of savings by the time you retire.
If you start late, don’t fret. It is better late than never! Just be realistic about how much you’ll need to save in order to reach your goals for retirement. Try to calculate how much you’ll need each year when you retire – don’t forget inflation.
19. They Don’t Compare Themselves To Others
There is an old saying, “comparison is the thief of joy,” which rings true. There is no need to compare what friends, family, or neighbors have and you don’t. You probably don’t know their entire situation, and even if you do, comparing doesn’t help you reach your goals. Instead, look at what you can improve in your personal life.
Just remember, short-term sacrifices will help you reach your long-term goals.
20. They Enjoy Life!
While pursuing financial success is all well and good, never let it interfere with your happiness. You can be financially responsible and still have a good time.
Conclusion
Whatever your current financial situation, if you can apply these habits you’ll be much better off than you are now. For more content like this, and a free budgeting template and financial goals worksheet, be sure to sign up for the Bitter to Richer newsletter!
