Five habits of millionaires you can learn
News flash, most millionaires don’t live an expensive life. When we think of the millionaire life style– luxurious vacations, luxury cars and homes the size of mansion, we think if only you had a million dollars you could live like that.
But the true is most millionaires live a simple life. They are more likely to live next dollar, drive a ford and only take a vacation to visit family.
Most millionaires get up early, work hard at something that interests them, and spend hours every week on reading or some other form of self-improvement like building connections with people, improving their education, or exercising.
So drop by your local YMCA, and maybe the folks on the exercise is at least on the way toward being a millionaire.
Fortunately, the habits millionaires follow are the things you can do to. You need the self-discipline to make it happen and a plan. Here are six habits millionaires work on to be financial secure.
1. Set goals
Setting attainable goals is the key. Without goals we tend to wander around not knowing how to accomplish what we want in life. You should set down and figure out what your short-term and long-term goals and then create action steps for getting there, including saving and investing part of your earnings for the those future goals. For example, a few years ago I asked my wife what her number one vacation spot would be. I then figured out how much to save each month for two years in order to make that happen. We had a wonderful time, saving in a modestly priced hotel, enjoying one or two expensive meals and a wide range of activities that were for the most part pre-paid out of the money I had saved.
Perhaps your goal is to save for a down payment on a house. First you need to figure out how much house you want to pay for, and if you are going to put 5-10 or 20% down. Then target how many years in the future it will be to save up the down payment. Break that down into a monthly savings plan and find the best place for this savings. If your plan to buy a house in five years, you might be comfortable taking less risk with this money, so a money market fund or CD might do the trick. The point is you have developed a plan, with action steps and a set amount each month for savings.
2. Minimize expenses
Smart money management leads to having that million dollars stashed away, but first you have to develop the same habits of millionaires including budgeting, finding bargains, and not buying things that you don’t need or will not use for long.
Can you check around and save money on insurance, cell phone, Internet and TV service? Smart people evaluate expenses with the goals of cutting out what is too expensive or can save even a few dollars. For example, cable TV just to be too expensive, so I switched to a satellite TV service, and cut my bill by $40 dollars a month. Every time you uncover savings, invest that amount. For instance, if you cut you a bill by $20 a month, add that $20 to your monthly emergency fund savings or debt repayment.
Spend time doing something productive. Be honest, are you spending more time in front of the TV or your iPad, than you take to plan what you want to accomplish tomorrow? US adults will squeeze an average of 12 hours, per day of media usage into their waking hours this year—nearly an hour more than the average in 2011– watching TV, watching videos, scrolling through social media or browsing the Internet.
Plan just some of this time for self-improvement will increase your chances of becoming a millionaire. So take a class, read a book, watch TED talks that inspire you to make positive change, start a side gig, or spend time with your family.
Here are things you can do to increase your productivity:
One of the habits of millionaires is that they start their day working from a list.
Plan Your Day The Night Before
Sit down with a piece of paper and write down everything that you need to do the coming day.
Writing a list clarifies your thinking and goals…
Writing down a list forces you to think at a higher level…
If you start working from a list you can increase you output 25%.
Set Priorities On Your List Before You Start The Day
Work from the 80/20 rule.
What are the most important tasks that I must accomplish?” Make that 80% of your day.
Complete The Most Important Task First
Begin immediately on your most important task and focus on it and only it until completion.
All success in life comes from project completion and developing good habits will help you complete more projects.
You can significantly increase your productivity by planning, starting and completing your most important tasks every single day.
3. Know what’s happening with your money
Know exactly how much money you have, how much (if anything) you owe, and to whom. Some people want to put their head in the sand and ignore their financial reality. But facing the truth is the best way to make positive change.
List your debts and savings account balances. How can you decrease debts and increase savings? If you owe more on credit cards than you can repay each month, you owe too much. Make the tough decisions you need to make to begin repaying debts and working toward financial freedom.
5. Don’t waste money on fees
Bank fees, late fees, investment management fees and interest paid will pull hundreds of dollars out of your pocket every year, and put in the hands of someone else, usually your banker or investment advisor.
Owing just $5,000 on a credit card at an average interest rate of 15 percent will cost you $65 in interest per month. That means you will pay over $700 per year. If you instead deposited that $65 each month in an investment earning just 4 percent annually, in 20 years, you would have over $20,000 for that vacation or perhaps a child’s college education.
Avoid late fees, by setting up auto-pay arrangements for your bills. Check your bank and credit card statements every month for errors or charges you want to cancel.
6. Focus on earning more
For your long-term financial well being, it is smart to focus not only on saving money, but getting best rates of return on your savings and investment dollars.
Learn how to invest safely and earn two, three or even four times what you might be earning with a bank savings account. Read some of my other blog posts for tips on investing and then take action to apply them.
Most of us won’t become millionaires. But good money habits day after day will get on the right path toward financial security and that is more likely to help to become a millionaire that trying to live like one. Achieving financial peace of mind and freedom from debt are accomplishments that will pay off in the long run.