The Five Simple Principles Millionaires Use to Maintain Their Timeless Wealth
- Author: Kelly Cooke
- Posted: 2024-08-07
The Five Simple Principles Millionaires Use to Maintain Their Timeless Wealth
Millionaires have simple habits that keep them wealthy. A financial advisor discloses the secrets from your average next-door millionaire to maintaining income and wealth in perpetuity.
These individuals were not your above-average income earners. They were disciplined savers that had nest eggs exceeding $1 million at retirement from small businesses and bountiful retirement plans.
Stick to the Plan
Wealthy individuals maintain their estates by seeking outside guidance through financial planning. Their economic plans include looking at the bigger picture to stay on the right track in meeting future goals.
Rush, a financial planner, says that the financial plan not only shows how millionaires budget their income by saving and spending money, but the financial plan demonstrates the hammer and nails of a family’s finances. Everything is on the table, ready for viewing. Like:
- Income
- Expenses
- Estate plan
- Taxes
- Investments
- Charitable giving
- Employer retirement plans
- Health insurance
The wealthy desire to leave a legacy for their children and future generations. From the financial plan, the wealthy know exactly what they need to accomplish to meet future obligations.
Your Financial Plan
As you walk through life, it is easy to go with the flow and allow money to control you. You could pull out your wallet and spend money however you want, regardless of the consequences. The next thing you know, you check your banking account balances, and all the money is gone. You are left scratching your head, wondering where the money went.
To avoid this trap, dictate to your finances by deciding when and where you would like to spend your money. Create a financial plan with the help of a financial advisor, certified public accountant (CPA), or a credit counselor. Your financial plan should include these things:
- Income sources
- Budget
- Debt reduction
- Emergency savings
- Investments
- Retirement plan
- Major purchases
Make big goals by starting with simple steps. Use the financial plan to realize your dreams.
Do Not Worry About Your Investments
You have probably heard about the GameStop stock madness. The stock rose from a few dollars to over $240 a share even as the company is closing stores and cutting back on expenses.
A Reddit group used Robin Hood to drive up the stock to insane heights until Robin Hood put a stop to it.
The SEC, the president, and the treasury secretary know what is happening in the stock market. Watchdogs alert authorities when things start to get out of hand.
Likewise, the wealthy are not concerned about the ups and downs of the market. They are not trying to exercise stock limits and puts to maximize their gains or checking out the next hot penny stock.
Instead, according to Rush, the wealthy are looking for long term growth through stable investments.
New IPOs are also a source of great wealth; consider stocks like Facebook which went from $17 to over $100 a share in only a few years.
It would be best if you had patience to build wealth through the markets. Do not expect to hit it big in the next one to three years. Think about wealth building for the decade.
The best outcome for clients, per Rush, is to buy stocks and bonds and hold on to them for a long time. That way, you will have the highest likelihood of success.
Do Hard Planning for Retirement
Life expectancy is increasing. One out of four senior citizens is expected to live to age 96. No one wants to live in retirement with minimum income, running out of money.
It is best to over-plan for retirement to avoid this outcome. In practicality, this means living on a smaller income even as you make sacrifices now for the future.
Reduce Your Taxes
The middle-class pay more in taxes as a percentage of their income than the rich. To stay wealthy, individuals have learned to reduce the amount of taxes owed to the state and federal governments.
Stay on top of the tax breaks and refundable tax credits that are available for your business and personal finances. Learn about the estate tax so that you can gift your family members the right amount to maintain the family wealth.
Give Generously
Wealthy people feel an obligation to give back to society; besides, there are numerous tax advantages. They provide monetary gifts, stock, or distributions from trusts which the wealthy can write-off as tax deductions.
By donating, the wealthy can reduce Medicare premiums and taxable income in retirement. In the end, through giving, the wealthy gain insight on how to further their wealth while benefiting society.
