Millionaires do not stay millionaires without proper wealth management. They handle their money differently than the average person. The tips they give can be applied to every income level to help with personal wealth management. Scroll through the following paragraphs to learn eleven simple-to-follow wealth management tips from millionaires.
1. Be Frugal in Wealth Management
Living below your means is a part of many millionaires’ wealth management plans. Choose a place to live that is less expensive than what you actually can afford. Avoid eating out and nonessentials. Do not create debt from your standard of living. Buy and use what you need, not what you want. According to Reader’s Digest, businessman Warren Buffet uses a flip phone and lives in a moderately priced home.
2. Credit Cards in Wealth Management
Every store, bank or financial establishment seems to have a credit card. Credit cards come with high interest rates. MIT published a recent study in Marketing Letters. Researchers found that shoppers spend up to 100% more if they shop with credit cards. Credit cards definitely give you instant gratification, but will hurt your wealth management in the long run.
3. Research Finance
According to Stanley Fallaw, millionaires spend an average of 10.5 hours a month researching investments. They accumulate more financial literacy than the average person. Millionaires typically take more financial risks as well. The time they spend researching finance helps their decision making in investments and wealth management. Financial research is another key component to wealth management.
4. Find Wealth in Personal Growth
Millionaires spend a good deal of time on personal development. Fallow found that the average millionaire spends 5 ½ hours a week reading for pleasure and 6 hours a week exercising. Millionaires are aware of how they spend their money and time. They make time for themselves and lead an organized life. Many millionaires do find success outside of their wealth management skills. They have a hobby or passion that pushes them to personally grow. They grow their wealth as they grow themselves.
5. Accept Feedback
Millionaires accept feedback not just on their wealth management skills, but in all areas of their lives. Millionaires take feedback as constructive criticism and use it to improve. They even seek out feedback from others, good or bad. Ask someone you trust about your wealth management skills. Are you spending too much or saving too little? Are you investing wisely? Feedback allows you to change directions and try something new. Millionaires use it all the time.
6. Get out of Debt
Getting out of debt is practical advice before taking any major financial endeavor. Debt is money that can be used for saving, investing or creating a million dollar business idea. Millionaires avoid using credit cards and pay cash for many things. Get into the practice of buying what you need and foregoing unnecessary extravagant purchases. Your debt will begin to disappear.
7. Automate Your Savings and Bills
Have money automatically withdrawn from your paycheck into your savings, 401k and bills. As your savings grows you can use it to invest in stocks, make an extra payment on your mortgage or pay off debt. Start small with automatic withdrawals. As your income increases, increase the amount withdrawn from your paycheck into savings. Automatic bill paying forces you to live within your means and not go into debt over necessities. Wealth management needs a disciplined approach. Automatic withdrawals teach you to live on less.
8. Purchase Value, Not Things
Without a reason or incentive to make money, many become lazy. Millionaires make money for a variety of reasons: financial security, early retirement or vacations. Make a list of what experiences are important to you. Adeola Omole, a wealth coach and lawyer, advises people to spend their money on something they are passionate about. You will then have your reason why you want to make more money. Quality wealth management leaves room financially for you to pursue your passions.
9. Invest in Index Funds
Index funds often have high returns. They also have a low cost. Index funds are very diversified. An individual does not take on as much risk as individual stocks. Millionaires and others invest in Index Funds because they make money. Millionaire Warren Buffet supports this type of investing.
10. Get Proper Insurance
Life throws curveballs. Millionaires cover losing their money or investments by having proper insurance. Consider getting medical, dental, homeowner’s, life or any other insurance you believe you need and can afford. Automatically withdraw the premiums from your paycheck. You will then have the insurance at the time you need it. Protecting your wealth and assets is another part of wealth management.
11. Remember Retirement
Millionaires save for retirement. They want to be financially comfortable their entire lives. Start investing in your 401ks and IRAs early. This builds funds and ensures that you will have what you need. Millionaires plan for their financial futures.
Act Like a Millionaire
Millionaires are organized, industrious and know what is happening with their money. They manage their wealth and act decisively. These are some of the skills needed in personal wealth management. Try bringing financial advice of millionaires into your wealth management.