Follow these 10 simple money habits of the rich and you’ll automatically become wealthy.
Get rid of bad debt
This is the first step to creating wealth. Good debt may be a mortgage on your own home or investment property, a student loan, or a business loan. Generally, everything else is bad debt and you need to eliminate it before embarking on any wealth building plan.
Prioritise your spending
Always look for ways to spend less. Stop all impulse buying, and only buy things you really need or value highly. You need to live life, so decide what’s most important to you and by all means spend money on the things that give you a real sense of happiness, but don’t spend money on things that are trivial to you.
Pay cash for consumer goods
Yes, this includes your car. Save up until you can afford it. This is called delayed gratification. Never buy anything on hire purchase or with a personal loan. You’ll usually get a discount on the sticker price if you hand over the hard stuff.
Ditch the credit card
Banks now offer debit cards, which you can use just like a credit card, except you’re spending your own money, not going into debt or paying interest. (There is one instance where having a credit card can be beneficial – using it in conjunction with a revolving credit mortgage on your home to turbo-charge early repayment)
Buy a used car
One of the best ways to throw money away is to buy a brand new car. Many millionaires never buy a new car because they know how much it depreciates as soon as they drive it off the yard. Better still, if you can get away with it, don’t buy a car at all!
Pay yourself first
If you currently don’t have a mortgage on your own home, set up an automatic payment diverting at least 10% of your income into a savings account or investment vehicle. This is one of the fundamental habits of the rich, and doing this forces you to live on less than you earn, an essential element to wealth creation.
Pay less tax
Most people don’t realise how much tax they actually pay (Hint: It’s more than just PAYE). You would be shocked. Tax is usually your biggest expense. You can get access to a myriad of legal tax deductions through having a home-based business.
Pay for your financial advice
That’s right – if you want truly independent advice, make sure you’re the one paying for their services directly, not a third party finance company with juicy commissions. Getting independent Wealth Coaching advice is a great starting point. And remember, your bank manager is not your friend, and certainly not your financial advisor.
Get financially educated
Make it a habit to read about money and investing on a regular basis. The more knowledge you have, the better your financial decisions will be.
Pay off your home mortgage as quickly as possible
If you have a loan on your own property, pay off the debt as soon as you can. Put every spare cent into reducing your principal. This is one of the most effective ways to grow rich, if you know how. Once you’re mortgage-free, you can divert the funds you were using for your mortgage payments into investments instead.
These are the habits of the rich. What do you think? Let me know in the comments below.
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