Rags to riches is a common story, but whenever we catch wind of people going the opposite direction, it always comes as a surprise. Generally, people don’t expect the rich to lose control of their finances because they’re assumed to be able to handle money better than anyone in the community. Real, smart, self-made millionaires are wise when it comes to money matters and it’s in staying rich that they truly prove their wit when it comes to finances. Find out how high net worth individuals manage to stay that way throughout the years by learning 5 things only the rich do with their money.
- Treat It Like an Asset – For many of us, money is seen as a reward. After months of working hard for our salaries, whatever small savings we might have accumulated are tucked away in the depths of our bank accounts, not to be touched unless absolutely necessary. The rich see their money in a completely different light. To them, every cent is an asset that can be used to earn even more. The rich aren’t afraid to spend their money on projects and investments that will generate more in the future because they believe that to make money, you need to spend money.
- Use It for Buy-and-Hold – Buy-and-hold is a strategy used by investors that entails buying an asset, holding on to it for a few years, and then selling it when the demand or market value is high. This is something that can take some practice and familiarity with market trends. But if and when you start to understand how it’s done, you can earn close to double your original cash out in a few years’ time.
- Use It for Advanced Amortization Payments – Making ends meet isn’t uncommon for a lot of people. Often, we live paycheck to paycheck, making our monthly salary cover whatever expenses we might have on top of loans we took out in the past. This faulty strategy can bury you in debt, especially if you need to pay for something that’s outside of your usual monthly expense. The wealthy keep a common practice of paying for any amortizations in advance to give them legroom in the next months to use their money for other things, without worrying about pending payments.
- Funnel It Into Different Bank Accounts – More people deposit their funds into just one account because it’s easier to manage and keep tabs on. Unfortunately, it’s also much easier to spend when all of your money comes from the same source. The rich often take their time with their banking processes, choosing only the best premier banking services, and designating calculated amounts to different accounts across numerous financial institutions for added safety, minimal spending, and increased interest.
- Spend It Later – For as many things as the rich may have, they don’t spend as loosely as the rest of us. They believe in the value of waiting, and firmly keep their money in place until is ripe for use. This way, they have more to spend when they do, and thus can afford much more expensive things than others.
How are you spending your money? If you always end up with your bank accounts close to empty at the end of the month, you should consider changing your money management techniques. Put these strategies into action when you receive your next salary to open doors to greater savings and successful financial management.