- Self-made millionaires check their budget regularly and keep their living expenses below their income.
- They are more interested in preserving wealth through low-risk investments than growing it.
- Millionaires move quickly from money mistakes, learning important lessons to their next venture.
- Read more stories from Personal Finance Insider.
Millionaires don’t happen overnight.
Some self-made millionaires started making costly mistakes that negatively impacted their financial health just like anyone else. And they can transfer larger sums from one account to another, but many of us can probably learn a thing or two from their ability to maintain high net worth.
Here are five financial habits that help millionaires stay rich, according to financial planners and advisors who know them firsthand.
1. Many millionaires avoid lifestyle creep
Kenny Senour, CFP at Millennial Wealth Management says most wealthy people eschew “lifestyle,” the slow but steady slide of spending more money on luxury items that then become essential to your lifestyle as your income increases.
“Self-made millionaires usually buy used cars with cash and keep them for as long as possible,” says Senour. Before splurging on luxury cars, Senour says wealthy people prioritize good health insurance and building an emergency savings fund. An emergency savings fund is an easily accessible reserve of cash, usually kept in a high-yield savings account, to cover expenses for 3-6 months in case you have an emergency like losing your job. .
2. They prioritize paying off their debts
Childless Heritage Specialist Jay Zigmont, CFP, Ph.D. says millionaires make it a priority to be freed from high-interest debt as soon as they can. “Debt is not part of their life,” he says. “They may have credit cards, but they don’t carry a balance.”
Zigmont says millionaires avoid credit card debt altogether. “Rather than paying 16% or more interest to a bank, they are investing in themselves and their future,” Zigmont says. “Some millionaires use credit cards, but they rarely keep a balance to avoid paying interest.”
3. They regularly check their money
Zigmont also says millionaires live within their budget, with a clear understanding of what they can and cannot spend. Regularly checking their money helps them prioritize the most important spending categories and save money by avoiding buying things they don’t really need.
Financial Counselor and Certified Divorce Financial Analyst Laurie Itkin at Coastal capital also says that millionaires check their net worth every month. They assess which revenue streams are working well and do more. “If their net worth is down from the previous month, they understand exactly why,” Itkin says. Millionaires typically stay solution-focused by analyzing their own income and spending trends.
4. They are more interested in preserving wealth than growing wealth
Dr. Guy Baker, CFP, Ph.D., Founder of Alliance of heritage teamse, says that millionaires are more interested in preserving capital than in making it grow. “They invest in low-risk stocks and debt securities with a high probability of reasonable income,” says Baker. “They’re much more focused on whether they’re going to get their capital back rather than doubling or tripling it over the next 10 years.”
Many self-made millionaires are more likely to invest in businesses or growth opportunities they already know about, instead of taking big risks on something they haven’t researched yet.
5. Millionaires don’t dwell on their money mistakes.
Most millionaires have made tons of money mistakes, ‘big and small’, that have had a negative impact on their wealth, says financial adviser Hannah Whatley, CFP, AIF of the wealth management firm and retirement Rather & Kittrell. “However, they know that being wrong doesn’t define them or their ability to grow their wealth, and they move on. Millionaires understand that consistency doesn’t require perfection.”
Whatley uses a falling regime analogy to explain how millionaires think. “You can’t change what you’ve already eaten for breakfast,” she says. “Many millionaires share the feeling of failing quickly and moving on.”