You don’t have to be rich to be good with money.
This is a matter of mind and habit, not income. Smart people are always looking for ways to live within their means and spend less than they need to.
Here’s what people who know how to handle money don’t do:
1. Don’t buy brand new cars
“Wealthy people and even millionaires tend to drive cars that are 5 to 10 years old,” says financial expert Lynette Halfany-Cox.
A new car loses 10% of its value in the first month and 20% in the first year. Anyone who knows how to count money will not go to such losses.
The most profitable option is to buy a used car and not change it too often.
2. …and don’t lease new cars
Khalfani-Cox says prudent people won’t lease a new car every year.
Leasing still requires a down payment, and while the monthly installments may be lower, you still won’t own the car (unlike buying on credit). While leasing seems like a way to avoid debt in the short term, it’s much more profitable to buy and maintain your car in the long term.
Of course, those who know how to handle money are not looking for show: they don’t need the latest model of the season, so they don’t need leasing.
3. Don’t buy houses they can’t afford.
Smart people know that the best real estate is the one they can afford.
It is not necessary to buy a house for the maximum amount available to you. Consider: maybe it’s better to buy something cheaper, but have more savings? Money is not superfluous: buying a more modest house, you can travel more or, say, open a personal retirement account.
A big house means big expenses for its maintenance. Keep this in mind when looking at a seven-room apartment “at an affordable price.”
4. Don’t buy on credit what they can’t pay for.
Whether the purchase price is $2,000 or $20, smart people never buy anything with interest.
If you always have an outstanding debt on your card, you lose money every month, and sometimes a lot. One of the most unwise habits is to buy things on credit. Understand that this is always an overpayment.
Don’t waste your money on interest payments!
5. Don’t buy branded goods from fashion designers
Smart people have little interest in brands, tags and labels. And in our time, even among the rich, it is becoming unacceptable to flaunt luxury.
For example, in the United States, since 2007, the top 1% have been spending less and less on material items every year. But they spend more on privacy, exclusive fitness and education.
6. Prefer quality over quantity
Smart people don’t stuff their wardrobes with trendy clothes and buy a bunch of cheap, short-lived junk. They prefer to buy reliable things.
They are more attracted to quality than quantity, so they are not afraid to go against the grain and consciously avoid consumerism.
7. They don’t usually throw fancy weddings.
If you’ve ever hosted a wedding, you know it can cost a pretty penny. But prudent people don’t spend money on ceremonies.
For example, investor Nathan Clark made his first $100,000 by the age of 25 and plans to become a millionaire. He says that the decision to hold a cheap wedding was natural for him and his bride: after all, they planned to get rich!
Clark spent only $10,000 on the wedding:
“We only paid for the scenery, the food, and a little rent. I don’t understand why people think they have to spend $50,000 on a wedding. I’d rather travel $50,000 for a year than spend that money in one day.”