By Brenda W Hargroves
In my post, Vision Board - Valuable Tool For Personal Growth, I mention what James Clear calls “identity-based habits.” He suggests you should not worry about what you want, but instead focus on becoming the person who can successfully achieve your desired result or goal.
According to Clear, the best way to focus on achieving millionaire status is to practice what millionaires do. With this concept in mind, I’d like to elaborate on Chris Hogan’s article, Most Millionaires Do These Five Things With Their Money. Among the 10,000 millionaires studied, he discovered similarities. The following is a list of the five things he discovered and my comments regarding each.
1) Have A Plan –Your plan should include a diversified savings strategy that builds wealth over time.
*My Tip:
Start with a savings account. As your savings grows, investigate vehicles that offer higher income opportunities (CDs, savings accounts with higher interest rates, etc.).
Take advantage of your employer’s 401k or similar pension plan. Invested funds are transferable if you change employers.
IRAs and Roth IRAs are also a consideration. Depending on which one you choose, funds are taxed immediately or at the time of withdrawal.
Investing in stocks takes a special kind of person. If you’re willing to take the risk, do your research and start with a small amount of money (funds you’re willing to lose).
Most people don’t consider an obvious, but critical way to build wealth. Get and remain out of debt! Strive to be at the place where you owe nothing except recurring expenses such as rent, utilities, food, etc.
During your early years, try to accumulate and pay off what’s been called ‘good debt.’ I prefer to think of it as ‘useful debt.’ For example, money spent to purchase a car you plan to keep long after it’s paid for is ‘useful debt’. For example, I drive a 2000 Toyota I paid cash for in 2004. Haven’t had a car payment since.
The key is to allow for flexibility but remain intentional about following your plan.
*Total disclaimer: I AM NOT AN ACCOUNTANT. These comments are merely suggestions. Always consult with someone licensed to give financial advice.
2) Spend Less – A friend of mine once told me his goal was to save six figures. His plan was simply to spend less than he earned each month. He accomplished his goal and increased his savings to seven figures. Hogan’s research revealed that 94% of millionaires spend less than they earn, whereas only 55% of the general population fits in the same category.
3) Look For Deals – Nowadays, prices are so high, people have no choice but to seek bargains and comparison shop. But did you know, millionaires search for ways to save all the time? Hogan found that ninety-three percent of millionaires use coupons and that the typical millionaire saves by spending $200 or less a month on eating out.
4) Make a Budget – CCreating and maintaining a budget is always the first piece of advice I offer regarding how to successfully manage your finances. For further insight, see my post You Need a Budget. Period. Not only do you need one, you must be intentional about sticking to it.
5) Stay in Control – According to Hogan’s research, 97% millionaires believe they control their own destiny versus 55% of the general population who do not. What that says to me is if you develop the right mindset, you, too, can control your destiny. A book written many years ago, The Millionaire Next Door, emphasizes that many millionaires are ordinary people who had a goal and took control of their destiny. Your neighbor could be a millionaire and you might never know it.
My Tip: You can practice all the habits of millionaires and never become one. But you can successfully accumulate enough money and resources to live your best life. That’s what I want. How about you?
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