8 ways to manage money like a millionaire

Created date

September 24th, 2013
Piggy Bank

Do you ever wonder what millionaires know that the rest of us don t? Experts say affluent people don t necessarily understand the stock market or real estate better than the rest of us. In fact, it s usually common sense financial decisions that build wealth. Below are eight habits millionaires tend to have in common. Try some (or all!) of them to create a more secure retirement for yourself. 1. They are cheap. Sandy Botkin, author of Achieve Financial Freedom Big Time! Wealth Building Secrets from Everyday Millionaires (McGraw-Hill), says millionaires tend to be keenly aware of needs vs. wants. You might need new shoes, but does it mean you have to go to Nordstrom or can you go to Nordstrom Rack? he says. 2. They hate taxes. No one enjoys paying taxes, but Botkin says millionaires pay serious attention to tax planning. You are not going to get rich unless you get taxes down to the legal minimum, and millionaires understand that, Botkin says. 3. They cover their assets. Whether it is forming a separate LLC for a new business venture or revising their estate planning when they remarry, millionaires vigilantly protect their wealth. Botkin says one thing we all can do is take out umbrella insurance policies for liability protection. 4. They ask for help. There are many areas where it pays to save, but financial advice isn t one of them. Millionaires value their time more by paying for professional advice, Georgia financial advisor Cecily Welch (welchfinancialadvisors.com) says. Yes, the Internet is filled with information that they could research and analyze themselves, but they recognize their time is better spent doing other things. 5. They prioritize. Millionaires might seem like they have it all, but Welch says that is because they make choices. For example, they may make a priority of traveling that s where their money goes, Welch says. For the other aspects of their life, like housing, clothes, entertainment, and cars, financial decisions are made frugally and based on financial calculations only. 6. They sweat the small stuff. Sure, millionaires don t have to consider the cost of a sandwich or paper towels but they do. Millionaires think very much about everyday expenses, says Bard Malovany, a registered representative of Lincoln Financial Advisors, a broker-dealer. Do I go out to lunch today or do I bring a lunch? When I am in the grocery store, do I need to buy a name brand or can I buy generic? 7. They make splurges count. When you save on everyday expenses, you can splurge when it really matters to you. Malovany says millionaires do that very thoughtfully. People with money are more apt to spend in line with their true preferences, he says. You might not eat out very much, but you buy expensive gifts for your grandchildren. 8. They don t buy happiness. Expensive furniture or a Mercedes might thrill you initially, but things rarely create true happiness. Malovany says that s a lesson wealthy people take to heart. Millionaires are happier because they have financial security, not because they drive nice cars and live in big houses and take expensive vacations, he says. The kernel of happiness is knowing you are secure. meghan.streit@erickson.com