Many of us wonder what makes financially successful people so…successful? Turns out there isn’t really much of a secret formula, but there certainly is a mindset and a common set of habits most financially successful people have. Here is a list of 20 habits that financially successful people maintain.
1. They keep a budget
Financially successful people plan ahead their needs and set limits on themselves to never go beyond their plan. They keep a budget that’s manageable and fits within their income and means and adapt their lifestyle to their budget, rather than making a budget around their lifestyle.
2. They reduce wasteful spending
Budgets evolve and change over time and need to be adjusted. Financially savvy people know to constantly check and review their budgets for pruning. Spending that no longer provides any substantial value or can be better spent elsewhere gets cut out.
3. They control impulse spending
It seems to be human nature for us to have moments of impulse where we want to splurge on something we want, but not really need. Financially secure people are able to discipline themselves, stick with a budget and control these moments of impulsivity.
4. They think about the consequences of their decisions
Before making any decision, people who are successful with money give thought as to the possible outcomes of that decision. They take time to research possibilities, account for current and possible circumstances, and spend a moment analyzing what the opportunity costs are to their decision. Financially successful people want to make informed, calculated, and logical choices.
5. They set financial goals
Setting measurable and attainable financial goals keeps one on track with their money. People are not successful overnight; it takes many goals that act as stepping stones to reach where they are today. Continue setting goals for yourself and make new goals once old ones are achieved.
6. They prioritize saving
Having savings provides an added security both now and in the future. Successful people make a habit of putting away some of their paycheck or funds aside into savings. Having savings in investment accounts such as stock or a 401(k) can also help you grow your money by having your money work for you.
7. They do not compare their wealth to that of others
Keeping up with the Joneses is an easy way to be distracted from what’s really important. It can lead to spending beyond your means and frivolous spending, both wasting money and time by looking at what others are doing, instead of doing what they themselves need to do. Financially successful people focus on their own goals and stay within their own financial capabilities.
8. They start thinking about money early
It’s never too early to start thinking and planning your financial future. Time is a valuable asset. Saving or investing early can yield a big difference down the line because when you’re young, you have more of the power of time and compounding growth.
9. They think about the long-term
Successful individuals think and make plans for long-term goals, not short-term gains. They plan ahead and understand the value of their decisions today may not be necessarily recognized immediately, but in the future. Delaying immediate gratification by saving more money a bit longer for a better purchase or saving money now and investing in a 401(k) can provide a more financially secure life later.
10. They manage their time
Efficiency is top of mind for financially successful people. Time is the most limiting factor to us as we can only do so much with our time. Financially-minded people maximize what they can do with their time by either being more productive themselves or finding ways to make the money they already have work harder for them.
11. They’re hands-on with finance
These individuals are usually actively involved with their finances and money decisions. They constantly monitor their situation and keep track of their responsibilities such as debts, bills, and income. They don’t let the money they have just sit around but seek new ways to earn money or better ways to use their money.
12. They’re proactive with money
Many of us don’t address finances unless a situation comes up or there is a potential problem. Financially successful people are proactive in researching and understanding financial situations well before they occur or come up. This allows them to be well-prepared should something arise and make smarter, responsible decisions.
13. They continue financial education
Our environments are unavoidably constantly changing around us. Financially successful people keep an awareness of current economic trends and make an effort to learn how changes can affect them. Personal finance can be a large and complex subject to grasp, but these people actively continue to expand their knowledge in the space so they can make better and more informed decisions regarding money.
14. They work with professional advisors
Successful people acknowledge when they don’t know something or simply lack the expertise to make the best decision. These people will seek the help of experts and listen to the advice given by those more knowledgeable. Relying on the assistance of other professionals at times usually leads to much better choices and also helps one learn to make better choices themselves.
15. They don’t wait for opportunities to happen
There is always a calculated risk in any business decision, but as LendingTree CEO Doug Lebda puts it, successful entrepreneurs aren’t taking a tremendous risk but accept an “affordable loss.” Successful people know that there is never a perfect time to take a chance on a potential opportunity. They don’t wait for a perfect moment. They go for it and make their own opportunities.
16. They track and eliminate their debts
Debt can be a heavy burden and limits our abilities to better use our money. Financially successful people try to eliminate their debts as quickly as possible.
17. They tackle their financial problems head-on
Even the best of us can end up having financial difficulties or problems at times. But rather than ignoring the problem and letting issues continue to build, financially successful people tackle their problems head-on by finding out a way to work with collectors and addressing things early. Ignoring financial matters doesn’t fix the root of the problem and can simply make issues worse.
18. They understand the importance of value over cost
Frugality can be helpful but always buying the most affordable option is not necessarily the best option. Financially smart people understand that when purchasing or investing in something, what really matters more is value: what do you get for what you pay? Maximizing value saves a lot more money over time than minimizing initial costs.
19. They are patient
Along with thinking about finances in the long-term, they additionally understand that success doesn’t happen overnight and that it takes time before seeing the value or benefits of their efforts. Successful people have the patience to wait for future benefits and remain diligent with their strategies.
20. They learn from mistakes
We all make mistakes from time to time. Even for the successful, there may have been a time where better financial decisions could have been made. What’s important, however, is learning from past mistakes and making sure you don’t repeat them. Successful people recognize their errors and take responsibility for them. Once they understand their faults, they make an effort to not continue those behaviors that could lead to trouble again.