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5 Actions Of Financially Successful People

There is an old saying in the world of finance that it is not how much you make but rather how much you keep. Closing deals and generating revenue is great, but if it all goes to expenses and debt it doesn’t really make a difference. There are plenty of investors who make less than $60,000 a year at their full-time job yet have an expansive portfolio greater than investors who make twice as much annually. The reason is they know how to spend their money, control their expenses and when to pay for quality. Being financially successful doesn’t necessarily mean generating revenue. It means having a profitable bottom line on every deal and at the end of every year. Here are five actions that successfully financial people practice regularly.

• Monitor activity. Some of the most successfully financial people can state how much they have in a specific account at any time. This may be a bit excessive, but you need to constantly stay on top of your accounts. It can be shocking to see exactly where your money goes every month. When is the last time you spent a few minutes looking at your bank statement? If you are like most people you probably skim through it and focus on the bottom line. Financially savvy people know, and can justify, every expense. They know all the seemingly miscellaneous expenses such as gym memberships, Netflix, magazine subscriptions, coffee runs and lunches that have a huge impact on your account. They constantly look for ways to reduce, or eliminate, these expenses without changing their daily routine too much. Without looking at your monthly statements you really don’t know what is going on with your finances. Don’t spend more time scrolling through the new releases on Netflix than you do looking at your bank statement.

• Plan for future. We live in a short attention span, instant gratification society. In and of itself there is nothing necessarily wrong with that, but financially speaking it can get you in trouble. Successfully financial people know that five, ten and even twenty years often comes much quicker than we would like. One day you are planning to have children and the next they are off to college. You need to always have a roadmap for everything you do, and want to do, in your business. Most Americans do not have any money saved for retirement. As an investor there is no 401k or other savings plan to constantly contribute to. You need to have the discipline to put a percentage of every deal or every rent received into a dedicated savings account. This account can only be touched in true emergencies. Hopefully you will never need to tap into it and you will have some kind of nest egg for retirement down the road. With everything going on in your daily life it is easy to disregard your long-term plan. In the blink of an eye you will be staring at retirement and be glad you planned for the future.

• Follow budget. It is difficult staying on a budget. Regardless of how much you make spending money is always tempting. With e-commerce so prevalent we can buy almost anything we want at any time. The problem is that things have a way of quickly adding up. A new pair of sneakers, some gadgets for the grill, a nice bottle of wine individually won’t break the bank but added up have a definite cumulative effect. It is not unrealistic to have hundreds of dollars every month go to unaccounted for items. When this happens, you take money you planned on saving or using to pay bills to compensate. You can end up spending money on closings that are weeks away from happening. The best way to avoid all this is by following a strict financial budget. Give yourself a realistic allocation every week and stick to it. You will have to make sacrifices and it won’t be easy, but if you know where to pick and choose your battles it will be the best thing you can do.

• Seek positive return on investment. Every dollar you spend should provide you with a positive return. This concept doesn’t necessarily apply to investments you make. Paying to have the living room painted in a rental or a property manager deal with tenants often gives you a greater return on your time. With additional time you can complete more work projects and ultimately improve your bottom line. You also need to focus on your returns with every project you get involved in. Closing deals is great but the goal is to make a return. If the numbers aren’t there it is ok to pass and wait for a better deal to come along. Tying up funds with minimal upside is not a recipe for financial success.

• Pay for quality. There is a big difference between being cheap and savvy. Investors who are cheap constantly look to put band-aids on things and often just delay the problem. Financially savvy investors are ok with spending money on quality items they know will give them extended use. Instead of spending money on used appliances or band-aid repairs they bite the bullet and buy quality products. By doing this they don’t have to worry about the item for years and don’t throw money. Paying for quality will cost you more money initially, but over the long haul it is the financially savvy thing to do.

Staying on top of your finances is a constant battle. However, there are several little things you can do that have a tremendous impact.

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