You don’t have to be a millionaire to employ the same tactics they use to stay financially solvent. Many millionaires started from scratch and built their wealth over time. They did it by sticking to these 10 money habits.
10. Avoiding Debt
Outside of home mortgages, millionaires maintain a habit of avoiding taking on debt. If they do have debt, they focus on reducing and eliminating it. Millionaires do their best to avoid paying interest on credit cards and car loans. Credit cards have notoriously high interest, and millionaires who use them prioritize paying off balances in full every month.
9. Buying Cars and Keeping Them Long-Term
Typically, new vehicles lose value the moment you drive them off the lot. Most self-made millionaires buy cars rather than lease them, and plan to keep them long-term. Many will buy vehicles outright rather than financing, thus avoiding interest. If you must finance, pay off a vehicle as soon as possible and keep it long after paying off the loan.
8. Having Emergency Funds
Most millionaires don’t put all their money in investments, they establish an adequate reserve of cash for emergencies and unexpected expenses. Most financial experts recommend having a “rainy day fund” equal to six months of your expenses at a minimum. This avoids the need to take on debt through credit cards or a personal loan if an emergency arises.
7. Investing and Saving
After building up an adequate emergency fund, most millionaires invest the rest of their money into financial vehicles to help build wealth. These may be in the form of bonds, treasuries, stocks, exchange-traded funds (ETFs), and more. The general rule is to save at least 20% of your monthly income for an emergency fund, retirement, investments, and savings.
6. Taking Advantage of All Employer Offers
Self-made millionaires take advantage of everything their employer might offer to employees. This can include employer retirement match, employer life or disability insurance, employer health savings account (HSA), employer legal services, and employee stock purchase plans (ESPP). Leveraging these employer benefits can help you save money and invest to earn more.
5. Not Trying to Keep Up With Others
The saying “keeping up with the Joneses” refers to trying to compete with someone else’s lifestyle and what other people do or have. This might be cars, boats, recreational toys, electronic gadgets, etc. But all that stuff wastes your money. Instead, self-made millionaires save and invest every spare dollar to build wealth to secure their and their family’s future.
4. Utilizing Tax Deductions
Some people are shocked at how little the wealthy sometimes pay in taxes. However, it’s a smart money move to know and take advantage of every legal tax savings available. Anyone can deduct retirement plan investments, home mortgage interest, charitable contributions, funding college and health savings accounts, and more. Millionaires seek advice from financial and tax professionals – so should you.
3. Always Look For Other Income Streams
Self-made millionaires are never content with their current sources of revenue. They know these income streams can dry up at any time, so they continually look for others. That might be other assets or forms of passive income, such as rental properties or REITs. Look for other ways you can gain income, such as a side hustle.
Read More: 20 Tips for Early Retirement
2. Start Saving Early for Your Kids’ College Fund
Millionaires take advantage of college savings plans like a 529 plan. These plans allow tax-free withdrawals when you withdraw money to pay for college. Starting these types of plans early allows you to leverage the power of compound interest to increase the college fund. These help both future cash flow and tax savings.
Read More: Investing Basics You SHOULD Already Know
1. Seeking Advice
Most self-made millionaires have a basic understanding of earning an investment. However, most are also wise enough to seek out financial, investment, and tax professionals to allow them to leverage the experience and wisdom of these expert advisors. Millionaires also continually educate themselves on financial matters to stay abreast of changes, trends, and opportunities.
Read More: 10 Money Myths Most Likely to Sabotage Your Finances
