01 Jan 5 (simple) wealth habits of self-made millionaires
Best-selling author Tom Corley’s ongoing analysis about how to grow and sustain wealth reveals that, surprisingly, the most common path to becoming a millionaire is what he calls the ‘saver-investor’ path, which identifies someone with a middle-class income who is disciplined and consistently saves/invests over time.
The saver-investor path does not require a special set of skills
It doesn’t even demand significant sacrifice. What it does require is mastery of the following healthy wealth habits:
- Quality vs cost
The idea here is to buy quality at the best price as opposed to buying the cheapest. Cheap goods break more frequently, requiring multiple replacements, which costs you more in the long run.
- Stick to a budget
For a healthy savings habit, aim to save 50% of your after-tax earnings and spend the rest as follows:
- Housing – 25% or less
- Cars – 5% or less (including maintenance & fuel)
- Clothing – 5 % or less (remember to buy quality over quantity)
- Holidays – 5 % or less (look for travel deals)
- Entertainment – 10% or less
- Need vs want
Being aware of the difference is key. When you spend based on want it often results in overspending or even incurring unnecessary debt. In today’s world, it is easy to be consumed by instant gratification and get into a habit of spending to satisfy your wants.
- Stop spontaneous spending
Better decisions are made when your willpower is high, which is usually after sleep or a light meal. Plan to do your shopping first thing in the morning or after a light lunch when your willpower is the highest.
- Avoid lifestyle creep
Increasing your spending as your income increases can lead you down the path of ‘lifestyle creep’. Often, this happens subconsciously and, before you know it, you are living one month to the next.
Becoming wealthy is a process that takes time and discipline
And it starts with intentionally creating a plan you can follow. When you partner with a CERTIFIED FINANCIAL PLANNER®, you get objective advice to help you create a workable plan and keep you accountable (which increases the likelihood that you will achieve the goals you have chosen for yourself).