Money habits that may help you become wealthier
Why do some households tread water financially while others make progress?
Does it come down to habits? Sometimes the difference starts there. A household that prioritizes paying itself first may end up in much better financial shape in the long run than other households.
Some families see themselves as savers, others as spenders
The spenders may enjoy affluence now, but they also may be setting themselves up for financial struggles down the road. The savers better position themselves for financial emergencies and the creation of wealth.
Being a saver does not mean being a miser, however
It simply means dedicating a percentage of household income to future goals and needs rather than current wants.
Budgeting is a great habit
What percentage of U.S. households maintain a budget? In 2013, Gallup posed that question to Americans and found that the answer was 32%.
So often, budgeting begins in response to a financial crisis
Ideally, budgeting is proactive, not reactive. Instead of being about damage control, it can be about monthly progress.
Keeping consumer debt low is a good habit
A household that uses credit cards “like cash” may find itself living “on margin” – that is, living on the edge of financial instability. When people habitually use other people’s money to buy things, they run into three problems. One, they start carrying a great deal of revolving consumer debt, which may take years to eliminate. Two, they set themselves up to live paycheck to paycheck. Three, they hurt their potential to build equity.
Investing for retirement is a good habit
Speaking of equity, automatically contributing to employer-sponsored retirement accounts, IRAs, and other options that allow you a chance to grow your savings through equity investing are great habits to develop.
Long-term planning is a good habit
Many people invest with the goal of making money, but they never define what the money they make will be used to accomplish. Wise households consult with financial professionals to set long-range objectives – they want to accumulate X amount of dollars for retirement, for eldercare, for college educations. The very presence of such long-term goals reinforces their long-term commitment to saving and investing.