There are two types of people in the world; those who have enough money and those who obsess over money. While it is true that many of those who have plenty of money were born rich or got lucky by playing the lottery, there are also those individuals who have achieved financial security the old fashioned way – through hard work and smart investments. You can adapt some of their strategies to achieve your own financial security by starting to practice some of the habits that they have employed in their lives:
1. They Monitor Financial Goals, Not Bank Balances
When you’re living paycheck to paycheck, it’s difficult to avoid obsessing over every penny that passes through your bank account. But just as a watched pot never boils, obsessing over your bank balance won’t make it any healthier. Instead, focus your efforts on achieving long-term stability by monitoring whether you meet your monthly savings goals or maintain current status on your bills.
2. They Maintain and Adhere to Budgets
Budgets are not fun; budgets are not sexy or exciting. However, when executed properly and followed diligently, budgets work. Financially successful people maintain solid budgets to account for their saving and spending, and you should too.
3. They Use Credit Wisely
There are worse strategies than adhering to the truism of “neither a borrower nor a lender be.” However, if you ever intend to purchase a home or a car, you must have a favorable credit history. Take a page from financially successful folks and maintain a few credit lines by making small purchases and paying off balances immediately.
4. They Spend Now to Save Later
Putting off needed maintenance on essentials – such as the car you need to get back and forth to work – is being penny wise and pound foolish. Financially successful people know that Murphy’s Law dictates that the car will throw an axle just when the bank account is totally flat. The money you spend now for a tune-up and other necessary maintenance will potentially save you hundreds, if not thousands down the road.
5. They Pay Themselves First
Even if you love what you do, wouldn’t it be nice to have the option of slowing down or taking a sabbatical? Financially successful people know that the most important financial obligation they have is to themselves. Even if you can only save a few dollars at present, establishing a savings habit now will pay dividends in the future.
6. They Maintain a Rainy Day Fund
People get sick. Houses burn down. Stuff happens. Unless you live a charmed life, eventually you will have to deal with a financial emergency. Financially successful people have money put aside specifically to deal with such circumstances. Financial experts recommend having enough savings to cover at least six months’ worth of expenses. If you don’t have a rainy day fund, start one.
7. They Practice Deferred Gratification
Yes, it is extremely cool to have the latest gadget or a car that looks like it’s doing 60mph when it’s standing still. It’s not so cool if you have to skimp on essentials like replacing the ten-year-old mattress on your bed to afford those expensive toys. While there is nothing wrong with purchasing items for fun, financially successful people know the difference between wants and needs.
8. They Work to Maintain Good Credit
Financially successful people pay their bills. On-time, and usually in full. Of course, nearly everyone faces circumstances that require them to delay a bill or two, but financially successful people do not have maxed-out credit cards or creditors calling them day and night demanding payment.
9. They Invest in Themselves
Do you have a good eye and love to take pictures? Have you considered a career as a photographer, but nixed the idea because, well, good cameras are expensive? Financially successful people make essential equipment or education a priority to make their career goals come true, and so should you.
10. They Are Financially Literate
Do you think that “Dow Jones” must be some hip new clothing line? Does the term “CD” make you wonder when the next album from Adele is scheduled to drop? You don’t have to be an active player in the stock market, but you should have a basic understanding of how money works. Financially successful people are financially literate. They can differentiate margin calls from a call from that certain someone and know precisely when selling short is in their financial interest.
Audrey Henderson is a Chicagoland-based writer and researcher. She holds advanced degrees in sociology and law from Northwestern University. Her writing specialties are sustainable development in the built environment, policy related to arts and popular culture, socially and ecologically responsible travel, civic tech and personal finance.