5 Money Moves Rich People Make (and Poor People Don’t)

The idea of getting rich quick is pretty appealing but unless you inherit a big windfall or nail the winning lotto numbers, it’s not a very realistic goal.

When creating long-lasting wealth is a priority, you have to be prepared to dig in and do the work. Developing some savvy financial skills can lay the groundwork for a richer life where your money is concerned.

If you’ve been working on building wealth and you’re ready to step up your efforts, here are five personal finance habits that can help you reach your target that much faster.

1. Pay Yourself First

This is one of the most basic rules of building wealth and if you truly want to be rich, this should be your mantra. When you pay yourself first you’re making the commitment to saving and by taking that money off the top before your other bills are paid, it becomes a lot easier to resist the temptation to just spend it.

If you’re not in the habit of paying yourself first, automating your savings is the answer. For example, if you’re trying to build a six-month emergency fund, you can schedule a recurring automatic transfer from your checking to your savings account every payday.

You can also set up automatic transfers to an IRA or to a taxable investment account. If you’re saving in a 401(k) or a Health Savings Account through your employer, these contributions should be coming out of your check already. Getting used to saving automatically may take time but once you do, you’ll wonder why you didn’t adopt this habit sooner.

2. Keep Tabs on Your Spending

A budget is a crucial personal finance tool for anyone who’s interested in getting rich and if you don’t have one, you could be draining your potential wealth without even realizing it.

In the most basic sense, a budget is a balance sheet of sorts that tells you how much you’ve got coming in each month and how much is going out. To make a budget, you add up all of your expenses and subtract it from your income. If you’re making more than you’re spending, you’re already moving in the right direction towards building wealth.

If you’re finishing every month in the red, on the other hand, you can kiss your dreams of being rich goodbye until you get your spending under control. The best way to do that is by tracking every dollar you spend. If you don’t have time to write it all down, syncing up your checking or credit card accounts to a budgeting app like Mint eliminates the hassle.

3. Steer Clear of Debt

Debt can be the biggest roadblock to creating wealth, especially for 20 and 30-somethings that are bogged down with thousands of dollars in student loan debt. If debt is constantly nipping at your heels and you’re spending a lot of your income each month to cover your minimums, you’re going to have a hard time coming up with anything to save.

Whether you have credit card debt, a mortgage, student loans, or a car loan, you’ll never be able to dig your way out if you don’t have a plan. Working your way towards debt freedom may require some financial sacrifices in the short term but you can reap some long-term rewards.

Once you’ve gotten out of debt, you should be committed to staying debt-free. That means paying cash for bigger expenses like a car or a new roof for your home instead of turning to a loan or a credit card. If you’ve been working on flexing your savings muscles, swearing off debt should be relatively painless.

4. Be a Goal-Setter

Research has shown that goal-setting subconsciously motivates you into action, which improves the odds of achieving what you set out to do. Having some clear goals in mind is especially important when it comes to your money since it’s easy to stray off course if you don’t have roadmap for where you want to go.

[inline-ad]When you’re creating your financial goals, keep the SMART technique in mind. This strategy involves setting goals that are Specific, Measurable,Achievable, Results-focused and Time-bound. In other words, it’s not enough to say you want to build an emergency fund. Your goal needs to be specific and have actionable steps.

For example, you could change your goal to saving $10,000 in one year. That tells you that you need to save $833 a month or $192 a week to get there. The more defined your goals are, the better the odds of reaching them.

It’s important to keep in mind that setting goals isn’t a once-and-done thing. Getting rich won’t happen overnight and the goals you set today may no longer be appropriate a year or ten years down the road. Regularly reviewing where you’re at with your current goals and how they fit with your bigger financial picture can tell you if you‘re on the right track.

5. Think Rich

Getting rich is more than just what you do with your money—it also depends on how you think about it. If you’re constantly telling yourself that you’ll never achieve the kind of wealth you’re after then you probably won’t. Adopting a rich attitude, on the other hand, can help make your vision a reality.

Reminding yourself on a daily basis what you’re working towards can help you to stay motivated even when your savings balance isn’t growing as quickly as you’d like. If you have a temporary setback, dealing with it and moving on is a lot more productive than dwelling on it and letting it sabotage your goals.

Keep It Simple

Figuring out what you should (or shouldn’t) be doing with your money isn’t rocket science. Taking control of your financial destiny starts with making a commitment to adopting the five money habits we’ve outlined here. The sooner you do that, the sooner you’ll be on your way to a brighter financial future.