How do you get rich? It’s about forming good daily habits with money, but it’s also about things you only do once in a while.
Habits That Will Make You Rich
These habits will make you rich. However, if you can’t do them all, don’t worry. Start with the ones you can do, then add others on as your financial health improves.
1. Spend Less than You Earn
If you spend more than you earn, you are never going to get rich. Make spending less than you earn a habit for life.
2. Earn Your Employer 401k/403b Match
If your employer offered you a raise, would you turn it down? Of course not! So if your employer matches your contributions to your 401k/403b or another retirement account, you want to contribute at least enough to that account to earn the match.
For example, if you earn $100k and they match 5%, you need to be contributing at least $5k a year, and your employer will do the same.
3. Max Out Any Other Employer Benefits That Result in Cash
Many large employers offer other benefits that are equivalent to cash.
These may include wellness incentives ($50 just for going to the dentist – yes, please!). Or, they might offer matching or discounted company equity. Some employers will even reimburse your gym membership or tuition.
Whatever you do, don’t leave money on the table. This is one of the best habits that will make you rich.
4. Pay Your Credit Card in Full Every Month
Credit card interest is impossibly high. To get rich, pay your credit card in full every month.
5. Set up Automatic Deductions from Your Paycheck for Important Goals
This is one of the most important things I have done to improve my financial situation. When I don’t see the money in my checking account, it’s not there to spend.
If you are saving for a house downpayment or remodel, a new car, or a vacation, set up a separate account for the goal and have part of your paycheck direct-deposited to that account each pay period.
6. Don’t Tap Into Your HSA
For many years with my HSA, I used it as a sort of checking account. I withdrew money from it when I needed it. It was only after meeting with a financial advisor that I learned that these accounts offer TRIPLE tax savings.
You aren’t taxed on the money going in, you aren’t taxed on the earnings, and you aren’t taxed when you take it out as long as you use it for medical expenses when you withdraw it. There is truly no better tax-protected savings vehicle.
7. Frequently Visualize Your Ideal Life
Science proves that visualization works. So visualize your ideal rich life, and it will help make it a reality.
8. Review Your Income and Expenses Monthly
If you aren’t keeping track of money that comes in and goes out, you won’t be able to track your way to becoming rich.
9. Review Your Net Worth Quarterly
How will you know you’ve achieved your goals towards becoming rich if you aren’t reviewing your net worth regularly? Here are 7 other key metrics to assess your financial well-being.
10. Review Subscriptions Twice a Year
Apple and Amazon have made it incredibly easy to pay regularly recurring subscription fees for things you don’t use anymore. Your child’s $2.99 iPad game or your $4.99 extra channel TV subscription don’t seem like big expenses individually, but they add up.
Twice a year, double-check all of your recurring subscriptions and ensure you still need them.
11. Buy Used When You Can
Buying used is not only significantly cheaper, but it’s also much better for the environment. Whether it’s for smaller items like books or clothing or for larger purchases like cars, make a lifelong habit of trying to buy used before new.
12. For Big Purchases Shop Around
It doesn’t make sense to save a few dollars or pennies on every purchase if that means you are spending hours of your time searching. But for larger purchases (define what that means to you), make sure you spend some time comparing options and shopping around.
13. Make Shopping Lists
You probably have two or three stores you shop at frequently (for me, it’s Costco, Trader Joe’s, and Target). When you go to the store and just wander, you are likely to buy things you don’t really need.
Instead, make shopping lists part of your regular habits, and you’ll save hundreds, if not thousands, of dollars each year.
14. Set up Automatic Trading (Don’t Panic Sell or Buy)
The very best way to get rich is to regularly invest in index funds. This means buying on a set schedule based on what the market seems to be doing on any given day or week.
Similarly, don’t sell just because of what the market is doing on any particular day, week, or month. Here are 13 Recipes for Financial Success.
15. Spend Only What You Can Afford on the Things That Matter Most to You
You are the only person who can define what “rich” means to you. Spend what you can afford on the things that matter most to you, no matter what anyone else says.
The Bottom Line
If you want to become rich, these 15 lifelong habits will set you on the right path. And, if you’re still struggling to develop good habits, here’s how to form them.