Financial independence is something that we all aspire to, but those that have it don’t always have the exuberant tendencies we have toward wealth. In fact, wealthy people are usually very careful with their money, they often drive non-flashy cars, live in average houses, and don’t spend big.
Here are some habits you can learn from them so you can get with the play.
How To Get a Millionaire Mindset
Developing a millionaire mindset takes time. Don’t think about ‘getting rich quick’, but instead think about ‘getting rich slow’. Even thinking about your finances is part of developing a similar mindset to wealthy people. Apparently wealthy people spend around 20-30 hours a month thinking about their money as opposed to the average adult who spends only 2-3 hours a month. The more time you spend thinking about finances will invariably mean better decisions which lead to financial independence.
Don’t Make Hasty Investment Decisions
The wealthy usually don’t rush into making financial decisions about investing. Instead they find out all the details of the investment or scheme to ensure they don’t lose money. Part of a wealthy mindset is to obtain good financial advice from an advisor or someone you trust who has already achieved financial independence. It’s best not to invest in anything you don’t understand or is overly complicated.
Cover Your Assets
Spending money on insurance may seem a waste of money but it’s a wealthy person’s habit to do so. If something does go wrong, it could mean the difference between securing your assets and losing them all. House and contents insurance, is a prime example. It’s surprising how many people don’t have this basic type of insurance in place. Insurance means peace of mind so you can make better financial decisions overall.
Spend carefully
Wealthy people don’t just spend willy-nilly – they carefully consider every expenditure before they make it. This can be anything from buying shoes, to weekly food shopping. In fact, some advice from some super rich people may surprise you:
- “Eat frugally” – Ingvar Kamprad (founder of Ikea)
- “Cut down on your shoes” – Michael Bloomberg (business magnate)
- “Look for freebies” – Beyonce (entertainer)
- “Try living on almost nothing” – Elon Musk (CEO of SpaceX)
- “Only buy what you need” – Steve Jobs (founder of Apple)
Develop your negotiating skills
Wealthy people negotiate effectively to get higher prices when they buy and lower prices when they sell. But they don’t stop there. They ask for lower interest rates, better terms and conditions, immediate payments on selling and deferred payments when they buy. Don’t just take the first offer, if you can negotiate well you can gain 10% – 20% on many financial transactions.
Be aware of the power of compound interest
Most wealthy people build their fortunes slowly utilizing compound interest. This principle works on an initial sum of money earning interest, and this interest is then reinvested compounding upon itself to grow even more. Albert Einstein called compound interest, “The greatest power in the universe.” If you can increase your earning ability, then you can save more to invest, which will then compound and grow over the years.
Financial Mappers is an interactive financial modelling software. Start mapping your finances to learn more about your entire wealth portfolio and empower better decision making.
Are you ready to start your Financial Plan?
Glenis Phillips SF Fin – Designer of Financial Mappers
Disclaimer: Financial Mappers does not have an Australian Services License, does not offer financial planning advice, and does not recommend financial products.
