10 Important Financial Lessons From Millionaires
The best financial lessons in life are taught by those who have walked the journey and succeeded. That is why we should always learn the successful financial lessons from those who have actually made it.
a rich man on a private jet making a call
This consists of lessons regularly highlighted by the millionaires as key to achieving their success. In the race to becoming financially successful, there are various things that you need to know and implement.
Some of these actions represent short term sacrifices for the long-term gain. Becoming financially successful is a journey that might take years to achieve however, it is very much possible.
Let us look at some of the financial lessons we can learn from millionaires.
1. Use your time well
Time is one of the major resources allocated equally to everyone. We all have 24 hours in a day, but it is all up to us on how we utilize these hours.
The ability to harness and spare more time means that you have a bigger room to do more.
A person who wakes up earlier by one hour every day will have at least 365 extra hours in a year, this is approximately an extra 15 full days. If you do this for 10 years, you will have an extra 150 days.
This is why it is very critical to utilize your time well. Millionaires understand this very well as you will always find them waking up very early and sleeping late.
This ensures they are doing more than anyone else by sacrificing in some areas like sleep and leisure.
In the long term, the extra hours create more wealth and income.
2. Buying second hand Items
The second financial lesson you might want to learn is that sometimes it is cheaper and economical to acquire second hand items than buy new ones.
This results to massive savings that could be redirected to investments. Take an example of a new car.
It has been found that a new car loses 50% of its value within the first three years. Three-year-old cars, if well maintained, are still very functional.
So instead of buying a new car, why not look for a well maintained three year old car at half the price.
man being given keys to a second hand car
Millionaires understand this fact very well and utilize it to the fullest.
Savings realized from these types of purchases if well utilized go a long way in creating more inflows. Learn to buy second hand and you will be a step closer to realizing financial success.
3. Buying in bulk
In this article I previously wrote, I have emphasized on the importance of buying in bulk. Bulk items are heavily discounted and reduce other related costs with frequent purchases.
Most of the bulk sellers offer discounts making it cheaper than buying in small items.
Financially, this results to lower spending hence increasing the amount of savings. Millionaires often make their purchases in bulk so as to enjoy the benefit of discounts and offers.
Buying in bulk also ensures that one is making purchases fewer times. Case scenario is the monthly shopping.
Compare this to the weekly shopping. The weekly shopper will have to visit the seller at least four times a month while the monthly shopper will only do it once.
This means that associated costs like transport, parking and time will be lower for the monthly shopper.
In the long run, the monthly shopper has more funds left from savings than the weekly shopper. This is the reason why most millionaires only shop once.
Over time, they have realized the benefits of bulk buying and use it to their advantage.
4. Save automatically
Savings are key in achieving financial growth and freedom and are one of the major financial lessons we can learn from millionaires. Through savings, once can leverage them for a higher credit access or investment.
They are also necessary in case of emergencies. These may include job loss, family needs or health issues. One of the key secrets and lessons from the millionaires is that savings should be automatic.
Money allocated for savings should be deducted automatically at the source before you can access it.
This minimizes the chances of getting tempted to reallocate the money. Manual saving is also tempting and can result to minimized saving or no savings at all.
Saving automatically instills discipline and eventually results to a sizeable account size. The importance of savings is immense.
Incase of an emerging occurrence, like job loss, they give some protection until a time when you get another job or source of income.
This allows peace of mind and ensure you don’t drown in debts that are in the long run very expensive.
5. Living below your means
On of the biggest challenges facing people today is living beyond your means.
It results to a lot of financial ruin as the income cannot sustain the expenditure leaving most of the people to indulge in endless debt for consumption.
Nowadays, it is good to note that living within your means is not enough. You should also live below your means.
This is one of the key financial lessons most millionaires understand and utilize. Living below your means ensures that enough is left to save and invest.
Most of the millionaires are frugal.
They are slow to spend on luxuries and things they don’t necessarily need. Always ensure you tune your life as per your income levels to avoid overspending.
This not only minimizes the chances of getting into expensive debt but also ensures there is extra cashflow that can be directed towards income generating activities.
6. Use the public transport
Transportation is a major cost element to most of people.
Take for example the cost associated with buying and maintaining a car. This includes fuel, insurance and repair.
When you do the math, it is cheaper to use public transport than to use a hired car or buy a car.
This might not be an easy thing to do especially for those used to driving themselves but it is a necessity if you need to achieve financial growth.
Most millionaires regularly use public transportation as a means to cut on costs.
Not that they can’t afford owning a car, but because they understand the benefits.
As discussed earlier, savings realized from this action are then redirected to other income generating activities.
7. Find your passion
The only way to enjoy life and grow wealthy is understanding and persuing your passion.
This has been mentioned over and over by most millionaires. Persuing your passions ensures you can excel and grow easily because you are doing something that you like.
In finance, money is a reward of hard work and smart decisions. Therefore, with passion, you do not need to focus on the money but quality output and the money follows.
a man working late into the night. Following his passion
Passion as well allows you to be better than the rest resulting to growing their value tremendously. Passion needs a lot of hard work and sacrifice before it can pay off.
So, if you are persuing your passion, you will have less resistance to working hard and smart.
8. Grow your passive income streams
It is necessary for every person desiring financial freedom to have passive income. This is the income that needs minimal input to obtain.
A good example is real estate. Once you have built the house, the tenant will be paying you every month without needing much effort from you.
This form of income is derived from assets either tangible or intangible. It brings comfort and surety once the investments are set up.
Another form of passive income is investing in stocks whereby you receive dividends regularly. This ensures that other people are working for you.
Online businesses are also a good way of building a passive income stream. Read more on this here.
Multiple passive income streams is what most millionaires have achieved. Passive income streams result to quality without the worries of missing a salary.
9. Work with the successful people
There is a famous quote that if you are in a group with five successful people, then there is a chance that you will be the sixth successful person.
Working with the successful people allows you to learn from them both on how they perceive and actualize things.
The reverse is also true. If you are always in company of people who are drunks and slobs, then it is highly likely that you will be quite like them.
Most millionaires surround themselves with people who have successfully walked the journey and can continuously challenge them.
This ensures that they always stay motivated and are running something new by the day.
So it is advisable that you evaluate your company and friends. If you want to become a millionaire, then ensure you surround yourself with successful people.
10. Save for retirement
Retirement is an inevitable occurrence in someone’s life. This means that your working days will one day come to an end either voluntarily or involuntarily.
For this reason, it is advisable to start saving earlier for that moment. There are many retirement saving schemes that are highly subsidized and some attract minimal tax.
You should take advantage of these opportunities earlier in life when you are still working and young.
This ensures that by the time retirement comes, there is enough to take you through the retirement age and your family as well.
It is not uncommon to find people getting to their retirement age without any savings. Millionaires understand this concept and put as much as they can in their retirement accounts.
Regular discussions with your pension funds holder are also necessary in ensuring that you are on top of how the funds are being managed and you can see value from them.
These financial lessons are to a successful financial journey. Most millionaires use them regularly and that is why they have succeeded