Do you have big plans for your future? Whether it’s exploring the world, owning a house or just not worrying about money, these habits will help you get there.
You might be thinking that you don’t earn enough to ever become rich. But that’s just not that case: every millionaire started somewhere. And to grow that wealth, they had to nurture their money, invest wisely and stay smart.
I’m always amazed by the many different ways in which people become rich. But the real trick of becoming rich is staying rich. Because then you can live the lifestyle that you’ve always dreamed of.
7 Money Habits To Get Rich & Stay Rich
- Understand what’s going in and what’s going out
- Create a budget
- Pay off all your debt
- Build your emergency fund
- Live below your means
- Take on a side-hustle
- Grow your wealth
1. Understand what’s going in and what’s going out
The first money habit that will make you rich is to have a clear understanding of your finances. You should always know exactly what is coming into your bank account and what is going out. You can use this free Budget Planning Calculator to help you work out what you’re spending your money on and whether you’re living beyond your means.
With soaring debt levels across the world because of the pandemic, it’s important that you start by understanding where you’re going wrong.
Picking up an understanding of what is going in and what is going out will also help you to maintain your wealth in the future.
2. Create a budget
Once you understand where your money is going, you can create a budget. That might mean cutting back on some things that you enjoy, but as soon as you know how much you have to spend on bills and how much you have left over for yourself, you’ll be more financially stable.
3. Pay off all your debt
As someone who recently paid off all their credit card debt, this is a big one for me! You’ll be amazed how much more money you have if you haven’t got those pesky debt payments each month. Simply start with your smallest debt and work your way up from there.
You can use this free Loan Calculator to work out how long it would take for you to pay off your debt. Even if you increase your repayments a little each month, you can save yourself from having this debt hanging over you in future.
Based in the UK and struggling with debt? You can speak to the Money Advice Service.
4. Build your emergency fund
Before you start saving, you need to build your emergency fund. This is a pot of money (usually 3 months earnings) that you always keep at the same amount.
The emergency fund may take a while to build, but it means that you don’t have to worry about your washing machine breaking down, your car stopping and it can cushion worries about job loss too.
5. Live below your means
The best way to grow your wealth is to always live below your means. That means that you don’t always need to buy the best-of-the-best. Often, it’s the flashiest people who are in the most debt and, trust me, they’re not sleeping well at night!
And I’m not saying stop enjoying a take out coffee on the weekend. I’m talking about the big stuff. If you can’t afford that brand new car, don’t buy it. If you can’t afford that 5 bedroom house (when you actually need 4), don’t buy it!
6. Take on a side-hustle
If you’re struggling with debt and to live within your means, it might be time to take on a side hustle. Whether that’s being a virtual assistant, managing a blog or becoming a freelance writer, you can actually make money doing the things that you love.
But don’t expect this to be a ‘get rich quick’ option – often it takes time to build your audience or client base. But if you get it right, you could (like me) have all your debts paid in a couple of years.
7. Grow your wealth
Now you know how to manage your money, you’ve got your emergency fund and you’re out of debt, you can start growing your wealth. Millionaires don’t sit on cash. They use it to create more passive income streams.
Passive income is when you earn money without putting in much work yourself. Good examples are becoming a landlord or buying a business which essentially runs itself.
By developing smart money habits early, you can ensure you have a happy and prosperous future. Not only will they enable you to grow your wealth, but they’ll also mean that you can maintain a great lifestyle!