Anyone can develop smart money habits that will allow them to begin building wealth. If you can avoid making foolish mistakes with your money, there’s a very good chance that you will have more money than you need. That’s a good place to be. When you have a lot more, you can give a lot more. You can save more and build more financial security for you and your family. Here are seven money habits for you to start today:
Spend Less Than You Make
This is a vital habit of the wealthy. Since no wealth-building strategy is likely to work if you don’t get this one under control it’s important to implement. Quite simply, spending less than you make will make the cash you need to fund your wealth-building endeavors.
This means that whatever you earn, you will live on a smaller amount. Set up a percentage, like 70% of your income that you will live off of. The rest should be used to fund your efforts to build wealth. By spending less than you make and living within your means, you can invest the surplus instead of impressing others with a lavish lifestyle that is a danger to your wallet.
This means driving an older car, cooking more meals at home, and dumping hobbies that drain your money, time, and energy.
Pay God First
This is so important when it comes to avoiding our human tendency to allow money to rule our lives. When you give your money to God first, you are demonstrating your ability to live without it. Though we use money to purchase goods and services, it’s important to be a part of a continuing process of letting it go so you can remember to focus on more important things – like God’s plan for our lives and money.
When you “pay yourself” by assigning a percentage of your income to savings, you prevent yourself from spending it. That will help you develop discipline to spend less than you make and accumulate money to build wealth.
When you intentionally put money into savings, you’re developing a way to building wealth. By taking the money out of your hands for frivolous spending, it’s placed where it can do more good for you and your family’s financial future.
Any debt you avoid now means more cash flow in the future. Because debt payments reduce cash flow, savings are more difficult to accumulate. If you have to borrow to pay for something, you can’t afford it. And if you can’t afford it, ask yourself if it’s worth causing an unnecessary blockage in your cash flow.
Debt creates risk and future obligations that you don’t need if you want to become wealthy. It also creates stress that can keep you from reaching your financial goals.
Do Invest, Don’t Speculate
Though it’s sometimes true that speculative investments can make you rich, it’s more likely that they will crash, burn and cut your wealth. Life is short. You don’t have time to be losing money. Diversify your investments to minimize risks. Spread your money across different assets classes such as stocks, interest-bearing investments, and real estate.
Set Goals and Plans
One of the reasons why so many people struggle is that they are content with just getting by. Goals are necessary to your future course. After you have set your goals, you must develop a plan to reach them. A goal without a plan is just a wish. A plan makes your goal real and tangible. Creating a series of steps will help you reach the goal. Those steps are your action plan. They should define what you do each day on the way to your goals.
Keep Moving Forward!
Wealth-building is rarely a straight line forward. Along the path, you’ll experience disappointments and failures. You need to be prepared for those times, and even more importantly, you need to be ready to move beyond them. Accept what happened, deal with it and keep moving forward. Many people start with solid plans, goals, and the best intentions, then get distracted and discouraged by setbacks along the way. Never allow the setbacks to completely derail your hope for a better financial future.