The image of a successful person conjures up visions of Richard Branson relaxing on his private island or a garage full of shiny luxury cars.
But most wealthy and successful people didn’t get to that stage overnight. It’s the culmination of good personal finance habits and smart spending and saving patterns to create wealth over time.
Glen James, financial adviser and host of the My Millennial Money podcast, put together the top personal finance habits of successful people after interviewing wealthy people and observing the habits of people he’s worked with to improve their money habits.
He shared his six tips with Your Money Live.
1. They keep away from consumer debt
“It’s interesting that now there’s advertising out there almost slapping us across the face every day with borrowing for holidays, borrowing for lounges,” James said.
Wealthy people steer clear of easy credit and ‘buy now pay later’ services like ZipPay and Afterpay. “That’s a trap,” he said.
2. They automatically invest money
James calls this “low hanging fruit”, an easy habit that anyone can start today. Set aside a small amount of money each month and siphon it to a savings account out of reach, a superannuation account or investment.
“If I can remove myself from the process and set up the habit of the (payment) automatically occurring, the year goes by and at the end of the year you’ve got money there that would’ve otherwise been spent,” he said.
James gives an example of his clients who are teachers and “over a period of years they’ve invested into a managed fund, investment account or ETF [exchange-traded fund] and they’re very wealthy relative to where they live and the people around them.”
3. They automate their spending accounts
Most successful people have a solid budget and personal spending plan.
They calculate a weekly budget and automatically divert their cash into various accounts like spending, bills and savings.
“It sounds really basic but the effects on someone’s life can be huge,” James says.
Removing the human nature element and automating your accounts is not only a good habit to get into, but allows you to cap daily spending and removes the temptation to splash the cash on a whim.
4. They keep themselves educated and focused
Successful people are always learning and working on their personal development.
James suggests getting in the habit of listening to podcasts, audiobooks or reading to satiate your curiosity on topics you’re interested in.
“What can you read to inspire you? Whether it’s a financial book, or Your Money website articles, just to keep up to speed and encouraged in your own personal life.
“The best golfer in the world needs a coach. The best tennis player in the world has a coach. All it is, is third-party accountability. I believe none of us are above that.”
5. They are goal-driven
James says successful and wealthy people are strongly motivated, and it’s not always money they are driven by.
The key to being motivated is to pick a goal, and it doesn’t need to be a financial one, he suggests.
“What can you do to give yourself a purpose in life?” James said.
6. They are always thinking long-term
Successful people think about the future and develop the habit of delayed gratification.
“There’s a study that said if they offered people on the street ‘Hey, would you like $100 today or $200 at the end of the year,’ most people would take the $100 today.”
Successful people delay short-term gratification for the benefit of gaining something long term.