So many of us treat our financial health like a new year’s resolution: something to break and forget about a month into the new year. If you’ve struggled to maintain healthy money habits in the past, know that you’re not alone and you’re not a lost cause. Financial freedom is possible. Wealth-building? Possible. A great retirement? Absolutely.
Financial success isn’t beyond your reach, no matter where you are starting this year. That isn’t to say it won’t be challenging: but it is also infinitely rewarding.
Improving your financial status and your relationship with money doesn’t have to be difficult. It’s not complicated, but it does take dedication and know-how!
How do the millionaires do it? They follow these simple money management strategies.
7 Money Management Habits That Make Millionaires
Make Your Money Work
Unfortunately, we can’t rely on savings alone to achieve millionaire status. It simply isn’t enough to let our money sit in a bank, collecting meager interest, and find real, true wealth when it’s all said and done. In fact, your money may depreciate in a savings account due to economic fluctuations.
Instead, put that money to work. You want to prioritize investments that provide appreciation and passive income. Real estate is an ideal choice, as they provide a high physical asset value and historically hedge against inflation. Not only that, but a long-term buy-and-hold strategy provides passive income each month via rent.
Don’t Try to Time the Market
We’ve all heard horror stories about day-trading mishaps and unforeseen market disasters. You stand to lose a lot of money when you try to time the market. Whether that’s in trading stocks or in aiming for short-term real estate investment, trying to “get in” at the right time often spells disaster.
The most reliable investments are designed with the future in mind. You’re meant to buy-and-hold, weathering market fluctuations and staying firm in seasons of under-performance. This not only reduces your stress, but it ensures long-term wealth-building.
Don’t get gun shy when the market shifts. There are always market cycles with highs and lows. If you pull out or reduce your investments, you’ll miss out on what the future has to offer.
Practice Financial Forecasting
What is financial forecasting? Part of successful wealth-building is an intense awareness of your own finances. Financial forecasting isn’t about the market or trying to predict the future — it’s simply knowing what to expect in your own financial life. Think of it as large-scale budgeting.
Be sure to check out: Wealth-Building Habits That Don't Cost a Dime
Look at how much money you will make this year. Then factor in your expenses, determine what will go to savings and investments, and make some realistic assessments. Doing so will help you see just how much money you’re making and where it needs to go to achieve your financial goals.
Plan for Big Financial Hits
None of us like to think about the worst-case scenario. Part of that millionaire mindset is anticipating and preparing for all of the unexpected and costly things that life can throw at us. Major medical expenses due to unforeseen illness or accident. Death. Divorce. Job loss. We also must account for our own decision-making. There’s much to be lost if we make the wrong call.
That said, one unexpected incident doesn’t have to throw your finances off track. Prepare for these eventualities with emergency funds, solid insurance policies, and passive income.
Stick to the Plan
When the unexpected happens, it’s difficult to stay the course. When stress and outside pressures enter the picture, your resolve can be swayed with logical and emotional appeals. For the millionaires of the world, the plan is paramount. Now, the plan may change over time through careful re-evaluation and reflection.
What we’re talking about when we say stick to the plan is namely a) don’t jump ship when an investment under-performs and b) don’t put your saving and investing goals on hold. There are other places you can adjust to make up for any losses.
When it comes to building a financial future, starting early and contributing consistently is essential.
Prioritize Savings and Investments in Tandem
Now, what exactly are we contributing to? We’ve already said that savings alone will not get you to where you want to go. There’s a misconception that you can only do one or the other. And yes, you do need to build up your savings often, in order to invest in meaningful ways. But you can do both at once, too.
Make investment goals a part of your budgeting plan. Instead of thinking “I’ll build my savings up before I invest,” get started as soon as possible. This is what builds long-term wealth.
Manage Your Finances Sustainably
In the past, part of our financial advice has included things like cutting down on eating out, canceling unnecessary subscription services, and generally living within or below your means. That said, it’s important to note that you need to continue to enjoy your life. While planning for the future often means sacrificing luxury, it doesn’t mean you have to sustain yourself on a diet of rice and beans and cut out absolutely everything “fun” in the name of savings.
Be sustainable in your financial habits. That means be realistic within your budget and goals, but it also means not making yourself miserable in the name of maximizing savings and investments. Life is meant to be enjoyed — not just when you retire, but now.
What helps? Increasing your streams of passive income and buy-and-hold, long-term investments. You don’t have to worry and stress about these investments, nor do you need to be fearful of market fluctuations. Sustainable money management has plenty to do with money, but it also has to do with your mental and emotional health.
Be wise: invest in yourself, too.
Invest in your financial future through real estate investment. Start today!
