Ever wondered what you are doing wrong with your money?
And what the millionaires are doing right?
Lifehack made the following list of ways that millionaires manage their money
Take these pointers on board and it may get you one step closer to the other side of the wealth divide.
1. The wealthy forget about instant gratification
Humans are wired for instant gratification. We love it.
But evolution made us that way long before our modern monetary system came about.
The desire for instant gratification doesn’t help us when we’re trying to become wealthy; it hurts us.
Stop making decisions that will make you happy now, but mess up your future wealth.
2. The wealthy understand the difference between wants and needs
“We need a bigger house,” you may say.
Don’t confuse wants with needs.
A common mistake poor people make is to disguise wants as needs as a way to to justify them.
Then you feel better about making a poor financial choice.
Wealthy people understand the difference between what you need and what you want.
Know the difference between a want and a need and don’t lie to yourself about it.
3. The wealthy invest automatically
There are ways to automate investment, such as payroll deduction to a retirement account, which is great, but the mentality of investing is more important.
Roy Sheppard, millionaire and finance expert says, “Save 15% of everything you ever earn for the rest of your life.”
4. The wealthy understand the cost of debt
“What are the monthly payments?” is what poor people ask when considering a car purchase.
That’s the wrong question.
A better questions is “what is this car really going to cost me?”
When you multiply the monthly payment by the number of months of the loan, you’ll see a shocking number that’s way more than the cost of the car and that’s before depreciation, taxes and other expenses.
5. The wealthy start with a goal and work backward
Decide what you want your life to be like, figure out how much that will cost and do exactly what you need to do to get there.
Josh Simon, 28-year-old real estate millionaire, says, “Figure out how you would like to live in retirement, come up with a number, then work on a strategy to realize that number. ”
6. The wealthy live within their means
The great thing about investing automatically (see number 3) is that it basically takes care of this one.
The important thing is that you spend way less than you make. To reiterate: spend way less than you make.
7. The wealthy make short-term sacrifices
The whole point of getting wealthy is to have more of what you want.
But sometimes you have to trade off what you want now for more of that or something better later.
8. The wealthy get help
Know what you are good at and leave the money management to a professional.
Millionaire entrepreneur, Vladimir Gendelman says, “I know how to build and grow businesses, but I leave my money management to a professional financial advisor.”
9. The wealthy do math
Wealthy people run the numbers when they make a decision.
For example, poor people believe that when a car begins to have problems, it’s better to get a newer car so they don’t have to spend as much for maintenance and repairs.
This is not necessarily true. You can spend thousands of dollars a year repairing a car and be financially way ahead when compared to buying a car.
10. The wealthy take advantage of opportunity
When an opportunity like that arises, take advantage of it. If you also do the math (number 9), you’ll see exactly how beneficial this is.
Managing money like the wealthy is learnable and it’s not hard.
Also published on Medium.