Contrary to popular belief, most wealthy people don’t luck their way into money. They aren’t trust fund babies or lottery winners – they’re hard workers who understand the value in sacrifice. And that’s good news for you because it means you have the opportunity to become wealthy – no matter your income bracket.
5 Smart Things Wealthy People Do
The notion that there are only a few wealthy people in this world is totally false. There are an estimated 14.8 million millionaires in the United States alone. That accounts for more than one out of every ten households in the country. More than half of these households are multimillionaires. So while it’s still a relatively challenging threshold to reach – it’s not some impossible dream.
If you live in the United States of America, there’s no excuse for not becoming a millionaire by the time you retire. It doesn’t matter if you average $50,000 annually or bring in a seven-figure annual income over your entire career – the recipe for success has been documented and proven.
While it certainly helps if you make a higher income, it’s not the income that makes most people wealthy. There are plenty of people making $400,000 per year who are broke and living paycheck to paycheck. It’s about the simple lifestyle choices that people make. If you look at the average millionaire – not athletes, celebrities, and Fortune 500 CEOs – you’ll find that they do simple things well.
Here are some of their secrets to wealth building:
1. Spend Less Than They Make
The first fundamental key to financial success is to spend less than you make. It sounds like an obvious statement, but the majority of Americans don’t abide by it. They spend money they don’t have with plastic credit cards, take out absurd loans for vehicles they can’t afford, and put tiny down payments on houses that they’ll spend 30 years paying off. Avoid making these mistakes!
2. Save and Invest From an Early Age
Most people don’t get serious about saving and investing until they get older and feel the pressure of retirement closing in. But if you want to build wealth, time and compound interest are your best resources.
Just look at this comparison, which shows the difference ten years can make. As the chart shows, investing just $5,000 annually from age 25 to 35 (for a total investment of $55,000) will yield an estimated $615,000 at retirement. But if you choose to wait until 35 and invest the same $5,000 annually until the age of 60 (for a total investment of $130,000), your nest egg will only reach $431,000.
The moral of the story is to start consistently saving moderate amounts of money at an early age. That’s how the average person becomes wealthy.
3. Pay Off Debt
Like cigarettes and lottery tickets, debt is a tax on the poor. While it can be used as a tool for leverage, most people aren’t smart with how they take on debt. Instead, they use it to fund credit cards and depreciating assets (like brand new cars).
If you’re currently in debt, your number one goal should be to pay off these balances. You’ll then use the difference to invest and build wealth.
4. Hire People Who Are Smarter
Wealthy people aren’t always the smartest or most talented people in the world. In most cases, they’re simply self-aware enough to hire people who are smart. And you should be, too.
For example, if you find yourself in a car accident, you shouldn’t try to negotiate your own settlement. Instead, you should hire an attorney who can make sure you get the claim you need to offset expenses and continue living a high quality of life.
You should also hire a financial advisor, tax expert, and real estate agent (when it comes to moving or purchasing investment real estate).
5. Avoid High-Risk Investments
Wealthy people invest, but they don’t throw money at high-risk investment opportunities that promise unrealistic returns. Instead, they put their money into proven mutual funds, real estate, and insurance. It would be wise for you to do the same.
You Can Get Ahead
Don’t let people tell you that you can’t find success because of your age, income, job, family history, race, or personality. Real world millionaires will tell you that wealth building is about discipline, sacrifice, and time. Will you follow their advice?
To read more on topics like this, check out the business & success category.
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