Have you ever wondered how the wealthy got that way? Why do they get to be rich while the majority of us commute to work every day and put in long hours? I mostly have these thoughts when my alarm goes off on Monday mornings, but I wanted to dive deeper into the specific actions we can take to follow in their footsteps.
I read an interesting article from Market Watch entitled “10 Things Rich People Know That You Don’t”. I was a little indignant at the title – are they really smarter than I am or are they just taking intentional steps towards financial freedom every day? Let’s look at five of the most important actions the author recommends we take and if they’ll work for you:
- Start Early: This can be a very important step relating to starting to save for retirement. The earlier the better! Remember that more time allows your money to compound and grow even faster.
- Automate: Having your paycheck automatically contribute to your retirement and your bank automatically transfer a predetermined amount to your savings accounts takes the guesswork out of saving and makes it feel like you’re not “missing out” on any money when you do it manually.
- Maximize Contributions: If you’re leaving any employer match on the table it’s basically like taking a pay cut and not doing anything about it. Make sure you contribute enough to receive the maximum contribution from your employer.
- Live Like You’re Poor: Increasing your expenses can be easy to do when you get a raise – you earned it after all! When you get annual raises or promotions try to continue living within your means without increasing expenses. Of course, you can reward yourself for that promotion or bonus pay, just don’t make it a long-term habit.
- Be Goal-Oriented: Setting financial goals and a budget can be very powerful – if you’re motivated by them. Set a target balance you would like to see in your savings account six months from now and work to achieve it. You will feel great when you meet it or learn what adjustments to make when you fall short.
These five steps really can make us just as smart and successful as those wealthy people. Will these five steps work for you? What else can you do to achieve your version of financial freedom?