6 Simple Steps To Manage Your Money Like A Millionaire
Even if you don’t have the money to live lavishly, you can still manage it the way the wealthy do. No, we’re not going to tell you how to pick out the perfect yacht, or which polo ponies to buy, or what brand of caviar. Instead, we’re talking about simple money moves that any normal, non-millionaire person can make today. Here are 6 simple steps to manage your money like a millionaire.
Want to join the ranks of the 10.4 million Americans who can call themselves millionaires? Check out these six secrets of millionaires that you can put into practice in your own life.
1) Only Invest in What You Know
There are so many stories about people getting rich in areas that sound exotic and complicated that we are tempted into assuming that we need to look outside our everyday experience for things to invest in.
This actually couldn’t be more wrong.
Millionaires make their fortunes by investing in areas that they know extremely well. Because they understand all the ins and outs, they are able to spot the good and bad investments, and ensure that their money is always in the best place to grow.
When it comes to investing stick with what you know even if it seems boring, and ignore all the fancy and exotic-sounding investments that you have little understanding of.
2) An all-cash mindset
One habit the wealthy live by is avoiding debt and interest costs by paying for everything up-front.
Talk show host Jay Leno has been quoted saying he barely uses credit cards doesn’t write checks and doesn’t carry debt.
“I don’t write checks at the end of the month for anything. When you own something and you don’t have to write checks every month, you’re just better off,” he told CNBC.
Save the cash you need for each purchase, and you won’t need to take on debt. This will also make you more frugal with your buying decisions because you’ll be budgeting with the cash in your bank account, rather than what credit loan is available to you.
If you’re buying a large purchase as an investment such as property, taking on debt like a mortgage can be good debt, but having a cash mindset for smaller purchases will save you money.
3) Live Below Your Means & Save The Rest
“Living below your means” simply means you have money left over after you’ve paid for all of your needs (housing, food, electricity, etc.) and purchased some “wants.”
When you’re on the path to financial freedom, you make spending choices. Mindfully.
You figure out what brings you the most joy. And that’s where you spend your money. Be frugal everywhere else.
When you have a goal, such as being able to retire by age 45, it’s easier to say no to the latest iPhone or luxury vacation and instead buy the older model or find a less expensive, but just as relaxing, getaway.
Regular-people millionaires buy less house than they’re approved for or could “afford.”
A smaller house not only costs less to buy, but you’ll also save on mortgage interest, insurance, maintenance, heating/cooling, taxes, and furnishings.
4) Take Risks
Whether it’s money, love or life in general, if you want rewards, you have to take risks.
When it comes to money, taking risks means investing in things that can go down in value — like stocks, real estate or your own business. Can you get through life without taking risks? Sure, but as my dad was fond of saying, you’ll never get a hit from the dugout.
Riskier investments typically offer the chance for higher returns. And that extra return can make a world of difference to the size of your nest egg. If you invest $200 a month over 30 years and earn 12% annually, you’ll end up with hundreds of thousands of dollars more in retirement savings than if the same investment earns just 2% per year.
That being said, making risky bets is simply gambling. Take measured risks. Minimize risk by knowing as much as possible before investing, not putting all your eggs in one basket, and learning from your mistakes. Or better yet, learn from someone else’s errors.
5) Plan Every Day In Advance
Now, this isn’t necessarily monetary-based, but this is important and will help you navigate your next day. Plan every day in advance. The best time to do this is the night before.
The very act of planning each day, each week, and each month in advance will make you far sharper and more precise at everything you do.
You will find yourself with better focus and a greater sense of self-control and personal power when you work from a list. When you plan every day in advance you will be better able to control and track your spending habits as well.
Plan how much you have to spend for the week, the month, the year and decide where you will be able to save.
6) Work smarter and harder than your competition.
Identify your competition. How hard are they working? What are some differentiators you can bring to your workplace or market?
Start by working smarter. There’s no use in working harder if your work isn’t effective at producing income – you’ll be spinning your wheels.
There’s no sense in selling ice cream cones on your front lawn in the dead of winter. Instead, set up a booth at the park in the sizzling summertime – you get the idea! Simple, commonsense changes can greatly improve your effectiveness.
Are You Ready to Adopt Rich People’s Habits?
Saving like a millionaire doesn’t have to be complicated. The main rich people’s habit that will help you save like a millionaire is having discipline. Those with a high net worth are committed to making their money work for them. The best part about this is that you can start today!