Learn from the best: Millionaires habits
What do millionaires have in common? Learn from the best by trying out these tips for financial success.
I was told early on to try and learn from the best. To be a better hitter in baseball, learn from Ted Williams. To be better at business and selling yourself, learn from Dale Carnegie. Steven Covey enlightened me on the “7 Habits of Highly Effective People.” I even tried to emulate my basketball skills after my hometown hero Magic Johnson. We look to gain knowledge from professionals, coaches, businesses and those that have been successful in their craft. We want to learn from them. What are they doing that we could be doing? What was it that made them successful? How did they do what they did?
According to T.J. Stanley and W.D. Danko’s bestselling book, “The Millionaire Next Door,” 80 percent of millionaires are not born wealthy, but built their fortune through hard work and discipline. The author’s book came out in the late 90s as the economy was humming, and before the bubble burst on the dot com companies and the great recession hit in 2008. I am sure there were a few millionaires falling from their perch at that time. For those that survived or those that made mistakes, does their message still hold true today? Can upcoming generations still learn from the millionaires of the past? I think so. Some of those traits and practices ring true today and can help protect for the future.
Highlighted below are few points that many “millionaires next door” have in common.
Have a plan. Failing to plan is planning to fail. Know what you are saving for and where you want to be in the future. Looking ahead will allow you to not fall behind.
Money doesn’t buy you happiness. Financial “freedom” is what you want. That means being financially independent and having freedom from family members too. Don’t rely on the old man’s money. Parents should teach their children to be money savvy so they are not a burden on themselves in the future.
If you can’t pay cash for it, you can’t afford it. However, the use of a credit card can be beneficial if you pay it off in full every month. Buying on credit generally costs you more money, so make sure you have the money upfront first.
Don’t live above your means. Don’t pay for something now with future money. Make payments to yourself for the future car, the vacation or the big ticket item. When you pay cash for it you can save two ways. First by earning interest on “your” savings sitting in the bank and secondly by not paying interest on a loan.
Time and patience is an asset. With the miracle of compound interest, saving early and often can be so beneficial. Start your savings and retirement plans while in your 20s or earlier. It gives your nest egg time to grow. Even if your income early on is small and you can only put in a small amount, this savings pays off in the long run.
Your money needs to be cared for. Give your investments and finances the attention they need. Spend the time planning and setting it in the right direction early. It can take you where you want to go. You will need to make changes along the way as “life” happens. A loss of a job, a marriage, or a child’s medical bills may occur. Those need to be managed and planned for.
You won’t spend what you don’t see. Try to have deductions come out of your paycheck. You shouldn’t feel these effects and you’ve in essence paid yourself first. As you receive raises or your income increases you can increase the savings amounts and still not feel the effects. More goes to savings and your lifestyle remains the same and your goals can be reached quicker.
Trying out these tips from those that have had success is learning from the best. For more tips on what a millionaires habits are, Business Insider sites 19 ways to act like a millionaire. You can also visit Michigan State University Extension for more information about fiscal management, finances and money management.