Sometimes that huge amount comes from unexpected luck or objective factors, but most of the time it is the result of diligence, smart choices, and holding back the habit of enjoying for a while.
So what’s their secret? So what did they do? What have they been through? The financial magazine Kiplinger listed 10 facts about these families.
Don’t spend more than they need
This is an obvious but often overlooked factor. In the words of Knight Kiplinger, a longtime Kiplinger editor, personal expenses such as a luxury apartment, upscale restaurant meals, electronics, designer clothes, and cars certainly don’t make you richer.
Simple, well-to-do families never use such money. They have specific standards for smart shopping, whether it’s groceries, college, or whatever.
At the same time, they will buy use-value by thoroughly focusing on their real needs. The money others are wasting on glamor will be spent or saved by them.
Understand the importance of education
What is the top priority of these families? Education and education. It is still the main means of providing a sustainable income for life and it is never too late to learn.
The ability to make money that comes from your education and skills is your most valuable asset that no recession or scammers can take away but fade away if you don’t grow.
These families will never shout slogans that should let their children have fun or blame the pressure of education because they understand that all future achievements require an investment of effort and time.
Choose the right profession
There is a lot of variation in salary in today’s job market, even for jobs of the same rank and entry standards. Wealthy families will consider the lifetime earning potential of a profession.
What job are they choosing? Personal financial advisors and app developers are the two most popular choices today, according to Kiplinger’s research.
Start a business
Many well-to-do families have secretly worked to build their businesses over the years, seizing opportunities and working hard for the rewards. They know the value of every penny and make the best use of their business.
Save and invest early
As soon as they earned money, the rich group began to save slowly and let the money multiply over time.
When it comes to getting their first job, the rich are sure to take advantage of retirement plans, tax-advantaged programs to ensure any extra money comes in.
If saving your starting (or even current) salary seems impossible when you have to pay your bills every month, consider additional financial solutions like budgeting, earning extra income, …
Don’t follow trends
Just like avoiding wasting money on flashy things, rich people stick to the principle of focus and simplicity when investing, avoiding risky choices or new trends in the market even though their net worth allows them to do so. that.
Not only because of the risk of losing capital but the costs incurred from complex investments are also a number worth considering. That is the amount of money you will lose while the success rate is not guaranteed.
Insurance is never one of those discretionary expenditures that the rich would consider cutting back. Diligently getting rich and then losing everything because of illness, accident or someone goes bankrupt is a stupid thing.
Insurance is the main source of guaranteed income if you are too sick or seriously injured. And as your tangible assets and liquidity grow through smart investing and saving properly, property and personal insurance become even more valuable.
Strict financial control
When receiving a certain amount of bonus, whether in the form of a raise, bonus, inheritance, or winning the lottery, the rich see it as an opportunity to elevate their status rather than partying.
And even when a difficult situation does not allow them to upgrade their life situation, they still act slowly and deliberately. Of course, rich families also never buy lottery.
Do not usually change cars or new houses
Cars and houses are valuable assets for most people, so they also require careful consideration.
The authors of The Millionaire Next Door have spent an entire chapter discussing the dangers of spending too much on a car.
Housing, on the other hand, may have a more sustainable value but the transaction risk and additional costs such as brokerage fees and transfer taxes are also not small amounts. Stay in your current home if you can, making modest but wise renovations for long-term benefits.
Billionaire Warren Buffett has lived in a small house in Omaha for more than 50 years, even though he can afford the most magnificent mansions or mansions.
Fear of debt
You can’t be rich if you’re always in debt. Only use credit cards to buy things of lasting value like a house, education, maybe a car, and pay cash for everything else. No one gets into big financial trouble because they don’t borrow enough money.
An exception to this is raising capital for your business. If you have a great idea and are trying to make it happen, raise capital. Of course, it’s also important to separate your personal and business assets.