Ever fantasize about what it would be like to be wealthy? Life would be easier, that’s for sure. Paying bills would be a cinch, and you’d never worry about retirement. But living a lifestyle of the rich and the famous is probably a lot different from what you’re imagining.
Rather than splurging on the finer things in life and taking endless vacations, most rich people live their lives by strict money management rules. If you ever want to gain some wealth of your own, you better follow suit. Here are some things rich people do with their money — and some things they don’t.
🗹 DON’T: Shrug Off Debt
Between student loans, mortgages, credit cards, and online loans, the average person carries their fair share of debt. Some $51,900 of it, on average, according to Business Insider. With a debt load this big, it’s easy to believe you’ll be in debt for the rest of your life.
Resigned to this fact, you may not prioritize paying these debts off as fast as possible — something the wealthy never do.
While installment loans may work for you in an emergency when you fall short of what you need for unexpected yet unavoidable repairs and medical bills, you should always have a plan to repay it. In fact, tweak your budget to make pre-payments against your outstanding balance as long as you won’t be penalized.
🗹 DO: Spend Below Your Means
Once you have more extra spending money, think twice before actually spending it. Very few wealthy people got to their position in life by splurging when they should have saved. This is how rich people get the reputation for being cheap.
While they may have the budget to allow for exotic vacations and luxury accommodations, most often than not, they’re scrimping and saving as if they make a fraction of their income. Warren Buffet, one of the wealthiest people in the world, still lives in the home he bought in 1958 for $30,000.
While you may not be lucky enough to get on the property ladder at such a cheap moment in real estate, there are other ways you can emulate the chairman and CEO of Berkshire Hathaway. Set a budget that helps you save scrupulously. Most millionaires manage to save as much as 64 percent of their incomes!
🗹 DO: Have Multiple Income Streams
It’s hard to save more than half of your income if your bills take up most of each paycheck. Some budgeting hacks can help you reduce your monthly bills, but they may not be enough if you’re a relatively low earner.
If you can boost your income without succumbing to lifestyle creep — a phenomenon that describes spending to match your new salary — your bills will take a smaller fraction of your earnings, letting you save more of it.
Upgrading skills and changing jobs is one way you can earn more. But to be like a wealthy person, you should consider a side gig. Rich people tend to have many fingers in a lot of pies. That way, if one project doesn’t work out, they still have other streams of income to rely on.
Wealth gives you the financial security to cover your immediate and future needs without worry, and the financial freedom to enjoy the things that fall in between. With this in mind, you don’t have to bring home 7-figures or belong to the 1%. Your dreams of being wealthy can happen on a modest salary, provided you remember these tips along the way.