It’s no secret that wealthy people know something about managing money. By 2020, women in particular are expected to hold almost a third of of global private wealth. Achieving and maintaining lifelong wealth is a disciplined process that starts with small steps. For most of us, it’s not one major windfall that will determine our wealth trajectory, but micro decisions we can execute regularly.
1. Start Saving Today
If you only master one financial concept make it time value of money. Nothing will make a greater difference in your lifelong wealth prospects than understanding this topic. Essentially, any dollar you save today is worth more over time. The longer that time horizon, the greater your prospects are for compounding interest gains, even if you’re just saving a small amount. Wealthy people know that small, consistent increases in their savings plan add up to big bucks in the long run.
2. Make Technology Your Ally
Technology makes it almost impossible to make excuses for financial slip ups. At our fingertips we can check our balances, kick spare change into investments, and set up our bills to pay without us even thinking about it. People who are money-smart don’t actually spend every day thinking about it! Instead, wealthy people carve out dedicated, periodic times to set up and review their financial status and then let all of this helpful tech run in the background of life. We can take a note here by auto-enrolling in our work’s retirement plans, or setting up our paychecks to get deposited into separate savings and checking accounts. >> Learn how you can save better with Plinqit.
3. Have a Plan to Tackle Debt
Sometimes, debt is inevitable. Rich people know that it’s not always about living life completely debt-free. Is the flip side of your debt a strong asset that will increase in value over time? (Think, your mortgage or education.) In any debt situation, having a plan for how you’ll pay it off is essential. While some people use the snowball method or consolidation, this is a time when you can also make automation your friend. Set payments for well above the minimum and start making a dent in those credit card balances.
4. Live Below Your Means
Wealthy people know that to preserve the hard work they’ve put into building their finances, they must live well below their means. This one shift in mindset can truly ripple through all of your financial behavior, and help you actually build your assets instead of living paycheck to paycheck. That means that any extra little cash, raises, or change in living circumstances are all opportunities to check in on how you’re living. Could you tighten up on rent? Do you really need a daily coffee? Lifestyle creep eats wealth. Reign it in.
5. Invest in Value
It’s not that wealthy people don’t spend any money. They sure do. But they know that the idea of value beats cost every time. So in fact, if you’re someone who can live with the same trusty work tote for a year, then go ahead and invest in something that will hold up! A wealthy person, however, stops there and doesn’t add cheaper versions to their closet throughout the year. This holds true for other life essentials! Work wardrobe staples, quality furniture, and whatever you deem to be purchases with extended shelf-life should be invested in.
6. They Talk About It
Eek! Talk about money? With like, other people?! Rich people know that making money requires two fundamental skills – learning about it, and talking about it. Step 1 – get smart about financial terms and get very comfortable understanding your own financial picture. Once you feel armed with the details of your own situation and some good financial know-how, start test driving money conversations. Your friend group is always a good place to start. Sometimes even focusing on how people save or budget instead of how much can be a friendly gateway to start those types of conversations with friends. When you’re ready to really get in the weeds, swap out book club for a savings club or finance night.
7. Built an Expert Financial Team
Lastly, wealthy people know that they don’t have to do it all alone! If anything, they understand that various life stages will require expert input to be sure they’re meeting their financial goals. To be sure your savings is going as far as it can, you might want to consider a financial advisor. If you’ve had a small business or side hustle, an accountant is almost a non-negotiable! Leaning on a professional, especially early in your career, means that you get the benefit of that wisdom over the rest of your financial future! (Time value of advice? We’ll buy it!)
As always, you can seek any financial advice at the credit union. Whether you want to bulk up your savings portfolio, pay down debt, earn member discounts on insurance or retire with confidence, reach out to Member Services! They have your back.