Guest post by Rachael Harper with comments by Holly Morphew
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There’s no one formula to wealth
There’s no one formula to getting wealthy, but most wealthy people will tell you that they have their mindset to thank for their financial success.
The Wealth Mindset
A wealthy mindset is a way of thinking and doing that allows you to make the most of your money, often through wise spending and investment decisions. It’s the starting point for anybody who wishes to build and grow their financial assets.
Do you want to build wealth and secure your future? These money habits will help you develop a wealthy mindset and improve your financial standing.
Save Before You Spend
Pay yourself first. This is the cardinal rule of personal wealth management. As soon as you receive your monthly paycheck, stash away a set percentage of it in your savings account before budgeting for everything else. Instead of saving what’s left of your income after paying all your monthly obligations – bills, groceries, insurance payments, etc., you save first. This way, saving becomes a non-negotiable.
Paying yourself first is one of the most important financial habits to build because it teaches you to prioritize your financial future and practice discipline in handling your finances.
Once you have saved, make sure you are getting the best deals when you shop. I love Rakuten for this because it automatically gives you money back on things you are already buying and deposits the money into your Paypal account!
Practice Delayed Gratification
The ability to purchase almost anything online makes people more prone to buying stuff on impulse. Even if the items “don’t cost that much,” if you make several impulse purchases in a month, the spending could add up and eat up a significant chunk of your income. That’s money that could have otherwise gone to your savings, investments, or debt payments.
You’ll need to learn how to tell yourself NO if you want to secure your financial future.
I like to use a spending account for any shopping and non-essentials. Each month I give myself an allowance and transfer it into my Aspiration account. This means that there is never overspending because once the money in that account is gone, there’s no more to spend until I refill it the next month!
Set Financial Goals
In his book Secrets of the Millionaire Mind, T. Harv Eker wrote that “the number one reason most people don’t get what they want is that they don’t know what they want.” Building wealth is a slow process, so the first thing you need to do is set financial goals for yourself – both short-term and long-term. Once you’re clear about what you want, create a financial plan that will help you achieve those goals.
Like all goal-setting, though, you’ve got to be realistic, but don’t be afraid to challenge yourself.
Stay Away from Debt
Carrying a lot of debt is one of the costliest mistakes you can make. While some types of debt can be beneficial to your financial situation, most debts (especially high-interest credit card debt) will only keep you from putting money towards your financial goals. If you still have plenty of debts to pay off – student loan, mortgage, car loans, set up a debt repayment plan and adopt sound spending habits to eliminate them as soon as possible.
The less financial liabilities you have, the more money you can allocate to growing your net worth.
Live Below Your Means
This one’s a no-brainer, but we’re including it here anyway because a lot of people still fall into this trap. There’s nothing wrong with spending money on yourself, but if you’re not mindful of your expenses, you can still end up being broke no matter how much money you earn.
Wealthy people stay wealthy because they never spend more than they make. The earlier you develop this habit, the sooner you’ll be on your own path to wealth.
Seek Multiple Sources of Income
If you want to boost your personal wealth faster, then you have to find ways to make more money. There are plenty of ways to earn extra cash on the side. You can either take up part-time jobs or generate passive income by investing in stocks, rental properties, or businesses.
A quick path to cash is to use an app like Decluttr so sell tech, CD’s, and books you no longer want or need.
Even if you have a good-paying job, that shouldn’t stop you from looking for and exploring alternative sources of income.
Invest for the Future NOW
Leave your money to sit idly in your bank account and it’ll be worth a lot less in a few years because of inflation. To grow your money, you’ve got to invest it. And one of the best ways to get started is with your retirement plan.
If you’re still young – in your 20’s or early 30’s, retirement may be the last thing on your mind. But NOW is actually the best time to plan and save for your retirement. Start putting more money into your 401(k) and or Roth IRA. The longer you allow these accounts to grow, the more money you will make by the time you decide to access them.
Invest in Yourself
If you really want to develop and foster a wealthy mindset, the most important thing you’ll have to invest in is yourself. Most rich people got to where they are because they continue to learn and invest in themselves.
Instead of spending hours in front of the TV or scrolling your social media feed, find activities that will enrich your mind.
Read more books. Learn new skills. The more you educate yourself, the better you’ll be at handling your finances.
About the Author:
Rachael Harper is the Content Marketing Strategist of Bennett & Porter, a wealth management and insurance firm based in Scottsdale, Arizona. When not writing, she makes use of her time reading books and playing bowling with her family and friends.