Whether they’re successful at it or not, almost everyone would like to be better at managing their money. The fact is money management plays a huge role in an individual’s personal wealth and financial well-being. While not everyone can be wealthy, everyone can be smarter with his or her money and manage it in a way that keeps it protected and keeps it increasing. So, no matter how much money you make you can take the necessary steps to manage your assets so as to not get into financial trouble. With that in mind, let’s look at what many high net worth individuals do in order to manage their money differently than most people.
Never Act on an Impulse
Most wealthy people avoid the trap of impulse buying. If you took the time to add up how much money you spent each week on little things that you never even think about, you might be surprised at how much you’re wasting. A few dollars here and a few more dollars there and before you know it you’ve wasted hundreds if not thousands over a year’s time. Wealthy people are able to avoid these types of purchases, even though they have the money to make them. This is just one more way they add to their wealth and protect what they have.
Patience Is a Virtue
Yes we all like instant gratification, but the fact is wealthy people have patience and that’s often why they enjoy both continuing and long-term wealth. Most people out to make a quick buck aren’t successful. Instead, make decisions based on long-term success. If you want financial security in the future you can’t base your decisions solely on what happens within the next few weeks.
Do You Want it or Need it?
We all have basic needs that must be fulfilled. However, how often do we justify a purchase as something we need instead of what it really is: a want. For example, do you buy new appliances or tech products simply because you want the latest and greatest thing, even though your current model still works perfectly fine? The wealthy base their decisions on need and not want.
Live Within Your Means
This might seem unusual because the wealthy have so much more, but they still know how to live within their means. On the other hand, people who do a poor job of managing their money often make bad purchases on credit and then end up with too much debt and eventually a bad financial situation. Debt is killer, especially when you don’t have the means to pay it off.
Debt is More Than Meets the Eye
That leads us to our next item. Wealthy people understand the true cost of debt. Debt is so much more than the cost of the item being purchased. When you get into debt you owe interest and that continues to add up until the debt is paid off, which means debt is much more expensive than the original price tag. The wealthy understand this principle and don’t get into more debt than they can handle.
Tips for Everyone
These are just a few of the ways that the wealthy manage their money differently than most. However, anyone who applies these tips is sure to see positive results, wealthy or not.
The post Top Ways to Be Smarter About Handling Money first appeared on Advisors to the Ultra-Affluent – Groco.
