Financial Fitness: Taking Control of Your Finances
By: C. Michael Unterreiner, ChFC – Financial Legacy Associates
The popular book “The Millionaire Next Door” revealed many of the characteristics shared by wealthy Americans. According to the authors, the typical millionaire doesn’t drive an expensive car or even appear wealthy. Instead, he or she might blend into a typical middle-class neighborhood.
In my 25 years helping people invest, I’ve discovered that those who have achieved financial independence have a number of traits and habits in common. Give them a try! You might find yourself a step closer to being out of debt and on your way to financial security.
They Pay Themselves First
Successful people save through salary deductions or automatic drafts from their checking account. Building wealth becomes the first “bill” they pay, rather than something they do with extra money.
They Make Good “Little” Decisions
Small choices have a big impact when repeated. Quitting smoking, getting coffee at home instead of at an expensive coffee bar, packing a lunch and minimizing alcohol use aren’t just healthy choices—they can save you money. As little as $5 spent each day on those luxuries totals close to $2,000 in a year. An additional $2,000 invested each year certainly helps reach financial goals.
They Don’t Compare Themselves to Others
An “attitude of gratitude” is rewarding in itself. Financially successful people don’t buy possessions just to keep up with (or be ahead of) someone else.
They Live Below Their Means
People on the path towards financial independence know it’s vital to avoid “lifestyle creep.” Each year, with a raise or a larger bonus, people spend more, and then grow accustomed to that higher lifestyle. The
standard of living becomes more difficult to replace, since the amount
needed to reach financial independence depends on expenses. The higher your lifestyle, the more you need to save, but the less you are actually able to. The only way out of this vicious cycle is to consistently
spend less than you earn.
The Bottom Line
Wealth isn’t created by those who act like they make a lot of money; it is created by everyday decisions to spend less than you make and wisely invest the difference.
Financial Fitness Column provided by: Michael Unterreiner – Financial Legacy Associates
About: C. Michael Unterreiner, ChFC, founded Financial Legacy Associates to create an environment where financial professionals could serve their clients better by sharing their experiences and ideas. Since 1992, he has served his clients by recommending investment and insurance solutions to their financial planning, retirement planning, and college funding challenges. Connect with him on Facebook and Linked In for more Financial Fitness related articles and posts.
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