Everyone has different financial obligations and is working toward their own savings goals and secure financial future. These obligations and goals could depend on how old they are, whether they have children, types, and amounts of debt they have, and other factors.
However, if you walked into a room full of wealthy men and women, they likely possess some similar characteristics that have helped get them where they are. Here are five examples of traits you may find wealthy people have in common, and tips for achieving wealth yourself.
They pay off consumer debt
Credit card debt is the most common type of consumer debt, and mortgage debt also is a significant contributor. Other types of consumer debt include auto loans, student loans, and personal loans.
Being debt-free can make a big difference in your financial and retirement plans because not only will you have to spend less each month making the payments, but also you’ll avoid having to pay additional costs from monthly interest.
One of the most common characteristics of wealthy people is that they’ve paid off their consumer debts, prioritizing mortgages, credit card debt, and auto loans.
They save for retirement
When saving for retirement, many experts recommend an annual retirement savings goal of 10% to 15% of your pre-tax income. That means contributing at least 10% to your 401(k) or another retirement fund every pay period. By starting to contribute and save early, you’re increasing the likelihood that you’ll be financially set for retirement.
To estimate how much you’ll need to save for retirement, multiply the annual income you’ll want to maintain by 25, which is the typical number of years people are retired.
By starting to save early, you’ll have greater wealth and more financial flexibility later.
They strategically invest
Not all wealthy people make high-risk investments. Most do have short-term investments, but also are in it for the long-term. Whether they invest in a stock, real estate, or something else, they stick with it as long as it makes sense.
You don’t need a significant amount of money to start investing. What’s more important is developing an investment strategy that works for you, whether it’s low-risk and long-term, or high-risk, high-reward. There also are many types of investments to consider, such as stocks, bonds, mutual funds, annuities, and more. You may want to consider talking with a financial advisor to learn about which options are best for you.
They are frugal and save
One key to being wealthy is to live modestly and below your means (unless you have Bezos money). Even if you can spend extravagantly, many wealthy people only buy things they need and choose to save or invest most of their funds. Doing this also will help your money grow faster and go further.
One way to ensure you save more than you spend is to create and stick to a budget. Calculate all of your income for the month, and subtract all necessary expenses such as bills, mortgages, food, and gas. Of course, you can set a little aside for entertainment or fun spending—gotta make sure you can watch Ted Lasso. Otherwise, the rest should go into savings.
They are patient and planners
Wealth doesn’t happen overnight. You’ll find that many wealthy people create a plan for saving and execute it over time. They know and track their incoming funds and make a plan for all outgoing expenses. They also make a plan for saving and investing, and are patient when it comes to growing those savings. This helps them increase and continue increasing their wealth long-term.
Caitlyn is a freelance writer from the Cincinnati area with clients ranging from digital marketing agencies, insurance/finance companies, and healthcare organizations to travel and technology blogs. She loves reading, traveling, and camping—and hanging with her dogs Coco and Hamilton.