If you’re trying to build wealth, it’s essential that you learn from those who have already reached the goals that you’re striving towards. However, it can be difficult to determine where to begin your wealth-building journey if you’re just getting started. That’s why we asked a trio of self-made millionaires to divulge the money-saving rules they always follow.
Here are the top money-saving rules and strategies that self-made millionaires never break when building wealth.
Rule #1: Don’t Buy It If You Can’t Pay in Full
“Don’t buy it if you can’t pay it off in full that month,” said Tom Brickman, a real estate investor and founder of The Frugal Gay. “I never pay credit card interest. I only use my credit cards to earn discounted travel or discounted gift cards.”
Brickman stressed the importance of embracing smart spending habits while investing your money to build wealth. If you’re trying to build wealth, it’s vital that you don’t make purchases on your credit card that you can’t afford. Constantly racking up credit card debt can make it nearly impossible to become a millionaire, since you become stuck in a cycle of paying down your debt.
How do you ensure that you never break this rule?
- Plan your major purchases in advance.
- Don’t make impulse purchases that cost more than a set amount.
- Do your research in advance to ensure that you find the best price.
- If you can’t afford it, save until you can, no matter how tempting the financing plan is.
If you don’t have the funds for a major purchase, you may want to consider delaying it until you’re ready. You may even discover after saving up for a few months that you didn’t really care for this purchase in the first place.
Rule #2: Don’t Always Buy Everything New
“One rule we didn’t break was buying used when possible,” said James Lowery, a real estate investor and one of the founders of Rethink The Rat Race. “From cars to appliances and furniture, if we could buy it used to save money, we would.”
When it comes to saving on high-ticket items, you can make a significant impact on your savings account by going with used items.
How do you buy used to save money?
- Check Facebook Marketplace and local groups regularly for deals.
- Avoid the temptation to purchase the newest gadgets.
- Don’t replace major appliances if you don’t have to.
- Explore vintage shops.
- Look out for refurbished items that are as good as new.
The goal is to save money on high-ticket purchases to have more funds to invest into new income streams to build wealth and eventually become a millionaire. James and his wife saved money to invest in Airbnb properties. Every dollar they saved was poured into real estate investments until they had enough money to quit their jobs.
Rule #3: Always Invest In Education
Even though we’re looking at the idea of saving money, there are times when you shouldn’t be cheap with your finances. While it’s essential to save money on high-ticket items, you will want to spend the funds on your education.
How can you invest in your education?
- Spend the money on learning new skills.
- Attend networking events in your field.
- Buy books to help you learn about a new topic.
- Invest in coaching and masterminds so that you can learn directly from others.
- Take someone you admire out for coffee to pick their brain.
The money that you save from other areas should be poured into investing in yourself. This investment will pay dividends in the long run.
Rule #4: Focus on Assets Over Liabilities
“Growing your assets column to pay for the lifestyle you desire is key,” said Chris Corinthian, founder of FinLit University and @theFinLitGuy on Instagram.
Corinthian also stressed the importance of choosing assets over liabilities if you want to build wealth. Robert Kiyosaki is known for saying that assets will put money into your pocket while liabilities will take the cash out of your pocket.
Many self-made millionaires will stress the importance of focusing on assets over liabilities because you want your money working for you.
How do you focus on assets instead of liabilities?
- Purchase real estate instead of trying to purchase the fanciest car.
- If you like niche things, focus on investing in assets to pay for them.
- Be cautious with the amount of debt you accumulate.
- Stop financing every purchase.
- Research the different asset classes, from real estate to dividend-paying stocks.
The goal is to invest your money into assets that appreciate with time instead of spending money on liabilities that will make it difficult to build any real wealth. If you can find ways to constantly invest in assets like stocks, real estate, or business ventures, you’ll accelerate the journey toward becoming a self-made millionaire. The assets you invest in will depend on your risk tolerance and what kind of investor you want to be.
Rule #5: Don’t Spend Money To Impress Others
In previous research and conversations with financial coaches, the one key piece of advice shared is the idea of not spending money to impress others. Stay focused on your journey. What you value won’t be the same as what your friends value.
How can you follow this money-saving rule?
- Figure out what your values are. Once you prioritize spending money on what you care about, it will be easier to save on everything else.
- Understand that FOMO is normal. The fear of missing out is common, and you must ride the wave since you can’t always try to keep up with others.
If you can avoid spending money to impress others, you’ll be well on your way to building wealth.
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