How do wealthy people get wealthy? One common trait among the rich is that they have good spending habits. If you want to be wealthy, then you need spend your money wisely.
Many people think that being wealthy requires a secret formula or luck like an inheritance. That perception comes from the television including the media. However, it is not true at all. In fact, most millionaires are self-made. This small class or families have accomplished wealth by following simple strategies which include how they spend their money. Lets look at five spending habits of the wealthy:
- Credit cards: Plastic is a wealth stealer. It’s sucks the life right out of your bank account. I hear people tell me they use them to get the points or “free money.” Guess what, the credit card companies are not dumb. This is a way to get you to spend more. Have you ever stopped to calculate how much you have spent compared to what you get in points or those sacred airline miles. Most rich people don’t rely on credit cards because they know the math doesn’t work. Have you ever heard a rich person say that is how they built their wealth ( overspending, points, airline miles).
- Use cash: The wealthy use cash instead of credit cards. When you spend cash, you feel the pain more as opposed to using plastic.
- Budget: “
Using a credit card for daily expenses in the name of “convenience” is another way of saying, “I don’t want to do a budget.” Quote from Smart Money, Smart Kids by Dave Ramsey and Rachel Cruze. If you don’t live on a budget, then you don’t know where your money is going. The wealthy know where every penny is going; this is one of the reasons why they became rich.
- Financing Vehicles: Most wealth people drive 2-3 year old cars, yes , used. The average car payment in America is almost $500/month. That is mostly by the middle class. The rich know that the math doesn’t work. Buying new cars that depreciate 60-70% if the first four years is sure-fire way to kill your wealth. Rich people don’t engage in activities that cause them to lose money. The car or lease payment is the main killer of the middle class. If you want to stay in the middle class, then keep getting car loans.
- Deals and Bargains: Buying retail is not acceptable for the wealthy. Always look for a deal when making significant purchases; the power of cash helps a lot. Many self-made millionaires are entrepreneurs; which means they know how to bargain and find deals to make their business run.
These five spending habits of the rich are simple BUT NOT EASY. They must be done over time with discipline and perseverance. Question(s): Do you have any of these spending habits? Which ones do you need to adopt? Follow @robertjacobs01