Give up impulsivity
Remember how you often spontaneously bought something in a supermarket or on Amazon? For most people, unplanned purchases are entirely normal. But not for millionaires. They know how to curb their desires and refrain from impulsive decisions.
Walter Mischel conducted a famous study in the 1960s. Michel encouraged preschoolers to eat marshmallows whenever they felt like it, with the proviso that those children who waited until the adult returned to the room and only then began to eat would receive another candy.
The professor continued to monitor the study participants for a long time. The professor found out that people who managed to wait until they returned to the adult’s room during the study and received two pieces of marshmallows instead of one have a relatively lower body mass index; there are fewer drug addicts among them. In addition, they are less likely to divorce and have higher SAT scores.
Distinguish between wants and needs
Wealthy people know how to distinguish want from need. Of course, we sometimes want to buy a house, shoes, and an office. But are they necessary? Or maybe you want a luxury car?
It is, of course, mighty and a pleasure to drive it, but this is not a matter of prime necessity. Instead of spending money on impractical things, millionaires buy only the essentials and invest, boosting their income.
Perhaps that’s why 61% of people with more than $250,000 a year buy the same cars as the less well-off part of the population.
Prioritize the long term
Entrepreneur and millionaire Timothy Sykes told Entrepreneur:
Long-term goals, ranging from one to five years, are a great source of motivation. In addition, they allow you to analyze the future and understand how correctly you spend money now.
Daily tasks must necessarily relate to long-term goals, and if it turns out that they do not match, then the goals need to be changed. Adjusting goals can lead to a significant change in daily activities, help to abandon useless ones, and add more significant ones that will bring benefits over time.
There should be several sources of income
Having achieved some financial security, wealth owners, as a rule, immediately begin to come up with new ways to earn money. It is necessary because the primary source of income may suddenly dry up. The millionaire finds several new sources providing constant profit to avoid sudden loss.
Automate investments
There are many computerized investment advisory systems and other tools for automating this process, such as deducting a salary percentage on a deposit. And millionaires invest so often that it becomes routine for them. They always know under what circumstances and how to take advantage of the opportunity and how much to invest – it is evident because they have vast experience.
Keep track of your budget
Working with the budget, millionaires keep track of the amount of income and expenses. This way, they can plan their costs to get everything they need and forego the frills. The research results show that many wealthy people do not plan a budget, but the truly rich, on the contrary, are very careful about their money.
Be prepared for emergencies
Millionaires always have a certain amount of money “for a rainy day”: they understand that at any moment, they can fall into a crisis – lose their job, lose one of their family members. Savings help to overcome the difficulties that have arisen on their own. By forming an “emergency fund,” you can avoid many disasters. The optimal size of such a fund equals the amount of annual income.
Invest only in what you understand
According to Warren Buffett and legendary stock investor Peter Lynch, invest in what you know. All millionaires follow this advice – understanding how and why a company generates income significantly increases competitiveness and ensures awareness of opportunities and risks.
Focus on expenses
Do you know exactly how much money you spend and on what? If not, start keeping track of all your costs – daily, monthly, yearly – rich people do the same. You will soon realize you are buying unnecessary things and paying more than you could.
Live according to your possibilities
It’s no news that many wealthy people tend to spend no more money than they could, and often much less. Warren Buffett still lives in Omaha, Nebraska, in a house he bought for just $31,500 in 1958. Steve Ballmer, the former CEO of Microsoft, flew shared flights. Even though they could buy a huge mansion or a private jet, they decided to save this money and invest it rather than squandering it on luxury goods.
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