These rules can make a huge difference in helping you build wealth.
the main points
- Most wealthy people approach spending, debt, and other aspects of money management differently than others.
- Adopting the financial philosophies of the wealthy can help you grow your own wealth.
Getting rich and knowing that you can provide for yourself and your loved ones can give you peace of mind and security. But getting rich means more than just making a lot of money. If you want to make a fortune, think and act like the wealthy do when it comes to managing your money.
The faster you follow certain financial rules, the easier it will be to join the ranks of financial freelancers who don’t have to worry about how to cover costs. There are three main rules to keep in mind when making decisions about borrowing, spending, and saving.
1. Maximize the value of your money
Many wealthy people are famous for their economy—particularly in contrast to lottery winners, for example, who often end up a few years after they’ve won millions of dollars. Billionaire investor Warren Buffett, for example, has kept the same house since 1958, usually buying cars at discount prices.
Wealthy people realize that buying expensive luxury items can be a huge waste, as they fall in value and often cost a lot to maintain. This doesn’t mean that they don’t brag about the things that matter to them. They are only careful in financial decisions, ensuring they don’t make too many expensive commitments, live beyond their means, or spend money just to impress others.
By only flaunting the things that matter most while living economically in other ways, you can free up money to buy assets that build your wealth while still enjoying the money you make.
Contrary to what some people think, borrowing isn’t always a bad thing—and not necessarily something that the wealthy shy away from. Instead, most wealthy people use debt as a tool. They might borrow to buy a house at a low rate to leave more money available for investment, for example. Or they might take out loans to start a business, or use credit cards to earn rewards (by paying them off in full each month, they actually create very short-term, zero-interest debt).
If you’re hoping to get rich, don’t be afraid to take on debt when it makes sense – like using a personal loan to pay off high-interest credit card debt to lower your interest rate and become debt-free faster. However, you should avoid borrowing that does not improve your financial situation.
3. Think long term
Finally, if you want to get rich, make big financial decisions by considering the long-term impact of your choice, rather than focusing on short-term gratification.
Instead of wasting a luxury car, for example, consider how much you could make out of your fortune if you bought a cheap used car and invested the difference. While this is a short-term sacrifice—and one of many you might make—it is well worth it if your decisions help you become financially independent and free of financial worries.
If you focus on getting the most value for your money, treating debt as a tool, and looking at the big picture of your money, you should be on the right track to becoming wealthy.
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