Ever wondered why you’re not rich? It could be because you don’t have the inside knowledge. The secrets that every rich person knows. With this guide, you can find out how high net-worth individuals take care of their lifestyle and finances.
- 1 Spending should make money
- 2 Don’t spend money to impress others
- 3 Salary isn’t everything
- 4 Understand value over cost
- 5 Eat out less
- 6 Have plenty of liquidity
- 7 Learn to plan for your future
- 8 Buy property
- 9 Choose the right accounts
- 10 Avoid credit card debt
If there’s one secret that wealthy people know, it’s this – you should only spend money to make money. One way to control your spending is to set goals and align your budget with them. The first step in making sure you can actually afford something is deciding whether the goal or purchase will contribute towards your financial well-being.
If you’re not really into something, don’t buy it just to keep up with the Joneses. This is one of another secrets rich people knows – they know that it can be a waste of money trying to keep up with friends and colleagues or buying things to impress people who aren’t impressed by materialistic items. So, it might be time to sell your Ferrari and start driving around in a cheaper car.
The biggest misconception that most people have is that salary determines your standard of living. This couldn’t be farther from the truth. You can live a comfortable life with less if you know how to control your spending and make smart investments. When your salary increases, don’t use it to replace all of the smaller purchases you make with it. Instead, put the bulk of your money in investments that can multiply your projected income for a long time to come.
You’ve probably heard it from your parents before, but you need to understand the value you’re getting for a purchase. For example, let’s say there are two vacuum cleaners – one costs $500, and the other costs $700. If affordability is your only concern, you might buy the less expensive one. However, if you look at the actual cost difference, it’s only $200. The question is – will the more expensive vacuum cleaner last longer and therefore be worth the extra investment?
One of the best ways to save money is to cook at home, and a good way to ensure that you’re doing this enough is to make a commitment not to eat out for lunch. It doesn’t matter if you opt for cooking cheap meals from scratch or buy ready-made food. None of this costs as much as eating out.
Unlike most people, rich people understand the importance of staying liquid. Liquidity refers to how quickly you can get at your funds when there’s an emergency, or if you just want to enjoy yourself and will be buying something on impulse. If you keep a few thousand dollars in cash around for these occasions, you won’t have to break the bank just for a night out.
Rich people know that planning is a huge part of the wealth-building process. Remember that the key to buying investments is making sure you can afford them. Take a long-term approach, and make sure any investment you choose works in your favor. The worst thing you can do is to rush into things, and any investment that’s not well thought out will not pay off in the future.
This might sound like a no-brainer, but real estate is one of the best investments you can make. It’s good for your retirement, your children’s education, or when you want to splurge a little. There are so many ways that property can be a good investment, and if you put your money into something solid, it will pay off down the line.
If you don’t have a million dollars in your account, it doesn’t mean that you can’t make the most of what you have. In fact, if you know which accounts to open and use correctly, they can help make your money go further. The first thing to do is to understand the difference between an interest-bearing account and a non-interest-bearing one. The best thing to do is to choose the accounts that offer the most benefits for your specific situation.
Credit cards make it easy to spend money, which is great if you’re going on vacation or buying gifts, but they also can make it very easy to get into debt. If you’re going shopping and are about to use a credit card, but cannot afford the purchase, don’t allow yourself to do so anyway. You might think that paying later is just a matter of shifting things around your budget, but in reality, you’ll be accruing large amounts of debt that are much harder to pay off if you don’t have the money.