If you’re planning on quitting the 9 to 5 job, you’ll need to start thinking differently. So here’s 10 money habits of the wealthy which will help. The wealthy always have money for opportunities, for one. That’s because they’re savvy with their money. They don’t waste money, they invest it instead and get their money growing for them. They invest in stocks and shares, and buy their houses instead of renting them; they live below their means so there’s money left over for savings and investments. Here’s the top 10 money habits of the wealthy which will help you to escape the 9 to 5 and become more wealthy and free.
10 Money Habits Of The Wealthy -#1 Live Below Your Means
Most people think about the wealthy sailing around in million dollar yachts and driving Ferraris. But those are the super rich Billionaires of the likes of Facebook owner Mark Zuckerberg and Amazon founder Jeff Bezos. Millionaires are far more conservative! They build their wealth by living well below their means and staying there for years.
For example, a favoured car for millionaires according to Thomas Stanley’s book Stop Acting Rich is the Toyota. Wealthy people know that the fastest way to get poor is to buy expensive things which make you poor – such as an expensive car, expensive clothes and through living an expensive lifestyle. If you learn to live on less, you can put money aside each month which accrues interest and builds over time. When you continually spend beyond your means, there’s no room to do this.
10 Money Habits Of The Wealthy – #2 – Pay Yourself First
With the money you save from living below you means, you can afford to “pay yourself first” a money principle of the wealthy. This means putting money aside into a savings account. But rather than doing this manually, the wealthy set up automated payments which go out on a regular basis without them having to think about it. This is thought of as a bill. The money builds up in a savings account which accrues interest over time.
When you pay yourself first (as soon as you get paid), you become accustomed to living below your means and saving money. That money can be left to accrue interest. Or, it can be used for business opportunities when they arise.
#3 – Buy Your Home
The wealthy invest in the property they live in. Buying your own property gives you the ability to accrue investment in your home. Over time, you may even be able to own it outright. This is never the case for a rented property. With a rental, you continually pay out month after month and will never own your property. Once you’ve paid off the mortgage on a property, the payment is gone forever! Since rent, or mortgage payments are the largest monthly payments most people pay, this is usually a considerable amount.
Money Habits Of The Wealthy – #4 – Aren’t Big Hat No Cattle
In Texas there’s a saying “big hat no cattle”. In the UK there’s a similar saying “all talk and no trousers”. Big hat no cattle means someone is wearing the ten gallon hat, often worn by cattle ranchers, but in fact they have no cattle. Here’s another money habit of the wealthy – they are low key. They don’t show off their wealth with shiny sports cars and expensive watches. They know that money is better off in an investment or savings account accruing interest or growing. When you spend money on looking rich, you can’t use that money to invest to actually become rich!
If you want to become wealthy, don’t be big hat no cattle!
Use Leverage – #5 – Multiple Streams Of Income
The wealthy know that income from a job is limited by the time spent in working. So they diversify their income portfolio, using investments and businesses to grow their wealth. A business can make more money because it uses leverage in the form of employees, products and services. Similarly, investments allow you to use your money to make more money. It’s not time dependent as a job is. So if you’re serious about building wealth it’s worth having more than one income stream and definitely have one which offers some kind of leverage. Learn more about an online business here.
Money Habits Of The Wealthy – #6 – Eliminate Debt
The wealthy know that debt is lost money not only in the payments to reduce their debt but also in the interest payments on the debt. So the wealthy don’t do debt. If you can’t afford something you don’t have it. Unless you have the actual money for something you want to buy, you don’t get it. A lot of people get themselves into trouble because they want something they can’t afford. Unfortunately with credit cards, there’s a “buy now pay later” mentality in society which leads many into financial servitude.
If you have debt the best thing you can do to create more financial abundance is to get rid of it as soon as possible.
#7 – Buy Their Vehicles
Not only do the wealthy opt to buy their houses, but they also buy their vehicles too. They also plan to make them last too. While some rent a car, the payments on a rental car far outweigh the overall cost of a vehicle. So unless there’s a tax benefit of renting a vehicle, the wealthy will buy a vehicle they own rather than rent one and continue to pay month in month out for its use.
#8 – Utilise Tax Deductions
The wealthy know the law when it comes to tax deductions too. With a self employed job, or a business there’s various tax deductible allowances you can find to reduce your payments. These can include many things depending on the nature of the business such as entertainment, fuel, food, clothes and other purchases. The wealthy always collect receipts so that they can claim back any expenses which are part of a tax deductible allowance.
#9 – They Use Pensions
A pension not only is a means to save for the longer term but it also offers a means of tax free savings. Pensions should therefore be capitalised on because when you pay into a pension, your employer pays into it as well. The money you put into a pension would otherwise be taxed, so you’re saving the money you might even lose to tax payments by paying into a pension. Plus pension accrue interest over time and are a great way of saving money and using some leverage from your employer, if you have one.
#10 Have An Emergency Fund
The wealthy have an emergency fund should they need to spend money on health care, mend their house or pay for vehicle damages, for example. If you’ve use principle #2 (pay yourself first) for any length of time, you should have built up some savings. This is the money they can use should the shit hit the fan! Most people will dip into their credit card at this point, if they don’t have any savings to use. This only places them in debt and the fall backwards into debt. By having an emergency fund, you can avoid this from happening.