We’ve all heard the term “get rich quick.” In most cases, this is more of a dream than a reality. Shortcuts to accumulating wealth rarely pay off, unless you won the recent Powerball Jackpot. A strong financial foundation has to be paved and maintained. While there may not be easy shortcuts to financial success, there are five financial habits that can lead toward greater wealth.
- Live Frugally
If you want to build your wealth quickly, you need to spend significantly less than you earn. While this may seem like obvious advice, for most Americans it’s an effort they are preaching but not practicing. Only around one-third of Americans are actually living within their means. Living frugally means spending your money on needs, not wants. Take a detailed look at the money you have coming in and what is going out. What are you spending your money on and which costs can you reduce or completely eliminate? Start cutting back on unnecessary expenses and monitor your spending every week. Eventually, spending less will become second nature.
- Set Big Goals (and Small Milestones)
Don’t be afraid to dream big financially. Consider how much you want to have saved five years from now. What if you could save $100,000 in the next five years? Having a big goal in mind can inspire you to stay on track. To avoid getting frustrated along the way, celebrate small milestones, such as reaching $5,000, $10,000, $25,000, and so on. Reevaluate your goal every year to ensure you’re on track and make adjustments as needed.
- Always Look Out for a Better Deal
Avoid settling when it comes to bills and service payments. As you work toward your financial goals, find opportunities to speed up your savings. Are there any loans you can pay off faster or refinance? Can you forgo cable television or find a less expensive Internet provider? Are you using your gym membership enough to justify the price, or can you instead take advantage of the great outdoors?
Once or twice a year, review your subscriptions, memberships, and recurring bills. You may find subscriptions to magazines you no longer read or memberships to services you don’t need. You’d be surprised just how much you can save every month by cutting down on recurring services.
- Avoid Debt Like the Plague
An important step in building your wealth is reducing your debt. Many of us face some form of debt, whether it’s student loans, car payments, or a mortgage. Make a list of all of your debts, including loans and credit cards. Include the interest rates and balance for each loan. As you look at your list of all of your debts, compare the interest rates and balances. If you have a loan with a significantly higher interest rate than the others, you may want to work on paying off that one faster than the others. Or, if you're feeling overwhelmed by debt, try paying off the loan with the smallest balance first, no matter the interest rate, to gain some momentum. Along with paying off debt, avoid accumulating additional debt. Stick to a minimum number of credit cards and, as shared earlier, spend on your needs, not wants.
- Work with a Financial Advisor
In fitness, having a workout buddy can double your performance. Having a partner holds you accountable and inspires you to push harder, even when the going gets tough. It’s easy to slack on adhering to your budget or slip up on following your goals when you don’t have someone holding you accountable. This is where a good financial advisor comes into play.
An advisor not only helps you stay on track, but also can provide knowledgeable advice, tips, and answers to your greatest financial questions, including:
- Should I start investing or pay down debts?
- How much risk should I take?
- How much should I be contributing to my company’s 401(k) plan?
- Do I need to be on a budget?
An advisor can help you determine how to build your assets based on your specific needs and circumstances. Find a financial advisor you trust to help you stay on track and provide advice when you need it.
Get Started Now
While it takes patience and time, you can consistently build your wealth by following a few helpful financial habits. The most important step is to get started clarifying your goals and creating a plan to pursue them. If you’re currently looking for a financial advisor or have questions on how to start making healthy financial habits, feel free to contact us today at (626) 529-8347 or email me at [email protected].
Ricky Biel CRPC ® is a wealth manager with Haydel, Biel & Associates, an independent financial advisory firm serving individuals and families near Pasadena, California. The firm was founded in 2004 by Chris Haydel and Ricky Biel with a desire to provide unbiased, client-centered, community-based financial advice. Together, they built a practice that has grown into a family of caring, smart professionals committed to blending proven investment methodologies with cutting edge financial technologies that make it easier than ever to accomplish your goals. To meet and see how the HBA Wealth team may be able to help, contact them today at (626) 529-8347 or email Ricky directly at [email protected]