MILWAUKEE -- We might never be billionaires -- but there is something we can learn from the rich and famous about managing our money. Financial expert, Nick Nick Foulks or Drake & Associates, joins Real Milwaukee with some tips.
First, it doesn't happen overnight- at least not for most people!
• Becoming rich takes willpower and a long-term outlook.
• Let`s talk about 5 money habits of the wealthy that can work for everyone, even if you don`t have a seven-figure income.
1. Start Early
• Put your money to work for you now! The earlier you start, the more time it has to grow. Start thinking about your last day of work on your first day.
• If your company has a matching 401(k) plan, make sure you are taking advantage of it. That is like free money.
• You can also contribute to an IRA. I recommend my clients put away at least 10% of their income into long-term savings.
2. Go Auto
• When it comes to finances, we can be our own worst enemy. This is something I see with clients all the time- we procrastinate and give into spending temptations.
• A good way to avoid this is to automate savings. Set up recurring transfers from your checking account to savings and investing accounts. It`s really difficult to spend money you don`t see!
3. Pay It Off
• As the wealthy know, high interest debt weighs you down!
• The average person in Wisconsin will pay $144,127 in interest in their lifetime (Source if you choose to use fact: Credit).
• Think about what you could do with that money!
• If you are looking to get rich, stop carrying credit card balances.
• The first step is to organize that debt, and I have a worksheet on my website at wealthwisconsin.com to get you started.
• Attack the lowest balance first, paying as much as you can on that card and minimum payments on the rest. When that one is paid off, move on to the rest.
• To be clear- I am not saying don`t use credit cards. There are some great rewards, points and discounts with them. The key here is to pay them off monthly.
4. Splurge Smartly
• We all splurge. But rich people make sure their splurges are cost-effective.
• Divide the price by the number of times the item will be used. Use that number to determine whether a purchase is really worth it.
• Use the high-low approach. Mix high-end pieces with more budget-friendly buys. This works for your wardrobe and home furnishings.
5. Adjust Your Attitude
• Sometimes it`s all about your attitude. Ask yourself if you`re working to become wealthy or if you`re just working to pay the bills?
• Try the 70/30 Rule. Start by living on 70% of your after tax income.
• Then take that remaining 30% and put it to work for you. Invest 10%, give 10% to charity and save the remaining 10% (Source if you choose to use fact: Success)
• Think of it this way: Poor people spend their money and save what`s left, rich people save their money and spend what`s left.