I think that on some level, most, if not all people in modern day North America want to live like millionaires. But getting there is not necessarily the easiest thing to do. The road to prosperity and financial freedom is paved with responsible money choices, planning, and a heck of a lot of goal-setting.
To help enrich your life and build your net worth, here are five millionaire money habits that you should starting practicing right now.
1. Driving a Used Car
Did you know that as soon as you drive a new car off the lot that car’s value depreciates immediately? Unless you're able to purchase the car for cash, you are taking on a new debt, thanks to that lease or finance agreement. While you might not have enough cash on hand to purchase a used car that meets your expectations, your car payments can be much lower when you buy a pre-owned car. Reputable dealerships take great care refurbishing the vehicles they resell, and they offer warranties and other perks like gas cards and free oil changes.
Fun Fact: According to the book, The Millionaire Next Door, the average millionaire drives a car that is two years old or older.
2. Creating Multiple Income Streams
One of the best ways to increase your income is to ensure that you have multiple income streams that are working for you. This often means taking on one — or multiple — side hustles. Have you ever heard the phrase, work smarter, not harder? This is where finding a side hustle that you really enjoy or that is a source of passive income can be incredibly helpful.
Some examples of side hustles that can help you to create multiple income streams include:
- Bartending a couple nights a week
- Freelance writing or editing
- House sitting
- Pet sitting
- Writing e-books
- Driving for Uber or Lyft
By creating multiple income streams, you will not only be making extra cash, but you will also be protecting yourself if something should happen to another one of your income streams. For example, if your main employer downsizes the workforce, someone in your family gets seriously sick, or if your car needs serious repairs, having additional income streams coming in can help to cover and offset costs until things are sorted out.
3. Making Your Savings Work for You
You work hard for your money, so it’s only right that to have you money work hard for you. At the very least, your excess cash should be in a high-interest savings account. If you're just sitting your cash in a chequing account, it might be time to speak with your bank. Remember, savings are meant to build up over time, and while it is crucial that you make regular contributions, it is also critical that your savings are still growing after the contribution has been made.
4. Living Within Your Means
This one might seem obvious to some people — but to many, the idea of not relying on credit cards to support a fun lifestyle is a foreign concept. In order to build your net worth, one of the most important things that you can do is to reduce your liabilities as much as possible — ideally to none. This means not taking on crazy amounts of debt in order to portray a certain lifestyle, wear particular clothes, eat in expensive restaurants, or go to the hottest bars every week. Remember, you are not a millionaire (yet) and often those who are had to work in order to get there — and they had to understand that image is less important than pursuing a long-term goal.
5. Setting Realistic Savings Goals
One part of putting money away is knowing why you are putting it away. So, what’s driving your savings? A down-payment on a house? A car? A vacation? A wedding or honeymoon? Retirement? A home renovation? Since taking on a ton of debt works against building your net worth (and is a poor financial decision no matter how you slice it), it’s important to be putting money away and setting realistic and inspiring savings goals for both the long and short term.
Unless you win the lottery, odds are that becoming a millionaire is not going to happen over night. But by implementing these five millionaire money habits, you will be well on your way to building your net worth to millionaire status. Making the choice to not buy a brand new car and ensuring that you are generating multiple streams of income, that your savings work for you, that you’re living within your means, and that you’ve set realistic savings goals are key steps to being able to take control of your money and get to where you want to be.