Can You Get Ahead Just By Changing Your Habits?
We’ve all done it: ogling massive homes and estates while we’re driving, wondering how the owners achieved all that success and wishing for a little of it ourselves. Or maybe your neighbor just bought a brand new Ferrari. How did he become so financially successful?
Here’s a hint: He might not be. He might just appear to be successful. In fact, the world’s most successful people generally don’t spend wildly. They’ve developed good fiscal habits and they’re exactly that – habits. They’re consistent.
A Penny Saved…
Successful people routinely save. This doesn’t necessarily mean dropping their change into a jar every night before bed, although this is certainly beneficial, too. It means never spending more than they have to.
Think of it this way: Every time single time you use that credit card or write a check, you have less money than you had a minute before. The equation only works if you spend less than you earn. It’s that simple.
You might have heard about Warren Buffett’s house, the one he bought for cash decades ago and continues to live in. It’s not a mansion. In fact, it’s a little on the small side. There’s no doubt in the world that Buffett can afford a lot more, but he’s lived with the habit of deferring instant and copious gratification in exchange for long-term wealth and security.
Are you stretching your budget to accommodate a lifestyle you can’t easily afford? Do you find yourself juggling your finances every month because you don’t quite earn enough to make all ends meet? This might be a habit you want to get out of.
And It’s About How You Save
About that change jar you toss your coins into every night. Get your money out of there and put it in some type of a financial account, even if it’s just a run-of-the-mill bank savings account, where it can earn some interest and grow.
Financial experts tout the 10 percent rule – you should regularly and methodically tuck aside this much of your income. Financially successful people tend to make it a habit to do more than that. Think 15 percent or even 20 percent if you can manage it.
If you’re not that disciplined – although most successful people are – set up automatic transfers to your savings so you don’t even have to think about it.
Put It in Writing
Another habit that can bear fruit involves writing it all down. Commit your budget to something black and white, whether it’s a file in your computer, a smartphone app or good old pen and paper. Financially successful people like to literally see where their money is going and coming from.
Sure, you can go online and view your bank balance at a glance. But do you really want to take someone else’s word for how much money you have? Banks aren’t infallible, and financially successful people know that. They keep track of their own money as well.
Failure Is Not an Option
In Apollo 13, actor Ed Harris famously says, “Failure is not an option.” The world’s most successful people embrace this sentiment.
They don’t make mistakes that will cost them – or at least they do everything within their power to avoid it. An overlooked payment can crash your credit score and result in extra fees, money you didn’t have to spend. Set up automatic payments where possible so you’re covered in the event that life happens and you forget that Bill X is due on the 15th of the month.
You might also consider investing in personal finance software that will send you an alert when an account payment is due, or ask your creditors to tap you on the shoulder with an email as your due date draws near. Leave nothing to chance … or to life’s little surprises.
Manage Your Time
Time is money. Financially successful people don’t waste it. They’re almost always doing something, often with a financial goal in mind.
This isn’t to say that you should never put your feet up and relax. Pacing yourself is a valuable habit as well. But successful people don’t squander their time any more than they squander cash.
Focus. Deal with obstacles as they arise, no matter how tempting it might be to procrastinate. Put them behind you, then move on to the next challenge. Keep going.
Manage Your Debt
Carrying at least a little bit of debt is a foregone conclusion for most people. Very few people can afford to pay cash for their homes like Warren Buffett did. And, credit cards just make life easier.
That said, financially successful people make it a point not to live up to their ears in debt. Some of them carry no debt at all. This might not be realistic, but it should be a goal. Pay off your mortgage. Pay off your car, and then refrain from trading it in right away if it’s still serviceable.
Now take a look at your credit cards and personal loans. Can you reduce any of those interest rates through refinancing or consolidating? If so, you’ll keep more of your own money.
And while you’re about it, consider paying cash for daily incidentals instead of pulling out the plastic and accumulating interest charges on all those purchases. Stop charging purchases to the extent possible.
Successful people also remember that what’s here today may well be gone tomorrow. Businesses can go toes up and you could find yourself out of a job. Any number of things might happen that will prevent money you were counting on next week or next month from making its way to your bank account. Don’t assume you’ll have the income to pay things off over time.
Successful people set goals and habitually work toward accomplishing them … day by day by day. When one is achieved, it’s crossed off the list and replaced with another.
Your goals don’t all have to be huge. It can be extremely gratifying and encouraging to cross accomplishments off your list on a regular basis, so set some smaller ones as well. It might be saving a certain amount of money or lifting your credit score up into the excellent range. You’ll gain financial ground each time you accomplish something.
Think Outside the Box
The most financially successful people might not necessarily be geniuses along the lines of Albert Einstein, but they’re almost always go-getters. They think of reasons why they should do things rather than why they should not, at least when there’s no glaring downside.
Maybe you’ve noticed a job posting that might be a little above your expertise, but just a little. Why not apply? The worst that can happen is that you won’t get the job, and it doesn’t count as wasted time because you were actually working toward a goal to make yourself more financially solvent.
And what about that business idea you have, maybe a service that no one else is offering? Why not network a little and talk it up with others? You might actually encounter someone who’s willing to invest to help you get the idea off the ground.
Financially successful people don’t just accept their current lot in life and work within those perimeters. They think outside that existing box and seize potential opportunities. Sometimes they create those opportunities.
Knowledge Is Good
Don’t stop learning. There’s always more to know.
Financially successful people aren’t stagnant. This goes hand-in-hand with thinking outside the box, but it takes that habit one step further. Successful people don’t just keep an eye on the horizon for new opportunities. They educate themselves so they’re able to tackle those opportunities when they arise.
Maybe it’s reading a biography about someone who excels in her field. How did she get there? It might be an investment seminar or even a how-to booklet explaining ways you can winterize your own home to save money without paying someone else to do it for you. The point is that there’s always more to know.
You Can’t Take It With You
Call it karma, but a pretty common trait among successful people is that they tend to give back: their money, their time, and other resources to those in need.
Share your knowledge with a newcomer at your place of employment. Give to charity – it’s often tax deductible if you itemize on your tax return. Help feed the homeless on Thanksgiving. At the very least, do some careful estate planning to leave your loved ones in good shape when you’re no longer with them.
If nothing else, you’ll probably feel pretty good about yourself when you close your eyes to sleep at night.