Most of us have worked hard and saved to amass our financial assets. Similarly, many of the world's wealthiest individuals acquired their position through hard work and long hours. While the affluent have access to resources that others do not, they have also developed clever habits that help them protect and grow their fortunes that individuals of any economic status can implement. So, what are these common practices that the average millionaire follows regularly? Continue reading to find out!
It's easier to avoid overspending when you have more spare cash. It is worth mentioning, however, that even millionaires have thrifty spending habits. For example, according to recent statistics from a study of those considered of millionaire status, 8% bought at Goodwill stores, and 37% utilized coupons.1 Furthermore, 64% claimed they lived in a modest, middle-class house, and 28% tended their yard to save money.1 Also, 44% exclusively bought high-quality used autos, and 41% never spent more than $3,000 on a trip.1 So, while you may often want to compare what you have to others' and obtain the nicer things in life, reconsider your lifestyle and budget, concentrating on what's most essential for your objectives.
Make Money Work for You
Not all wealthy individuals have a personal or familial history of constantly having money. Still, one thing they all have in common is an understanding of how to make their money work for them. Making money work for you is gaining control of your finances and then using that power to increase your financial stability and security over time. Wealthy individuals often use their money to generate more fortune by investing what they currently have in new passive income streams, stocks, bonds, matching workplace benefits, and more.
Building an Emergency Fund
A robust financial cushion that you can use in an emergency goes a long way. An emergency fund that is instantly ready for withdrawals might help you afford an unanticipated expenditure, such as an urgent auto repair or medical expenses. You won't have to charge the bill to a high-interest credit card or take out a personal loan this way. In most circumstances, you should strive to save 3 to 6 months of your monthly costs. However, many wealthy people have 9 to 11 months saved up. Whatever figure is reasonable for your financial condition, making this a priority will give you the needed foundation for success.
Taking Advantage of Tax Deductions
Wealthy individuals structure their lives around the income tax system. They research new tax legislation to determine how to organize their finances to pay the least amount of tax while adhering to the law. Tax planning may considerably influence one's finances since it determines how much tax you pay and how much you save to invest in additional assets to produce more income. While you may do your own studying in this area, consulting with a financial or tax professional can typically optimize your savings.
This may seem apparent, but avoiding debt is a good practice that may benefit your entire financial situation. In reality, most wealthy people prefer not to incur any debt, but when they do, they do so strategically. For example, they may borrow money at a lower interest rate to invest in assets with a higher potential return. Furthermore, if they must carry debt at high interest, they only take on what they can pay off immediately. Similarly, wealthy individuals use debt to buy things that will appreciate rather than those that would depreciate.
Finally, affluent people make it a point to be knowledgeable about their finances. They have at least a rudimentary grasp of their incomes, assets, and investments' value. Saving and investing money can be scary and complex for many individuals, but financial advisers and consultants can help make the process easier and straightforward. If you are looking for someone to consult with one-on-one, remember they should be open and honest about the costs of their services and explain how they will help grow your money and investments. A good advisor will be a partner and a teacher to you.
Schedule A Consultation with an Experienced Financial Advisor
We hope this week's article has been both informative and helpful for you. If you’re ready to start planning for a successful financial future, we’re here to help. Here at Fourth Avenue Financial, our first priority is you. We want to help you develop, implement, and monitor a strategy designed to address your individual situation to ensure all your investments are setting you up for a path of financial prosperity. Contact us today at (304) 746 7977 to schedule a meeting with one of our experienced financial advisors or schedule online: https://calendly.com/fourthavenuefinancial/introductory-zoom.
Securities are offered through J.W. Cole Financial, Inc. (JWC) Member FINRA / SIPC. Advisory Services are offered through J.W. Cole Advisors, Inc. (JWCA). Fourth Avenue Financial and JWC/ JWCA are unaffiliated entities.