If you’re ready to escape 9 to 5 permanently, you can benefit from these money habits of the rich. Escaping the 9 to 5 and staying out of it is key, and that means being very savvy about money. So here’s some top tips from time honoured rules of the wealthy.
- Make an investment of your dwelling
- Live beneath your means
- Save and invest
- Don’t be “big hat no cattle”
- Know your latte factor
- Automate your savings
Money Habits Of The Rich – Make An Investment Of Your Dwelling
Most wealthy people are home owners because it means paying into a mortgage rather than paying rent. By buying your home instead of renting, you are putting yourself in the position to eventually own your own property. Each payment you make should bring you closer to owning the property which means ultimately you’ll be paying nothing. Renting a place means you pay each month and never own it! Buying a property is a kind of enforced savings and providing you are on track to pay off the sum eventually, you’re gearing yourself to eventually own your property outright and never have to pay another mortgage payment (or rent).
Since rent/mortgage payments are often the largest monthly outgoing, it’s a big weight off your outgoings when you reach this position.
Money Habits Of The Rich – Living Below Your Means
Living below your means is a simple philosophy embodied by most wealthy people. This simple principle can be applied at most income levels too. To stay wealthy, you must live below your means. To not do so means you’re slowly sinking into debt, even if it takes a while. Many lottery winners could do to learn this principle because it is well known that lottery winners often lose all their money quite quickly.
This is because they haven’t learned to live by this principle. So they assume the large amount of money they have will last forever. Unfortunately this means they will often live beyond their means for long enough to go broke – usually within a couple of years.
Save And Invest
Unless you want to work forever, you need to make your money start working for you instead of trading your time for it. Most people work all their lives and then rely on a pension when they finally retire. But it’s far better to take charge of your investments and start building up a nest egg as soon as possible. If you’re not living below your means (see previous tip), you won’t be able to set aside money each month and do this.
Don’t Be “Big Hat, No Cattle”
Big hat no cattle is a Texan phrase meaning you have all the gear but nothing to back it up. Like someone who pretends to have a large cattle ranch with a ten gallon hat! This tendency is to wear expensive watches and drive expensive cars to look the part. When in reality, the money you could be making from business, savings and investment is propping up your ego instead!
Have a low profile instead and you’ll save huge amounts of money which can be used to further your portfolio of investments and savings.
Know Your “Latte Factor”
David Bach talks about the Latte Factor in his book the automatic millionaire. It means the small amounts of money you spend on a daily basis without thinking about it. A latte coffee and a biscuit, for example can only cost $5. However, if you spend this every day that’s $1,825 over the year. Small spending can add up too, with a number of little purchases, you can be spending money you could be using for your retirement!
A British saying is to “look after the pennies and the pounds look after themselves”.
Automate Your Savings
To save automatically, set up a payment into a savings account each month. Think of this as a bill and have it go to an account which isn’t easily reached. Over time, this grows and this can give you a bit of money to start investing with. You can also use it for building a business too if you wish. Learn more about starting an internet business here.
