Would you like to be a millionaire? If you aren’t already, I’ll bet you would like to be one. Who wouldn’t?
To that end, it’s a good idea to understand some of the habits that millionaires have. Now, having said that, there is much advice like this out there. Additionally, many of us who blog on personal finance or read such blogs are already either:
- Cognizant of such approaches and working to incorporate them into our routines;or
- Actively employing such strategies already
That said, it’s a good idea to step back and revisit the topic periodically, in order to keep ourselves on track to financial success. Along those lines, I came across an article at U.S. News & World Report which I thought was worth exploring.
It’s called “10 Secrets of Millionaires’ Money Management”. Below, I’ll list the 10 “secrets” from the article, and provide my own comments:
- Start Early to Avoid Financial Pitfalls. Sure, it’s important to avoid pitfalls. As I have said before, don’t lose money as it’s harder to recover than might meet the eye. Living within one’s means, and saving while young, provides a foundation for avoiding crippling debt and surviving issues that may come up in life. Issues can take many forms that could be unexpected as well, including reverse mortgage pitfalls, accidents, and things of the like
- Believe That You Can Do It. I really like this one, and think it’s especially important. Sometimes it’s our expectations that we somehow align our actions and decisions to. If we expect to struggle, we probably will. If we believe that we can succeed, we’ll have a better chance. Be confident. More on this after the 10 secrets.
- Articulate Your Vision For Success. It’s important to have a strong sense of where you want to go. If you’re nebulous, you’ll be more likely to drift. Working toward a specified goal can help you get to the place you want to be in a more efficient manner. I have such thoughts in my mind, and can articulate them.
- Insuring Against Life’s Risks. Very important, and one area that I’m shoring up now. You never know what could happen to your physical or mental capacity to generate income. Additionally, major life events could wreak havoc with finances as well. It’s important to insure against such risks, as we have discussed before here. One way to insure against certain risks is with a system
- Work Hard and You’ll Get Lucky. The article quotes Ben Franklin’s fantastic saying of “The harder I work, the luckier I get”. I think it’s also important to work smart, as hard work alone might not get us where we need to go
- Practice Smart Budgeting. I agree with knowing where your money goes. Even if you don’t spend the time tracking every penny every month, at least do it periodically to “audit” your expenses and money management performance. This is how I have done it in the past, and find that works well.
- Do What You Love. I’m working on this one. When I was younger, I thought that it was all about making money, not necessarily liking what it is you’re doing. As I have gotten older, I realize that life is a gift, and we need to enjoy it. The thing is, we need to enjoy it responsibly. With a family and major responsibilities, sometimes we have to be careful with risks to our income streams and just make money. Ideally, though, if we do what we truly love, our passion will shine through and we’ll be successful in the long run. Or so the story goes. I do actually believe that to a large degree, but one must balance this with the reality that some careers do pay more and offer better options than others.
- Decide How Much You Really Want. The way I see it, this is a matter at trying to project your future needs, as well as the lifestyle that you think you’ll want. Now, while nobody knows yourself like you do, you might not know the future you perfectly well as of today. Things change. I think it’s important to think of all the things you might want to do in life, leaving some room for new ideas to come into play, and work toward those goals. A big part of this is financial planning, by saving and investing toward those goals.
- Invest Against the Grain. Zig when the market zags. I think it takes some real guts to do that. For example, would you buy tons of distressed property right now, with the hopes of a big bounceback? Many people have been hit hard in real estate, and the thought of making money on it seems to be so yesterday, so to speak! To the contrarians, it’s an opportunity. Anyway, I of course see merit to this, but not everyone will be able to follow through. Smart value investments can yield significant profits down the road.
- Live Within Your Means. This goes without saying: maximize your savings minus expenses gap. If your income level increases, try to keep your expenses from rising as well. Don’t overextend your self.
One thing I think is additional advice that the article may have missed is the propensity to avoid debt, while paying cash for purchases. If one is taking on significant debt, it becomes a case of servitude to the lender. Where’s the progress there? Debt reduction is important. Paying cash for purchases as a rule is a good approach, in my opinion. It sounds like depression-era thinking, and maybe it is. But avoiding loans and interest obligations can go a long way to building your financial future.
Anyway, of the 10 “secrets”, the one that jumped out at me as a big hurdle for many – including myself, at times – is confidence that we can do it. Sometimes it seems daunting, but if you give up, you probably won’t get there. If you’re fired up, and want it enough, you have a chance at the least.
Speaking of fired up, I have always liked the scene below, from Jerry Maguire. Check out the Youtube clip and see someone get fired up!