Money management is a process. Accumulating wealth is a process. It's all one big process this thing we call financial success.
I spent 5 years to ask 233 milionaires 144 questions about managing money and discovered that the rich have certain specific money habits we all should adopt immediately.
Here are the 6 best advice I have learned about managing money.
1. Track spending.
Know where your money is going. Look at your bank and credit-card statements every month. You'll uncover certain expenses for things you're not even using.
Often these automated charges occur after you enroll in some "free" promotion, where the free part expires after a promotional period.
2. Use coupons.
Even the wealthy in my study engaged in this money-savings habit. Thirty percent of the rich used coupons to buy food.
Why pay more than you have to on groceries or other expenses?
3. Bargain shop.
Far too many make spontaneous purchases, paying more than they otherwise would.
That's a Poverty Habit. Shopping for bargains and taking advantage of sales events is a Rich Habit.
4. Establish savings goals.
The rich make a habit of allocating their savings into different buckets, or categories. In order to do this, you need to establish an overall amount of savings you're willing to set aside each month.
For example, if you decide to set aside 10% of your monthly income, you might allocate 5% into your retirement bucket, 2% into your specific expense bucket, 1.5% into your unexpected expense bucket, and 1.5% into your cyclical expense bucket.
5. Automate the savings process.
This is where the rubber meets the road: implementation. Automatically direct each of the above savings amounts into each bucket's separate account via automatic withdrawal from your net pay or from your bank account.
Automating your savings forces you to live below your means because you save first and spend what's left.
6. Periodically audit expenses.
Many expenses can change over time — like insurance costs. They can go up or down over time. Make sure you are paying the lowest insurance rates for homeowners, auto, and life insurance.
Check your health insurance. You could be paying for dependents who left the nest, are on their own, and have coverage through their employer.
When you develop good money habits, you feel like you are finally in control of your life. It's empowering and it will increase your wealth over time. Keep in mind that it took most of the wealthy in my study 32 years to become rich. Accumulating wealth takes time and discipline.
If you have another idea for savings or experiences of investing tips, connect to Money Lover to help a wiser expense manage world!