When you think about being financially successful, what do you picture? It might be driving a flashy car, wearing the latest fashions and having plenty of money to throw around. Although this is what you might see a lot of celebrities doing, would it surprise you to know that most millionaires and billionaires are actually frugal? After all, celebrities are also often in the news for having tax problems or even filing for bankruptcy. Financial success is less about what you show the world and more about what you do quietly and sensibly with your funds. These tips can help.
Know Your Needs
You may not need as much money as you think to truly be a financial success, but you may need to have more than a million dollars in assets. That can sound like a lot, but depending on where you live, it may not really be. In high-cost areas, a middle-class home can run half a million dollars. On top of that, you need retirement savings, and given that people today often live for decades after retirement, it would not be unreasonable to aim for $500,000 or more in retirement savings. One of the keys to financial success might be choosing the right part of the country to live in where the cost of living is relatively low.
If you have a low income or are looking at a lot of debt, financial success might seem like an impossible dream. However, plenty of wealthy people have built their fortune from modest beginnings, and you can too. If you have credit card debt, you are probably paying high interest rates as well. You might want to look into your options for taking out a personal loan at a much lower interest rate and paying off those cards. You can do this right now since you can often get matched with options in under a minute. You would then save a significant amount of money paying back the loan compared to the sky-high credit card interest. Whatever your challenges, make a financial plan and chip away at the debt or put a little away in savings from every paycheck as a start.
Once again, try not to be swayed by what you see in the media. While the image of risky investing might seem exciting, you’re better off over the long run choosing safe investments and putting some money toward them regularly. You don’t need to watch the stock market because you can be confident in the knowledge that it is the nature of investments to go up and down. Over the long haul, your fortune will grow. If you aren’t sure how to get started investing, you might want to consider working with a robo-advisor or a financial planner. Many people recommend a fee-only financial planner since they do not get commissions on the products they sell.
A mistake most people make is increasing their spending along with their net worth. It’s okay to splurge on things you truly value, but choose carefully just as you would if you needed to watch every penny. If you’ve always wanted a home theater, a designer purse or a round-the-world trip, you should indulge yourself if you’ve saved up the money. However, you will probably find that you are just as happy with the discount version of many other things.