Yahoo Finance US millionaires share 3 investing and spending habits that keep them rich
What does it take to become a millionaire? The best way to find out may be to ask people who are already wealthy.
Ramsey Solutions did just that, surveying 10,000 millionaires from Nov. 17, 2017, to Jan. 31, 2018, to find out how these individuals made their fortune. The company, which was founded by radio personality Dave Ramsey, claims it to be the "largest survey of millionaires ever."
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It may surprise you to learn that most respondents didn't inherit large sums of money, and they didn't get rich quick by winning the lottery or cashing in on stock options at an elite job. Instead, they employed simple financial habits anyone can adopt.
Here are three of those habits that led these millionaires to their seven-figure status.
Investing in a company 401(k)
According to Ramsey Solutions, eight out of 10 millionaires invested in their workplace 401(k) plan.
Investing in a 401(k) workplace plan is simple. You can sign up to have funds taken directly from your paycheck into a tax-advantaged account. Your contributions are pre-tax and can be reported as deductible, reducing your taxable income.
If you're lucky, your employer will match at least some of the money you put in.
If you have access to a workplace plan, sign up. If you don't, you likely can still claim tax breaks for investing in an individual retirement account. Although you'll lose out on the benefit of matching contributions, the savings still makes investing for your future easier.
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Investing consistently
For three in four millionaires surveyed, investing isn't a one-time thing. Instead, consistent investing was key to building their seven-figure status.
When you invest regularly, you don't just end up putting more money into your account, you further benefit from compound growth and accelerate the growth of your wealth.
If you invest $6,000 once and leave it alone for 30 years, it'd grow into $104,696 after 30 years, assuming a 10% average annual return. But if you invest $6,000 every year for 30 years, you'd end up with over $1 million.
Keeping spending in check
Ramsey Solutions's research revealed that millionaires may not engage in lavish spending like you might expect. In fact, 94% of respondents said they spend less than they earn, while less than three-quarters said they'd never carried a balance on their credit cards, ever.
These millionaires typically reported spending $200 or less each month at restaurants, and 93% were regular coupon users. These Americans aren't going out and trying to keep up with the Joneses. They're making smart financial choices that allow them to invest in assets that grow their wealth consistently over time.
You, too, can choose to make these decisions. Prioritize investing, make 401(k) contributions and live within your means while avoiding high-interest debt to put yourself on track to grow your wealth.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
