What are the top 5 money habits of successful people?

AI's response in regular print | Beverly Hills, CFP®, Joe O'Boyle's in italics

“What are the top 5 money habits of successful people?”

Successful people often possess certain money habits that contribute to their financial well-being and success. Here are five key money habits commonly observed among successful individuals:

1. Setting Financial Goals: Successful people set clear and measurable financial goals by creating a written plan and then work diligently towards achieving them. They have a long-term vision for their life and break things down into smaller, actionable steps. They exhibit discipline in sticking to their financial plans, avoiding impulsive decisions, and maintaining a consistent focus on their goals.
   
   A common financial goal amongst successful people is to create multiple sources of income. Successful people diversify their income streams through investments, side businesses, or passive income sources, reducing reliance on a single income source.
   

2. Budgeting Discipline: Successful people prioritize creating and sticking to a budget. They actually take the time to track their income and expenses and make informed decisions about spending, saving, and investing. Budgeting helps them maintain control over their finances and make intentional choices aligned with their goals.
   
   In my 20 years of financial planning experience, I’ve learned that most folks can’t answer these 3 simple questions:
   —Exactly how much am I taking home every month?
   —How much am I spending each month? (pro tip: use your last 3 month spending average and then compare that against your last 12 month average monthly spending figure)
   —How much am I intentionally saving and investing each month towards my specific goals?
   

3. Saving and Investing: Successful individuals understand the importance of saving and investing their money wisely to take advantage of the incredibly powerful combination of time and compound returns. They make a habit of consistently and intentionally setting aside a portion of their income for savings and investments. They also educate themselves about different investment options, diversify their portfolios, and seek professional advice when needed.
   
   A common strategy amongst successful people is to automate their savings and investing plans. Once you've established the automated transfers, the process becomes effortless and doesn't demand ongoing attention. It frees up your time and mental energy for other financial activities.
   

4. Continuous Learning: Successful people recognize that financial knowledge and skills are crucial for long-term success. They dedicate time to educate themselves about personal finance, investment strategies, and economic trends. They seek opportunities to enhance their financial literacy.
   

5. Living Below Their Means: Successful people make thoughtful decisions when it comes to their purchases, they differentiate between needs and wants, they avoid excessive spending and lifestyle inflation, and focus on long-term financial stability. Living below your means requires practicing delayed gratification and resisting impulsive purchases by focusing on clearly articulated long-term financial goals. They understand that small sacrifices today can lead to greater rewards tomorrow. They prioritize saving and investing over unnecessary luxuries that don’t add value to your life.
   
   If you asked most financial advisors, what is the most common trait or habit that their successful clients share, “living below your means” would be at the top of the list. You “live below your means” by spending less than you earn (or are receiving from your income sources such as a pension / social security / investments in stocks/bonds/real estate etc.).
   
   ”What are 5 great things about ‘living below your means’ that successful people embrace?
   
   “Living below your means” refers to spending less than what you earn and being mindful of your expenses. Here are five great things about adopting this approach:

   1. Financial Security: Living below your means provides a sense of financial security. By spending less than you earn, you have the ability to save and build an emergency fund. This cushion of emergency reserves can help you navigate unexpected expenses or financial hardships without going into debt.

   2. Reduced Stress and Debt: When you live below your means, you minimize financial stress. You're not constantly worried about making ends meet or struggling to pay off debt. Living within your budget allows you to have a greater sense of control over your finances and reduces the burden of debt.

   3. Increased Savings and Investments: Living below your means enables you to save a significant portion of your income. This allows you to build up savings for future goals, such as buying a home, starting a business, or retiring comfortably. It also provides the opportunity to invest your money and generate additional income over time.

   4. Flexibility and Freedom: Living below your means gives you greater flexibility and freedom in your choices. With lower financial obligations, you have more options when it comes to career decisions, pursuing passions, or taking calculated risks. Financial freedom allows you to have more control over your time and make choices that align with your values.

   5. Reduced Lifestyle Inflation: Living below your means helps you avoid the trap of lifestyle inflation, where your expenses increase as your income grows. By keeping your expenses in check, you can maintain a simpler and more sustainable lifestyle. This approach allows you to prioritize experiences, relationships, and personal fulfillment over material possessions.

Remember, these money habits are not limited to successful individuals alone but can be adopted and practiced by anyone seeking financial stability and success. It's never too late to develop these habits and improve your financial situation.
what are the top 10 money habits of successful people?

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Joe O'Boyle is the founder and principal of O'Boyle Wealth Management, a full service financial planning and investment management firm, located in Beverly Hills, California. Joe O’Boyle was named to InvestmentNews 40 under 40 class of 2016, and has a catalog of financial planning and investing articles on Money.com & U.S. News. Disclosure information.