Katie Winterburn, MoneyWise•August 13, 2019
Do you dream of becoming a millionaire? Getting there isn’t the easiest thing to do. The road to prosperity and financial freedom is paved with responsible money choices, planning and a heck of a lot of goal-setting.
You can learn from people who have already joined the seven-figure club. To help enrich your life and build your net worth, here are five millionaire money habits you should starting practicing right now.
1. DRIVING A USED CAR
As soon as you drive a new car off the lot, the vehicle starts depreciating. Unless you were able to purchase the car for cash, you are already upside-down on a debt, thanks to that lease or finance agreement.
While you might not have enough cash on hand to purchase a used car that meets your expectations, your car payments can be much lower when you buy a pre-owned car. Reputable dealerships take great care refurbishing the vehicles they resell, and they offer warranties and other perks like gas cards and free oil changes.
According to the book The Millionaire Next Door by Thomas Stanley, the average millionaire drives a car that’s two years old or older.
2. CREATING MULTIPLE INCOME STREAMS
One of the best ways to increase your income is to have multiple income streams that are working for you. This often means taking on one — or multiple — side hustles.
You want to work smarter, not harder. So, find a side hustle you really enjoy. Even better is to find a source of passive income, so you’re making money while you sleep.
Some examples of side hustles that can help you create multiple income streams include:
- Bartending a couple nights a week.
- Freelance writing or editing.
- House sitting.
- Pet sitting.
- Writing e-books.
- Driving for a ride-hailing service, such as Uber or Lyft.
By creating multiple income streams, you will not only be making extra cash, but you’ll also be protecting yourself if something should happen to another one of your income sources.
For example, if your main employer downsizes the workforce someone in your family gets seriously sick, or if your car needs serious repairs, having additional income streams coming in can help cover and offset costs until things are sorted out.
3. MAKING YOUR SAVINGS WORK FOR YOU
You work hard for your money, so it’s only right that to have you money work hard for you.
At the very least, your excess cash should be in a high-interest savings account.
If you’re just letting your money sit in checking account, it might be time to speak with your bank. Remember, savings are meant to build up over time, and while it is crucial that you make regular contributions, it is also critical that your savings grow — through the miracle of compound interest.
4. LIVING WITHIN YOUR MEANS
This one might seem obvious. But to many people, the idea of not relying on credit cards to support a fun lifestyle is a foreign concept.
In order to build your net worth, one of the most important things you can do is reduce your liabilities as much as possible — ideally to none.
This means not taking on crazy amounts of debt just so you can wear the trendiest clothes, eat in expensive restaurants or go to the hottest bars every week.
Remember, you are not a millionaire (yet), and it takes hard work to get there. Achieving millionaire status means understanding that image is less important than pursuing a long-term goal.
5. SETTING REALISTIC SAVINGS GOALS
One part of putting money away is knowing why you are putting it away. So, what’s driving your savings? A down payment on a house? A new car? A vacation? A wedding or honeymoon? Retirement? A home renovation?
Since taking on a ton of debt works against building your net worth (and is a poor financial decision any way you see it), it’s important to be putting money away and setting realistic and inspiring savings goals for both the long and short term.
Unless you win the lottery, odds are that becoming a millionaire is not going to happen overnight. But by implementing millionaire money habits, you might soon be on your way to building your net worth to that seven-figure level.