Some may argue that it’s easy to get rich, but it’s a lot harder staying rich. By choosing smart financial habits, you’re half way there. Whereas people’s source of wealth may differ, there definitely are some similarities to how financially fit people generally handle their money. Adopting these great financial habits are the difference between spending your life living from paycheque to paycheque, or securing long-term wealth and a fantastic retirement. So, what’s the secret to securing this long-term wealth and being financially fit? Keep reading to discover some habits which all rich people have in common.
1. Rich people always invest
That’s right! People with money don’t just spend it. They invest their hard-earned money in assets that make even more money. Thus, financially fit people are always eventually able to afford anything they want thanks to their long-term mantra, ‘invest wisely’. Whether it’s stocks, gold, art, antiques or real estate, the rule is to find assets that will increase in value and provide you with great returns. Investing in real estate is one of the safest investments you can make, with an average market growth around 6% per annum.
2. Financially fit people avoid paying high interest
Shortening the period of your geared investment or decreasing your loan amount by putting more money down will save you money in the long run. Wealthy people often avoid biting off more than they can chew, which means they invest without high interest loans. By not having to pay a substantial percentage of your profit to financial institutions, you keep your earned profit and ensure a positive cash flow. The money you save from avoiding interest can be used for reinvesting.
3. Wealthy people like to fight inflation
With inflation, the value of your money decreases over time. This impacts how much your money is worth and what you can do with it. Investing in assets that increase in demand and price over time helps avoid losing the value of your capital. Investing in real estate is a great way to fight inflation. The current inflation rate is around 2% whereas property prices in Europe have increased by 4.5%. Beating inflation is key to staying financially fit.
4. They keep away from credit cards with interest
If interest is involved, it is avoided. Credit cards come in handy in emergencies and for gaining rewards or making travel bookings. However, the truth of the matter is that credit cards usually symbolise money that you don’t have. If using a credit card means paying interest, then a financially fit person might choose to avoid making a purchase if it involves paying more than necessary and leaving them out of pocket.
5. Financially fit people plan ahead especially for their retirement
If you have a goal in mind, it’s important to make the right investments now in order to achieve your financial goals in the coming years. If you’re looking to buy a property overseas or travel around the world when you’re done with your career, you better start budgeting and planning ahead. Reinvest24 can help you save money and earn passive income through capital growth and monthly rental yield with a total combined return of 14.6% per year.
6. Rich people never pay full price
Why pay more? Wealthy people are known to be frugal. They simply know when and where to shop. Savvy investors also never pay full price or accept the asking price. Financially fit people will always try to find, choose and negotiate a good bargain. Saving money when buying something becomes a golden rule. It applies to all purchases, big or small. Shopping apps like SaleMap help you find the best shopping deals and save BIG when buying retail products.
7. They also learn from their mistakes
If money is lost, financially fit people take it very seriously. They will never repeat the same mistake twice. Whether it’s making an investment which was too good to be true, lending money to a friend, or overpaying for an asset; it won’t happen again. In every investment, it’s important to research the market and make your calculations. When it comes to real estate, our team does all the groundwork for you, searching for the best investment properties with high yield.
8. Smart investors cut back on liabilities
If there’s something in your life that’s draining too much money out of your pocket, get rid of it! It could be anything from excess interest on a hefty loan to short or long-term debts. The sooner you cut that money-sucking leech out of your wallet, the sooner you’ll be able to save instead of spend. Hence, it’s important to identify your expenses and reduce the unnecessary ones as much as possible in order to keep a healthy cash flow.
9. Rich people diversify their investment portfolios
One source of income just doesn’t do it anymore. As business mogul Warren Buffet once said, ‘Never depend on single income, make investment to create a second source’. That’s exactly what financially fit and wealthy people have, multiple sources of income. If you’ve already invested in real estate, find another property to invest in. By diversifying your investments and having multiple sources of income you will minimise your risks of ending up with a negative cash flow. In other words, don’t put all your eggs in one basket.
In conclusion, being financially fit and building your wealth takes time and discipline. It all depends on your spending and saving habits. Acquiring assets which earn you money with capital growth and making long-term investments are definitely habits which all rich people have in common. You’ll never get anywhere new walking down the same old road, so if you’re looking to become financially fit, start incorporating these rewarding habits into your life. Here’s one habit you can start right now — invest in real estate.