Do you ever wonder how someone becomes a self-made millionaire? What do they do that sets them apart from the rest of us? Of course, some people were born into their wealth, but many earned it with hard work and sacrifice.
One thing is clear: healthy financial habits are often at the core of million-dollar success. These millionaire habits not only help the affluent maintain their wealth but are usually the same means by which they became a millionaire.
By looking at the lifestyles of the wealthy, we can learn what contributes to their financial success. Read on to discover 15 millionaire habits that you can incorporate into your own routine.
They Religiously Track Income and Expenses
It may come as a surprise, but millionaires track income and expenses obsessively. Even if they may not have a set budget, the wealthy can make sure they are not overspending by tracking their finances. The shared experience of lifestyle creep occurs when income increases, leading to overspending. By ensuring they spend within their means, they protect themselves from this common pitfall and preserve their financial resources. In addition, tracking income and expenses shows what discretionary income remains to invest.
They Create Systems to Automate Areas of Life
Another millionaire habit lies in the realm of automation. Many of us lose valuable time on tedious and unprofitable but necessary tasks that take up large portions of our day. Millionaires often choose to automate these particular tasks, such as emailing, accounting, data organization, or social media management, giving them more free time to use in productive ways. They also may choose to outsource some of these functions for a low fee. By freeing time, the wealthy create more opportunities for themselves to spend on income-producing activities.
Produce Instead of Consume
While most of us are consumers, wealthy people are often producers. We may consume television, music, social media, books, games, blogs, and products weekly. Many affluent people instead choose to produce these things. Consumption drains funds contrasting production, which creates a stream of income. Some consumption will always remain a factor in life; however, the wealthy continually look for ways to generate a profit rather than spend their earnings.
They Have More Than One Income Stream
Nearly all wealthy individuals have more than one stream of income. This millionaire habit is one of the leading factors in building a fortune. Having multiple income streams increases the incoming cash flows and provides additional financial security. With multiple income streams, even if you were to lose your job, you would have other income to fall back on. Prosperous individuals often select passive income streams, like rental properties, stock market investments, business investments, or loan interest, for their portfolios. A significant benefit of passive income streams is the little time required to maintain them.
They Save 30%+ of Their Income
Another millionaire habit is prioritizing saving. By saving 30% or more of their income, the wealthy continually increase their net worth. Having substantial savings, the rich do not need to take out loans should cash be required for an emergency. Additionally, if they choose to invest their savings, future cash flows increase. While saving may seem difficult if you are on a tight budget, even setting aside a little each month into an investment account can immensely benefit you in the long term.
They Invest Often
While they could leave surplus earnings in a savings account, making minimal interest that fails to cover inflation, millionaires instead invest. When invested, money continues to grow. Considering compounding, amounts invested in the present can grow exponentially with time. Many today are millionaires because of their frugality and investments.
But Don’t Invest Without Proper Research
By thoroughly researching investments, the wealthy make every effort to ensure their money generates the greatest possible return. They must do so since they often pour large sums into investments. By researching, they identify new opportunities and choose suitable investments for their situation. It would be best to study anything you consider investing in, especially since investments have varying deciding factors such as time-frames, goals, and risk.
Don’t invest in something you don’t really understand; that’s basically just gambling!
Keep an Open Mind
An open mind is a trait held by wealthy people. Many projects, businesses, and inventions now considered household names were once viewed as outlandish ideas. Even the internet was once mocked on national television as it was first released. In keeping an open mind, millionaires do not shy away from new opportunities and allow their imagination to spark new ideas. This entrepreneurial characteristic has directly contributed to many wealthy people earning their millions.
They Keep Expenses Low
By keeping expenses low, millionaires save more and thus invest more. It may seem like millionaires would have no reason to keep costs down since they have ample funds, but this is often one habit they implemented before becoming a millionaire that allowed them to rise to their level of success. Keeping expenses at a minimum, they free up money to pour into business ventures, education, or investments.
They Constantly Financially Educate Themselves
Staying financially literate is a valuable millionaire habit practiced by the wealthy. Being educated and current on financial news and topics is vital for them. It allows them to make wise investments, find ways to improve and stay updated on best business practices. They also protect themselves from being taken advantage of by those who may be more knowledgeable. You can open financial doors for yourself by investing in your financial education and learning about business.
They Clearly Define Their Long Term Goals
By defining long-term goals, wealthy individuals create a clear path to success. By knowing their destination, they optimize their plans and avoid waste. In addition, by having an end goal, they can make all their decisions with this goal in mind. Having a long-term goal can also help maintain motivation and laser focus, increasing the likelihood of achieving that goal.
Stay Away from “Bad” Debt
Millionaires are careful about the type of debt they assume. They only choose to take on debt for specific business reasons. They avoid “bad” debt like the plague. What is bad debt, you ask? Bad debt refers to personal use credit cards, debt from depreciating assets, and extravagant personal item purchases. They steer clear of this type of debt since the interest that it carries is high.
Instead, the wealthy choose to take on business or investment debt, when the income the debt generates surpasses the interest cost. “Bad debt,” on the other hand, typically carries no benefit and only serves to add high interest expenses. Only take on debt that will grow your income, not hinder it!
They Don’t Spend Money on Unnecessary Stuff
Wealthy people select their purchases carefully. Many drive modest cars, are sparing in their designer shopping habits, live in humble homes, and choose to cook at home rather than eat out. This habit allows them to use their capital for profit-generating activities rather than spending it on expenses that offer no return.
Surround Yourself with Like-Minded People
Wealthy people can grow, learn, and network by surrounding themselves with like-minded people. By keeping company with other highly motivated, successful individuals, millionaires are constantly challenged by their peers. In addition, they open doors for networking and business opportunities. Seeking out driven people can seem intimidating, but it is one of the best ways to make lifelong connections with people who push you to accomplish your aspirations.
They Exercise
Exercise may not seem like the most apparent habit of the wealthy, but it is one of the most beneficial that you can incorporate into your schedule. Working out fosters self-discipline, which is necessary for the business world. In addition, it provides an opportunity for your mind to wander without work or personal duties combating for your attention. Exercising increases the amount of oxygen flowing to your brain, allowing your mind to function optimally.
Even if becoming a millionaire is not the top priority on your list, you can begin implementing these habits to solidify your economic footing and grow your financial literacy. By focusing on saving, investing, and maintaining the mindset of the wealthy, you are setting yourself up for success.