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Those who are good with money tend to value the quality of things more than the quantity, and avoid making purchases that could interfere with their long-term financial goals. What other rash steps are not in the rules of these people?
Most truly rich people cannot be denied financial literacy — in fact, it is thanks to it that they retain and increase their fortune. At the same time, many of them are quite frugal and lead a much more modest lifestyle than they can afford. After all, they are looking for ways to increase their capital, and not squander it. So what mistakes are they avoiding?
1. They don’t buy things on credit.
Anyone who knows how to manage money will never pay interest on the purchase of a thing — in the end, not to overpay more than its real value and not get into credit card debt. Such behavior is irrational, especially if the thing was not vital and the loan could have been avoided.
2. They don’t buy houses they can’t afford.
Spending all your savings on the best house or apartment you can afford is something financially literate people never do. They approach their money more rationally: they invest part of it in good, but not luxurious real estate, and invest part of it. And, of course, do not forget to leave a sufficient amount for living and for unforeseen expenses. Often, this calculation allows them to retire early and live comfortably.
3. They don’t buy new cars.
According to personal financial expert Lynette Halfani-Cox, those who have several hundred thousand or even a million dollars in their account usually do not chase after the latest in the auto industry. They quite calmly buy used cars that can be five or even ten years old. True, it is important to take into account the quality of American roads and, accordingly, the condition of used cars.
In any case, in the first month after purchase, any car loses 10% in value, so people who know how to handle money choose to buy used cars and drive them for as long as possible.
4. They don’t buy luxury designer clothes.
The desire to emphasize one’s own wealth by acquiring expensive things has long been a mauvais ton. For example, in the United States since 2007, the wealthiest people, who make up about 1% of the country’s population, began to make fewer material purchases. Instead, they prefer to invest in education, self-care, and staying fit.
5. They prefer quality over quantity.
We figured out expensive brands, but what about cheap things? Financially literate people also do not buy them, preferring “fast fashion” and the race for new products that will last a long time. That is, they choose the so-called “slow fashion”: the brands that support this movement care about the environment and the working conditions of those who sew these clothes.
5. They don’t spend too much on weddings and other special occasions.
The concept of «too» here, of course, is very relative: in any case, a wedding is not a cheap pleasure. However, those who are “friends” with money try to avoid unreasonably large expenses, whatever the reason: it is much more reasonable to invest this money in their future and the future of their family.
This model of behavior is characteristic not only of “obscenely rich” people, but also of those who know how to competently approach the issue of finance. This means that each of us can master it and increase our fortune.