FINANCIAL PLANNING: How the super-rich save and stay rich
Fancy cars, lavish homes and exotic tastes! This is typically the lifestyle we associate with the super rich. Behind all their extravagant choices, there lies distinct penny pinching habits, which are the reasons for their vast fortunes.
Being wealthy is not just about how much money one makes, it’s about your mind-set towards how you use the money. Here are five smart money habits of the super rich.
Live frugal: From Mark Zuckerberg’s simple wardrobe choices to Warren Buffett’s modest home, some of the wealthiest people are the most frugal. The super rich don’t dramatically spend or increase their standard of living once they start earning well. Most billionaires never splurge on their roti, kapda or makan. They follow a certain level of discipline when it comes to spending. The key is to understand the kind of lifestyle you want to follow. Cutting down on things that aren’t necessary, avoiding eating out everyday or choosing to live in a modest yet comfortable apartment are some ways to save up more.
Budget: The super rich have a definitive plan and purpose for their money, they know how to effectively allocate. They have the super ability of harnessing and harvesting the potential of their money to the fullest most of the times. Though they have the resources at their disposal, they prioritise on the essentials followed by investments.
Once the essentials are taken care of, they sparingly indulge in luxury and vanities. For instance, a rich person would make an investment (like real estate or equities) in assets, against buying an expensive car that is high in maintenance and high depreciation value.
Invest: The single biggest trait of a rich person is their expertise to invest. Knowing where to invest and the ability to pick up trends or opportunities early on is the hall mark of the super-rich guys. This is the key separation or inflection point. The really smart guys know that the ways to grow or stay rich is to find investments and make them early and keep them long. In today’s day and age of unicorns and tech billionaires, the super rich make investments in cutting edge technologies and products that deliver phenomenal returns.
Diversify your spread, but not too much: The wealthy believe in having their money spread across different asset classes. Diversification is essential to ensure the risk from over exposure to one asset class is minimised. Millionaires focus on a determined range of options; they target five to 10 sizeable stakes with higher prospects. They do not put all their eggs in one basket. Finding the middle path to successful wealth and value generation is a challenging task, but something which millionaires have acquired with years of practice and patience.
Re-ploughing: The key to being continuously successful and wealthy lies in the ability to re-plough and have greater opportunities to build wealth. They re-invest and find new ideas and avenues to grow their money. Serial entrepreneurs have displayed this ability across various parts of the world crisis crossing new industries and sectors. They are willing to try newer ideas and take risks in betting on emerging opportunities. In conclusion, it’s safe to say that millionaires cultivate money habits and qualities that are a notch above the rest. The super rich are aware about where their money is spent. They are consistent in their savings and investments.