You don’t have to be a millionaire to be considered good with money. Most people who are good with money just know how to make the most of what they have. Contrary to popular culture, you don’t have to be a millionaire to have a meaningful life. But you have to get good with money. In fact, the true path to financial freedom is developing your financial capability – which simply means developing the skills to handle money intelligently and not swayed by emotions like most people.
There are certain habits those who are good with money form that the majority of people just don’t get. I’ll share 7 of them with you in this video. Before we get to it, be sure to subscribe to After School TV for more insightful videos like this.
1. They do the best with what they have
When it comes to saving money, most people would say, ‘Why bother saving if I’m only saving $21 per month?‘ whereas a person who is good with money would say, ‘If I can just save, even if it’s $21 a month, that’s better than nothing.‘ They understand that wealth is more likely to emerge out of little consistent effort than from waiting on a one time hit.
Rather than saying they can’t, people who are good with money see where they are and what they have as a step in the right direction; they see a seed that has potential for harvest. I learned the habit of making the best of what I have while in boarding school, with no mobile phone at the time to reach my parents who were 1000 kilometers away. I learned to ration my little pocket money to take me through the term while reserving transport fare to travel during the holiday. Out of necessity, I learned how to make the best of what I had. And it turned out to be a life-saving skill.
Anybody at any income or asset level can be good with money by practicing financial discipline and smart money-management habits. It doesn’t take tremendous wealth to manage your money well — whether you’re saving $21 or $2,100 per month, anyone who’s good with money knows how to work with what they have.
2. They carefully plan for the future
Just like no one becomes a grandparent by accident, people who are good with money understand that wealth does not happen by accident. There is a deliberate process over a period of time. Anyone who’s good with money knows how to plan carefully for their financial future through their career or business decisions, saving routine, and investing.
This is a key difference between those who are good with money and those who aren’t; it’s about planning ahead. If you want to develop your financial capability, you have to be strategic in your financial planning. Don’t be entirely driven by today’s want. Those who are good with money are planning ahead, whether it’s through saving, investing, or increasing their earning; whereas people who are not as capable with money are present-oriented.
3. They spend on experience
One thing you take along with you anywhere you go is your life experiences. You can be robbed of your material possessions. But no one can rob you of your life experiences.
Apart from that, many different studies have shown that although money cannot buy happiness, when you spend your money on worthwhile experiences, your money can actually buy you happiness. When you have an enthralling experience, you create beautiful memories that you can relive for a lifetime. People who are good with money understand this and tend to invest generously in quality experiences like vacations, date nights with their partner, or whatever great experience means to them.
They value having great experience over showing off material things. They also understand not to overindulge because too much exposure can make an experience become routine or at worse a vain pursuit.
4. They don’t buy something because they can afford it
Only a couple of people alive today are as rich as Warren Buffet. Yet he still lives in the same house that is worth a tiny percentage of his net worth. You don’t have to be a billionaire to be good with money. And you don’t have to live in the same house or drive the same car for decades to prove a point. However, developing financial capability is not about having the latest and best items, or even having huge bank accounts. It’s about the good habit of living deliberately with the future in mind.
The consumer culture encourages people in debt, living paycheck to paycheck to own expensive smartphones, buy designer wears, and get consumed in the trappings of vanity lifestyle. People want to show that ‘I beta pass my neighbor’. But people that are good with money say no to consumer culture. They choose themselves first before anyone else. They keep more of the money they make rather than give it away in exchange for items with short-term value. For those who are good with money, it’s all about living on less than you can afford.
5. When they buy, they don’t chase brands
When you start getting good with money, you’ll begin to see the folly in saving from your hard work for months just to buy an expensive item for the sake of it. Why would someone whose monthly income is $300 buy a $700 phone?
If such a person is good with money, he will be more concerned about the functionality and durability of a phone than chasing after a brand name. Because what difference does it make to have a $700 phone and be broke, when a $200 phone can serve the purpose?
As much as people that are good with money don’t buy things because they can afford them or to impress other people, that doesn’t mean that they don’t buy expensive things. Instead, when they do, they aren’t blindly chasing after name-brand items. They are chasing after value, durability, and good deals. If a brand name proves to a valuable and durable option, and they can afford it, they go for it.
6. They make saving and investing a part of their routine
Financially capable people understand one important thing about money; it’s not how much you make, it’s how much you keep and invest. They know that while you shouldn’t spend your money lavishly, your money should not lie idle either. Those who are good with money aren’t waiting for a raise or a large gift to save — they’re making it a part of their routine using whatever they have in the present. They know that discipline and consistency are far more important than overnight encounters.
People who are good with money don’t wait until they start making $3,000 before they start saving or until they have $10,000 in saving before they start investing. They understand that even the smallest of contributions if done consistently, compounds over time. These people make saving and investing a habit and they’re more financially capable as a result.
7. They don’t stop investing in their financial education
No one graduates in the school of financial education. There are new innovative approaches to earning, saving, and investing today that were not available a few years ago; so much that a financial educator of 5 years ago is a novice today. You never get too good with money. That is why a part of being good with money is knowing that there is more you don’t know.
It is ignorant people that often think they know enough, and don’t have to learn more. People who are good with money consistently invest in their financial education. They read books, invest in financial products, and actively participate in executing their financial plan. When they have a bad financial experience, rather than look for external factors to blame, they seek out the lessons for them to learn.
Considering all the points I have mentioned in this video, you don’t have to have a lot of money to be good with money. In fact, it’s a good time to start practicing these when you don’t have a lot of money. Do the best with what you have, start planning for your future, spend on experiences, don’t buy something because you can afford it, save, invest and never stop developing your financial capability. Until next time, YOUR SUCCESS MATTERS!