Rich people aren’t smarter than “average” people, but they do make different choices on how to spend their time and their money. In fact, according to Dr. Thomas J. Stanley, author of “The Millionaire Mind,” there are five “success factors” that more than 80% of millionaires agree on as main ingredients to their success, two of which are:
- Discipline – applying self control
- Hard work – more than most people
Ok, so neither of these choices seems exciting, and they sure aren’t in line with the “win a million dollars as a reality show contest” school of thought. But have you ever really thought about what it’ll take to be rich? I’m not talking about “hit the Lotto” rich, I’m talking about the Steve Jobs do-it-yourself kind of rich. Read on to get some lessons on what you’ve got to do today to be rich tomorrow.
Lesson #1: Re-write Your Money Story
We each have a money story, I like to call it our “money map.” It’s the path you were unconsciously taught follow that leads you closer to or further away from money. For most of us who grew up hearing things such as, “We can’t afford that” or “I’m not made of money” or “You can’t be rich and happy” our “cash compass” is pointed to “broke.” But it doesn’t have to stay stuck at zero, you just might need to reprogram yourself to dismiss money myths you were taught that no longer serve your goal of becoming financially independent.
If a change in the way you think about money and the way you think about people who have money is in order, T. Harv Eker, author of “Secrets of the Millionaire Mind,” suggests that you make several powerful declarations. Why declarations vs. affirmations? Because according to Webster’s dictionary, a declaration is, “To state an official intention to undertake a particular course of action or adopt a particular status.”Â
So, if success is the status you seek then start by re-writing your money story using positive declarations. It might seem strange at first, but you decide, would you rather be strange and rich or really cool and cashless?
Lesson #2: Curb Your Craving for Credit
The average undergraduate has $2,200 in credit card debt, according to Nellie Mae, the nation’s largest college loan lender. That figure jumps to $5,800 for graduate students. Since so many student credit cards have high annual percentage rates, the longer you wait to pay your cards off, the worse it gets. It’s hard to get out from under the weight of debt once it starts to pile on. While you don’t have to literally go cold turkey on credit you will have to curb spending and boost your balances in your favor.
Credit isn’t cash so when you borrow money today you’ll have to pay it back tomorrow with interest. Generally, your minimum payment due each month will be about 4% of your outstanding debt. If you owe $5,000 at 18% interest, your monthly payment would be $200. Now, if you only make the minimum payment, it will take 12.5 years to pay off your credit card debt – but the best part (for the credit card companies) is you’ll pay back that money plus an additional $2,916 in interest – that’s more than half of your original balance. Of course, the amount you’ll pay back assumes you don’t make any new charges on the card! Visit youngmoney.com/calculators to calculate just how long it will take for you to pay off your outstanding credit card debt, and then put a plan in place to reduce your debt.
Lesson #3: A Penny Save…
Lesson #2 is a perfect lead-in for the final lesson – saving. The time value of money says a dollar earned and saved today will be worth more tomorrow than a dollar earned and saved in the future. If you’re serious about getting rich you’ll need to tell your money where to go instead of wondering where it went. And if you’re not sure where to put your money – don’t let that be an excuse for not opening a savings or investment account.
Every day, week and month that goes by while you’re thinking about how much to save; your money could be working for you earning interest that’ll be worth thousands – if not hundreds of thousands in years to come. Even if you start with only $50 to $100 the amount doesn’t matter, the important thing is not to wait any longer.
Sanyika Calloway Boyce is the author of four books. She travels nationwide to educate, empower, entertain and enlighten students about money, credit and debt. This former debt-strapped college student shares real and relevant money messages that young adults can relate to and understand. Visit her online today at www.financialfitnesscoach.com.