Have you ever set out with the goal to develop or keep a good habit, only find yourself not doing it a week later?
Most of us would have such an experience.
It can take years to develop good financial habits. However, the benefits of being responsible with your spending are definitely worthwhile and rewarding. Most wealthy people do not achieve success due to of luck, accident or bequeathed wealth. Instead, financially successful people are the ones who accumulate wealth through hard work, strategy and dedication.
In case you think that there are secret ways as to how financially successful people make their fortunes, please understand that financial success is not a total mystery. In fact, there are common habits among the financially successful people that lead to wealth, only if you pay attention to them and incorporate them into your own investing strategies.
Habit 1 – They Think for the Long Term
There is no such thing as an overnight success, we all can attest to that. Financial success requires careful planning and having a long-term perspective. Individuals who show concern about what their financial future will be like in 10 or 20 years’ time and take action on those plans and thoughts will have a far better chance to attain those goals.
Long term thinkers know how to convert income into savings which increases their options in the future and leads to wealth. Planning for the future definitely reduces a lot of chaos in one’s financial life.
Most importantly, long-term thinkers have patience and perseverance when pursuing financial goals. We wrote about the effect of delayed gratification earlier.
Habit 2 – They create a beneficial routine for themselves
Financially successful people love to optimize. If you pry into a wealthy person’s finances you can easily identify that they have financial systems that work.
Be it paying your bills via GIRO to avoid late payment fees, or investing periodically by deducting a portion of your monthly paycheck to regular savings investments, optimizing every dollar you earn is the key to building wealth.
People who achieve more with their money are those who do small things right, and over a long period of time.
The rich continue to get rich the same way they always have – by understanding how money works and making their money work for them – Robert Kiyosaki
Crucially, financially successful people have a pulse on where their money is coming from and where their money is going. Many people find themselves over-extended with their monthly bills because they have no idea how much they really need to spend each month to pay bills and meet expenses.
The most effective way to monitor is to list all of your bills and expenses on a piece of paper each month and then scheduling payments based on your income.
There are mobile apps that can help people create and maintain the monthly budget. Check out this list of budgeting apps; http://www.ourfreakingbudget.com/best-budgeting-apps-of-2015/
Habit 3 – They don’t waste time complaining
Did you know negative thinking makes it more difficult to find creative solutions to the problems you may be facing? When you dwell on negative emotions, it causes you to narrow your focus and makes it difficult for you to see the big picture.
Our king has something to say about this:
“When things go wrong, don’t go with them.” – Elvis Presley
When bad things happen, financially successful people change course and learn from their falls. Some look for ways to use it to their advantage.
They don’t blame the government or the economy for their situation. Instead, they assume full control and responsibility of their actions, and believe they are in charge of their own futures.
Habit 4 – They take initiative
People who are financially successful do not achieve more with their money by sitting back and waiting for good things to come their way. They take action and play an active role in their accomplishments.
Socrates said, “true knowledge exists in knowing that you know nothing.”
Those who succeed with their money not only earn, save, and invest, they also understand that they need to continue their financial educations and work on their financial literacy.
At the same time, they seek for ways to earn more. Why? This is because by earning more, you fast track your financial goals.
Don’t hesitate to ask for a raise for what you are worth. However, if you’re passionate about working for yourself, explore freelancing or entrepreneurship to boost your earning potential.
Habit 5 – They Don’t procrastinate
Waiting costs you money. A lot of money.
For instance, if you start saving $500 a month in an equity instrument that grows at 10% when you are 25 years old, you will have over $900,000 for retirement by the age of 60. However, this amount will be only $200,000 if you start at 40.
People have the tendency to procrastinate in certain areas of their life, like money and finance, as stated by a psychologist from DePaul University in Chicago, Illinois. The cost of procrastination can dent your financial future by significantly reducing your retirement funds, thereby delaying your chances for early retirement, or even retirement.
“The married procrastinator will let their spouse decide what refrigerator to buy, because if it breaks nine months later, the procrastinator can say, ‘Hey, it’s not my fault, I didn’t buy it “, the psychologists say.
Same is true for making decisions about investments, about retirement accounts, or paying higher prices for insurance because you waited too long.
Habit 6 – They have clear goals
Successful individuals have a clear direction and know what they are aiming for. They have a goal that they are pursuing as they work hard and protect their hard earned money. Clarity and having a life vision of where they are going and what they are doing is what keeps them thriving. Whether it is buying a house or saving for their child’s college fund, they have a clear goal.
In one of the most compelling and stunning studies done by Havard University back in 1979, interviewers asked new graduates from the Harvard’s MBA Program and found that :
- 84% had no specific goals at all
- 13% had goals but they were not committed to paper
- 3% had clear, written goals and plans to accomplish them
In 1989, the interviewers again interviewed the graduates of that class. You can guess the results:
- The 13% of the class who had goals were earning, on average, twice as much as the 84 percent who had no goals at all.
- Even more staggering – the three percent who had clear, written goals were earning, on average, ten times as much as the other 97 percent put together.
Isn’t it time you found a pen and paper?
Habit 7 –They are Accountable to themselves
The financially successful crowd know that they are responsible for every event in their life. At the end of the day, they answer to their own choices and decisions made. They know that opportunities do not wait for them and they don’t wait for a perfect moment. They go for it and make their own opportunities.
“No one can cheat you out of ultimate success but yourself.” – Ralph Waldo Emerson
Financial accountability comes down to discipline, discipline, and even more discipline. Holding yourself financially accountable for every decision you make is the best way to dig yourself out of a financial hole, but it takes one small painful step at a time.
Do you think there is an 8th Habit of Financially Successful people we should know about? Do share with us in the comments below!
This article was contributed by Zest Chia, and he represents an independent Financial Advisory firm. He wrote this article in the hope of educating more people and assisting them in their finances. You can reach out to him at 9675 9587.
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