As a young adult who desires to get rich, you need to cultivate some important financial habits first. No matter how little or big your income is, if you do not have these habits, getting rich would be a far-fetched dream.
What are your habits? They’re those behaviors you exhibit regularly, sometimes subconsciously. Studies of many great men have shown they have daily routines that shape the way they do things. These routines in turn shaped their lives. When you fail to build good habits, you unknowingly build bad ones.
Getting rich is an intentional process. You have to do certain things repeatedly until you see the desired results. That’s why in this article, we’ll be discussing seven key financial habits that can shape your future and help you actualize your desire to get rich.
7 Key Financial Habits You should Acquire to Get Rich
1. Set financial goals
Setting SMART financial goals is the first step to building wealth as a young adult. Goals help you stay true to a purpose and properly deal with instant gratification. These goals can be something as daunting and far-reaching as retiring early (say at 45), or something less challenging as getting home equipment. When you set goals, you have something to direct your actions and decisions.
Forming the habit of setting SMART goals for everything you desire is something every young adult should do. SMART goals are specific, measurable, achievable, realistic and time-based. In fact, this is the number one habit you should cultivate. Because once you’ve set goals for what you want to achieve with your finances, cultivating every other habit you need to get rich becomes easier.
2. Make a budget and stick to it
Budgeting is a financial habit all young adults who desire to be rich should acquire. It is one thing to set a budget and another thing to stick to it. If your income comes as a monthly paycheck, it’d be easier to create a budget. However, if it comes in bits, maybe on an hourly or daily rate, you have to work with an estimate.
Budgeting requires you to take care of your essential needs like food, rent, electricity and other essential bills first. And of course, the money set aside for these essential needs can’t exceed your income. In fact, it should be about half your income, to make room for savings, debt repayment (if there’s any) and other things you may want.
Human wants are unlimited. Taking care of them first would mean you’d have little or nothing left to take care of your essential needs. This puts more pressure on you and pushes you into further debt. Therefore, in making a budget, your needs come before your wants. However, everything should be accommodated by your monthly income.
Read also:
- 5 Forex Trading Strategies for Beginners That Still Work
- 10 Side Income Hustles for College Students Looking to Earn
- 10 Best Countries for Doing Business in 2022
3. Form a saving habit
Life is unpredictable. One minute you have a job, the next minute you might be jobless. At this moment, you have a comfortable house, car, and lifestyle. The next minute, you could be left wondering what’s left of you.
These unforeseen circumstances of life are part of the reason you should form a firm savings habit. Ideally, if you lose your job, you should be able to take care of your food, rent, and other essentials for at least six months while you search for another job. That can only be possible if you made savings while you were working.
You should make it a habit to put a certain percentage of your income into a savings account upon receipt of every paycheck. This percentage can range from 10 to 20%, depending on other financial obligations you might have.
Saving mustn’t be for unforeseen circumstances. You can save to attain your financial goals. You desire to go on a vacation, buy a house, get married, or even retire before you’re forty, right? Great! Save for them. You can’t achieve those things if you keep spending your monthly income without any thought of the future.
4. Invest part of your savings
Saving can offer you financial protection during a crisis, but investing is what gets you rich. Most young adults have this bad take on investing. They think it’s for the old people. Investing your finances when you are young helps to guarantee you a comfortable senior age.
One other reason most young people don’t invest is because they think it is complex. That’s wrong. These days, you don’t need to have an elaborate knowledge of financial investment to make a fortune from the financial market. With the assistance of a financial professional, you can invest in fixed deposits or mutual funds. These two, among many others, do not require you to have a deep knowledge of financial investment.
You also don’t need to save up to a hundred thousand dollars before you can start investing. With as little as $500, your investment journey can begin. Consistency and playing the long game are part of what makes you a successful investor. Consistently updating your portfolio and leaving your investments for the long term would help your earnings compound. Investing is delayed gratification, and it will eventually pay off in the end.
5. Pay bills and debt on time
Taking care of your bills as they come is very important in your journey to becoming rich as a young adult. This is because not sorting out your bills early enough will leave you with a compounded, much more worrisome bill to pay up later.
Ensuring you pay off your debt on time is also another important financial discipline you need. Debts can get really bad when they accumulate, and with the rising interest rates, you’d find it more difficult to sort out. You have to make sure to make a space in your monthly budget to take care of your debt. With a regular debt payment, you’d be working towards becoming debt-free, which makes it easier for you to attain financial freedom.
6. Live below your means
This is very important for all young adults who desire to be rich. In fact, it’s one of the key financial habits that’s guaranteed to give you a heavy purse. Being frugal with your income doesn’t mean you’re living a minimalist lifestyle. It means you’re able to separate your needs from your wants.
Cultivating this habit means walking over that Tesla you desire to acquire that Chevrolet you can afford. It means leaving those designer wears you wish to buy and purchasing generic wears instead. This is a habit that can set you apart from others and propel you to financial freedom.
7. Have a comprehensive record of your expenses
If you don’t track your expenses, you won’t know what you’re spending your income on. And if you don’t know what you’re spending your income on, you can’t stick to your budget. Sticking to your budget helps you attain your financial goals.
You have to form the habit of keeping track of every penny you spend. There are many accountability apps that can help you in this regard.
Conclusion on Financial Habits for Young Adults
It’s easy to desire to be rich; everyone does so. But only a few people eventually get rich. You may ask, why is it so? The truth is, it takes more than desiring to be rich to get rich. You have to put in the work and imbibe the right financial habits.
According to Steve Jobs, you make your habits in the first 30 years of your life, then your habits turn to make you for the last 30 years of your life. If you create healthy financial habits as a young adult, you’ll reap great rewards in your golden years.
