Although consumers are more aware than ever of the importance of saving and investing, a recent survey showed that more than two-thirds of American adults have less than $1000 in their bank accounts. As well as this, a whopping 34% admitted to having no money at all in their savings accounts.
This is surprising to hear, and it prompts the question: what does it take to be a successful saver and investor? Luckily, this can be achieved in several ways. Here are some habits of phenomenally successful savers and investors:
1. They Treat Savings as an Essential Spend
Most people believe they can’t afford to save because they think about saving what money they have left at the end of the month. However, we shouldn’t treat savings this way. Instead, we should treat them as essential spending, like we do our bills or an allocated entertainment budget. Instead of waiting until the month’s end to save, we should allocate a certain amount to put away when we receive our paycheck.
2. They Pay Attention to the Stock Market
To be a good investor, you must pay close attention to the stock market before buying and selling shares. A good investor will research which stocks are good value and which ones are likely to increase in the future. They also use tools such as a stock average calculator to calculate the average stock price for stocks they are considering buying. You can learn more about this and how to find your dollar cost average online.
3. They Spend Less Than They Earn
Successful investors and savers ensure they spend less money than they earn and have no credit card debt. They understand their spending behaviors and make an effort to spend prudently.
4. They Avoid Lifestyle Inflation
When given a pay rise, it’s tempting to treat yourself by spending more money on things you’ve never had before. This is known as lifestyle inflation. However, successful savers don’t do this. Instead of trying these experiences and buying new things, they invest in themselves. For example, they increase their retirement contributions or put more money into savings accounts.
5. They Are Prepared for Financial Emergencies
While investments are great, you must also ensure you put some money aside for emergencies, such as your car breaking down. Unfortunately, very few people do this. A recent survey found that over 30% of adults in the US do not put money aside for emergencies. Instead, they take out a high-interest loan or dip into their investments when problems occur. While this might not sound like an issue, it can be a costly way to fix problems; they have to pay a 10% penalty for dipping into their investments early.
6. They Start Investing When They Are Young
To get the most out of your savings and investments, they need time to mature. This means you must purchase your investments while young, ideally as soon as you begin working. You can do this in several ways. For example, you can contribute to a company retirement plan, build an emergency savings account, or establish an IRA account.
7. They Purchase an Affordable Property
Successful investors and savers wait until they have a substantial downpayment for a home before purchasing one. They then choose an affordable home for their income and do not compromise their ability to save for retirement. If they decide to move in the future, they follow the same rules again.
Saving and investing is not about getting rich; it’s an essential part of achieving financial independence. This means being able to financially take care of yourself and others that rely on you and achieving goals that go beyond paying your bills and managing debts. If you like the sound of this and want to increase your chances of saving and investing success, and achieve financial independence, follow the tips above.