9 Best Budgeting Tips From Millionaires
If you want to save money and build wealth to become a millionaire, you can learn a lot from those who are already where you want to be. GOBankingRates reached out to millionaires to gather their best budgeting tips, which you can use to build your own fortune.
Learn More: Mark Cuban Reveals Why He Keeps a Strict Budget Everyday
Check Out: 4 Genius Things All Wealthy People Do With Their Money
Practice Frugality Through Delayed Gratification
If you want to save money, you’ll want to embrace delayed gratification by learning to save up for expenses instead of adding everything to your credit card bill. Delayed gratification forces you to earn your rewards, so you don’t go into debt making purchases that you couldn’t afford yet.
“I’ve found that cutting expenses on non-essential items like haircuts and luxury outings can significantly contribute to wealth accumulation over time,” said Brenda Christensen, CEO of Stellar Public Relations. “By avoiding expensive temptations, you can build your savings more effectively.”
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Create a Budget To Have a Plan for Your Money
If you want to save money and build wealth, you have to know where your money is going, which is why you need to create a budget.
“Create a budget plan that outlines your fixed expenses, such as rent/mortgage, utilities and debt payments, and allocate a certain percentage of your income towards savings and investments,” said Michael Collins, CFA, founder and CEO of WinCap Financial. “This will help you stay on track with your financial goals and avoid overspending.”
“Personally overseeing all aspects of your finances is crucial,” Christensen added. “Diligent financial management ensures long-term stability and growth.”
It will be difficult to save up and become a millionaire one day if you don’t have a plan for your income. Ensure that every dollar you earn has an assigned job so that you know what’s happening with your finances.
Consider Zero-Based Budgeting
“Each month presents a fresh journey, which reflects in the way I handle my finances with zero-based budgeting,” said Erik Severinghaus, CEO and founder of Bloomfilter. “It’s like beginning anew every time — assigning each dollar of anticipated income to various expenses or savings categories. It’s similar to assigning a task to each dollar before the month begins, ensuring that there are no gaps for money to vanish without being seen.”
The idea of zero-based budgeting is that your income minus your expenses — including savings and investments — equals zero. Not a single dollar should be unaccounted for.
Pay Down High-Interest Debt Immediately
“Debt can consume your financial independence very quickly, and I prioritize paying off debts with higher interest first,” said Severinghaus.
This was a common theme among the millionaires — paying down debt allows you to focus on saving and investing for the future. If you have any high-interest debt, you want to do whatever you can to pay it off as quickly as possible, so you pay less in interest.
Make Investing a Priority
Work investing into your budget — even if you can’t invest much at a time, at first.
“Instead of solely focusing on saving money, millionaires prioritize investing their money in different avenues to grow their wealth,” Collins said. “They diversify their investments and seek professional advice to make informed decisions.”
Invest Your Money Wisely
Millionaires are known for wise investments, which often includes avoiding fads and temptations that come along. You’ll struggle to build wealth if you get caught up in the hype of every new investment opportunity that comes along.
“I allocate funds into diverse, growth-centric investments, such as real estate and collectibles,” noted Christensen. “Engaging in investments that blend passion with discipline makes the process more rewarding and helps in achieving financial goals.”
Christensen added, “Prioritizing investments that offer lasting value and align with long-term goals is essential.”
Don’t Stop Budgeting — Even After Accumulating Wealth
Once you build wealth, you have to work to keep it — it’s easier than ever to spend your money when you have a lot of it. Financial discipline once you reach millionaire status will help you stay there so that you don’t lose your hard-earned savings. That means keeping track of your finances and continuing to grow your nest egg.
“Even after achieving millionaire status, I continue to work and maintain a steady income flow,” Christensen said. “Consistent diligence is key to sustaining financial growth and avoiding complacency.”
Learn From Past Mistakes
“Reflecting on past purchases has taught me valuable lessons,” shared Christensen.
She cited investments in waterfront properties and luxury items, like boats and other purchases with limited utility, often leading to regrets — but those aren’t the only mistakes you can learn from. Adjust your budget to cut out spending that doesn’t really serve you.
Plan for Major Purchases
“Whenever I have a dream about something big, maybe buying the latest technology or going on a trip, I begin to put money aside with that purpose in mind,” said Severinghaus. “By doing this planning before, it helps me avoid quick choices, which might disturb my financial plan.”
Saving up and waiting to make your major purchases until you can pay cash means you won’t be relying on credit cards or buy now, pay later apps, which can save you from having to make payments that you can’t really afford — or just paying down a purchase that you end up regretting.
Review and Adjust Your Budget Regularly
The most important budgeting tip is the reminder that things will change in your life, and you will have to adjust your budget accordingly. Don’t let yourself get complacent while your finances get off-track.
“Budgeting is similar to sailing for me; often you have to change your sails a bit so the wind can push correctly,” Severinghaus said. “Every month, I look over my budget to check if it fits with what’s happening now and make small changes where necessary.”
Severinghaus concluded, “Budgeting is not only some rules; it is a way of living that needs dedication, the ability to think ahead and a little bit of creative thinking.”
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