Categories: Investments

How To Build Wealth And Avoid Dumb Money Mistakes Like A Rich Person

Ever wonder how the rich seem to get richer, while you live paycheck to paycheck? Nothing is more frustrating than not being able to meet your financial goals, giving you an awful pit that forms in your stomach when you consider yourself one of the “have nots” in your circle of, seemingly, richer friends.

Truth is, you’re probably making some serious financial missteps that the wealthier people in your life just aren’t doing — like sticking to a personal budget each month. You don’t need to make dumb money mistakes ever again if you read on and see how you’re silently sabotaging your savings!

1. Don’t Spend Everything You Earn

For those who aren’t making millions of dollars, it might be hard to imagine not spending everything you earn. After all the bills are paid, it’s pretty common to want to spend what’s needed to enjoy life, and whatever is leftover might go into savings. Sure you’ll see a little bump in your bank account, but those who are truly monetarily wealthy are skilled in the practice of deferring that income by putting the “fun” money towards their financial goals. To keep you on track, have a portion of your paycheck diverted into a savings account, or schedule auto-transfers from checking to savings. The mega rich reach their goals and avoid sabotaging their wealth with things like credit card debt.

2. Don’t Pass Up Opportunities To Make Your Money Grow

Let’s say you’re pretty set in life and have all your financial bases covered, but an opportunity to grow your bank balance comes along and you pass it up. This is a big reason why rich people have money: they never stop looking for opportunities to get another leg up. Whether it be starting a side hustle, going the extra mile at work to nab a raise/promotion or finding passive sources of income, it’s important to remember this extra income isn’t a free pass to spend more.

3. Avoid Making Emotional Financial Decisions

One of the worst things we do that rich people don’t is make financial decisions during exceptionally emotional moments. Yes, when it comes to money, it can be hard to leave your emotions at the door. This is why it’s important to create coping habits that stop irrational money decisions, starting with  a 24-hour cooling-off period before making any big money moves. Those who can fly first-class while traveling don’t spend money based on how they feel, but by making deliberate decisions with long-term goals and strategies in mind.

4. Limit Treating Yourself

If you’ve taken on extra work and your first thought is, “Oooh extra cash to spend on trips, clothing and maybe a nicer place to live,”  this is a red flag that you’ve got to get a grip and cool it with self rewards. Sure, it’s OK to buy yourself those expensive pillows or that fancy dinner out, but if all of your extra income is going towards too many “treat yourself” moments, you’re not doing anything but blowing your chance at reaching your personal money mark. The wealthy have fat bank accounts because they don’t allow their lifestyle expenses to inflate at the same rate as their earnings.

5. Don’t Make Big Money Decisions Alone

When it comes to big spending, wealthy people don’t chance it by making those decisions on their own. Typically, they have financial advisors who professionally crunch numbers to help navigate the, sometimes, murky waters of financial growth and investment. You might not need a money manager, but having a trusted friend or family member who knows money well is clutch when it comes to how you spend, save or invest your funds.

Lead image via Getty

Aimee Curran

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Aimee Curran

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