Financial Habits of Successful People

Financial Habits of Successful People

April 16, 2020

There’s a lot of wisdom to be had by studying the day to day lives and financial decisions of everyday folks who just seem to be successful in whatever they touch. You know the ones. They work a regular 9-5 job, they aren’t flashy, they don’t have extravagant cars or have extremely high paying positions, yet, if we are comparing ourselves to them, they just seem to be able to afford things we would never be able to.

Do you have anyone like that in your life? It is never good to compare, but sometimes that’s just the way it is.

In our position, we come across thousands of people, each of them being on a very different stage in their financial journey. Today we thought we’d share some of our observations with you. You see, there are things that successful people do in their daily lives that are quite different than the ones who seem to struggle. Here are 7 observations.

1) Successful people find the best deal, unsuccessful people stick to their list.

That is a catchy way of saying, successful people are always on the lookout for value.  You see, every time we purchase goods or services, we are engaging in a transaction with the seller. And in a buyer / seller relationship, someone is going to get the better end of the bargain. By being flexible and veering from what you are setting out to purchase, and remaining open to the better bargain that might be available, you are often better off financially. Perhaps you go to purchase a 60” Samsung LED TV for $1,200, but there’s an open-box 60” LG LED TV for $500. The successful people will take the savings!

2) Successful people pay off their credit cards every month, unsuccessful people make the minimum payment

Notice we didn’t say successful people don’t use credit cards. Some in the finance industry might make credit cards out to be evil. However, credit card debt typically comes about when individuals have poor financial management or do not plan for unexpected expenses. The answer to credit card debt is not to avoid using credit cards, the answer is living within your means. When you do that, you’ll find credit cards might actually be worth using for the cash back or travel rewards!

3) Successful people check their budget to see if they can afford a big purchase, unsuccessful people check their bank account.

This point speaks to tracking your spending and earning - aka, budgeting! If you are intentional about budgeting, and knowing where your money is coming and going, then the balance in your account is exactly where you expect it to be. You should refer to your budget to ensure there is room in it for a purchase. If you are first referring to your bank account, it is a signal that you aren’t quite aware of your spending habits.

4) Successful people have financial goals and a plan to achieve them, unsuccessful people take life as it comes.

This goes without saying… failing to plan is planning to fail.

5) Successful people find alternate sources of income, unsuccessful people live paycheck to paycheck.

This point speaks to two different things. One is living within your means. Whether you have one income source or seven, if you can’t budget your lifestyle in such a way that you’ll have a little extra money left over at the end of the month, you are setting yourself up for disaster.

I remember working as a financial counselor for people filing bankruptcy. One thing I found extremely surprising after working there for a while — the household income seemed to have very little to do with the bankruptcy. I wrongly assumed when I started that job that most of my clients would be lower income. Instead, I found I would have one client making $20k a year, and yet the very next client would be making $120k a year. The one thing they had in common was that they simply weren’t able to adjust their lifestyle in a way to where the income covered their life expenses. Some people get a raise and see that as an excuse to adjust their lifestyle accordingly.

The second thing this point speaks to is creating alternate sources of income. Affluent people often invest in rental properties, investments or side hustles that provide an alternate source of income which sometimes they don’t even have to work for. That’s called passive income.

6) Successful people know their investment strategy and remain consistent, unsuccessful people are easily enticed by the next big thing, and easily scared by negative headlines.

When it comes to investing, staying the course despite the temptations to find something bigger and better, or the temptations to jump ship when things seem to be going south, is key. Remember the point of investing should be to define and set out to achieve your goals. Anything else is just a form of gambling.

7) Successful people believe contentment and generosity bring fulfillment, unsuccessful people believe “once I have ___, then I’ll be happy”.

Attitude is really key when it comes to building and achieving wealth. A spirit of contentment is worth far more than the dollar amount in our bank accounts, and a spirit of giving literally and scientifically bring happiness to our lives. Rather than waiting for your bank account to reach a certain level, or hoping that next big purchase brings fulfillment, practice the art of contentment and see if your attitude about wealth shifts.