3 simple things wealthy people do to grow their money, according to a financial planner who knows
- Wealthy people have a few habits in common that help them grow their money, says a financial planner.
- They invest in themselves and keep their everyday routines simple so they can focus on priorities.
- They also avoid lifestyle creep, saving any money they get from raises instead of spending it.
- Consult with an advisor to make sure you are doing everything to grow your wealth in this challenging time »
The road to success looks different for everyone, but there are a few key things most wealthy people do with their money to help it grow over time. It’s not a get-rich-quick situation, but a slow-and-steady process that takes time and commitment.
Financial planner Jason Howell, president of the Jason Howell Company and author of “Joy of Financial Planning: 7 Strategies for Transforming Your Finances and Reclaiming Your American Dream,” shares the money habits his wealthiest clients have in common.
1. They invest in themselves
Those who built their wealth from the ground up prioritize learning every day, says Howell, who works with many high-net-worth individuals and families. The more skills you have, the higher your market value.
“You have to learn to earn,” says Howell. Whether you choose to go to grad school or pick up a book, you’ll be able to apply your new knowledge to your current job, a future job you want, or your side hustle.
The internet is full of resources you can use to increase your skills. Howell recommends checking out online learning tools like Udemy, a course provider that covers everything from computer coding to marketing. The platform is a great place to learn new digital skills that are valued in today’s market.
2. They don’t succumb to lifestyle creep
What you do with your money when you get a raise can make a big difference to your wealth long-term. Saving your increases will help you tuck away more money for retirement and other goals. But allowing your spending to catch up with your paycheck — a phenomenon known as lifestyle creep — can cost you.
Says Howell, “When you get that promotion and it increases your income, many people tend to increase their spending. They get the new car or splurge on a new wardrobe, even get rid of the roommate. This is where people go wrong. These are decisions you don’t have to make.”
Instead, he recommends investing that extra income. Start by maxing out your 401(k) or 403(b), at least to meet your employer’s match. Then, invest in diversified assets that will yield dividends or compound interest. Tools like Betterment, a robo-advisor, can help you get started by simplifying the investment process. The sooner you start, the more opportunity you have to increase your wealth.
3. They keep their everyday routines simple
Mark Zuckerberg and Steve Jobs kept their wardrobes simple, and there’s a reason for that.
As your wealth grows, so do your responsibilities. Keeping your routine simple frees up your mind so you don’t end up with decision fatigue, where you make mistakes on important decisions because you are mentally tired.
Simplifying your routine is especially important in the morning, because that sets the tone for your day and frees your mind for creativity. Less time spent thinking about what you’re going to eat for breakfast means more time for more important questions and ideas.
This approach can translate into many areas of your life, including your investment strategy. Some of the most sophisticated investors put their money in simple, low-cost index funds and don’t check their accounts for months, Howell says. This helps them avoid mistakes such as buying the next hot stock or selling while the market is high.
Decide what your priorities are, and focus your energy there. If you find yourself in a situation where you are over-analyzing something and are not clear on what to do, postpone the decision, says Howell.
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