Some of the most financially successful people in the world are not found on the Forbes rich-list. In fact, they rarely flaunt their wealth in an obvious way. But if you take a good look at their daily routine, you will catch a glimpse of the financial habits that made them successful.
Below are six spending habits common with successful people that you can adopt as you work your way towards your own financial freedom.
- They believe in delayed gratification
Financially successful people believe in the principle of saving or investing first, and spending later. This is known as delayed gratification. If you can adopt this strategy in your finances, it will not only give you peace of mind, but you will have stockpiled an impressive nest egg to fall back on when you retire. A good rule of thumb is to practice the 80/20 rule, where you invest or save at least 20 per cent of your income, and use the remaining 80 per cent for your expenditure.
- They believe in budgeting
Even after creating an 80/20 rule system, successful people don’t just spend on a whim, they believe in budgeting and spending only on important things. Of course, it is okay to splurge once in a while, but it should not be a habit.
Budgeting helps you anticipate your financial needs and places a cap on your expenditure; this way; you will not overspend, or be tempted to touch your retirement savings. A typical budget should account for living expenses, utilities, food, and clothing. After these basic needs have been satisfied before you can consider other expenses.
- They live within their means
Financially successful people know that to create and maintain wealth, they must live within their means. This doesn’t mean you should not enjoy life to the fullest, but your spending should be done with conscious thought to avoiding debt.
For this reason, most successful people don’t use credit cards. Instead, they prefer debit cards that allow them to control their expenditure and monitor their outgoings.
- They keep track of their expenses
This may come as a surprise to you, but successful people are known for keeping a close eye on where their money is going. They know how hard they worked to get to where they are, and so they pay close attention to the shillings and pounds.
If you are working towards financial freedom, cultivate the habit of tracking your expenses so that you can know when you are spending on things that don’t matter. Keeping track of your expenses will also help you determine how you are doing financially and make budgets changes where needed
Monitoring expenditure is not difficult; there are dozens of apps for tracking expenses on the internet. Look for one that suits your purpose and learn how to use it.
- They avoid debt
Falling into the debt trap is one of the easiest things in the world, what with mortgages, access to loans and credit cards. Once you fall into the debt trap, it can be difficult to get out of it.
Financially successful people stay away from easy credit as much as they can. They know that amassing wealth is difficult when you are struggling to meet your debt obligations.
Of course, as you work towards financial freedom, you may need quick cash for projects or to meet a need; however, be sure to seek financial advice from an expert before taking out a loan, so that you don’t get into a situation that will jeopardize your financial future.