7 traits of people who are good with money
While some people seem to have a natural knack for managing their finances, others may struggle. However, certain traits are commonly observed in those who are particularly adept at handling money.
In this article, we'll explore seven key characteristics that define people who are good with money, offering insights and actionable advice for anyone looking to improve their financial wellbeing.
They Live Within Their Means: People who are good with money are acutely aware of their financial limitations and make conscious efforts to live within them. This involves meticulous budgeting and a clear understanding of the difference between wants and needs. They avoid the pitfalls of lifestyle inflation - where increased income leads to increased spending. Instead, they allocate any extra income towards savings or investments. This discipline helps in building a secure financial buffer and ensures they are prepared for unexpected expenses without resorting to debt.
They Are Goal-Oriented: Setting clear financial goals is a hallmark of those good with money. Whether it's saving for retirement, a child's education, or a deposit on a house, they have specific objectives in mind. This goal-oriented approach provides a roadmap for their financial decisions, helping them to stay focused and motivated. They break down these goals into smaller, achievable targets, making the process less daunting and more manageable. Regularly reviewing and adjusting these goals ensures that they remain relevant and aligned with their changing life circumstances.
They Understand the Value of Saving: Good savers appreciate the importance of building a robust savings cushion. They prioritise saving a portion of their income, no matter how small, understanding that consistent saving over time can lead to significant financial growth due to the power of compound interest. This habit of saving isn't just limited to a general savings account; it extends to retirement accounts, emergency funds, and other forms of financial reserves. By diversifying their savings, they are better prepared to handle both short-term financial hiccups and long-term financial commitments.
They Are Informed Decision-Makers: Financially savvy individuals make informed decisions about their money. They dedicate time to educating themselves about financial matters, staying up-to-date with economic news, and understanding the basics of investment and savings options. This knowledge enables them to make calculated decisions that align with their financial goals and risk tolerance. They’re not swayed by market hysteria or the latest investment fads; instead, they make decisions based on sound financial principles and personal research.
They Avoid High-Interest Debt: People good with money are wary of high-interest debt, particularly from credit cards or payday loans. They understand that such debts can quickly spiral out of control, eating into their financial stability. If they do have to take on debt, they prioritize paying it off as quickly as possible to minimise interest payments.
They Regularly Review and Adjust Their Finances: Adaptable financial planning is a key trait of those who manage money well. They regularly review their budgets, investments, and savings plans to ensure they are on track to meet their financial goals. This periodic review helps them adjust to life changes, such as a new job, a growing family, or approaching retirement. By staying flexible and responsive to changes in both their personal life and the broader economic environment, they can make timely adjustments to their financial strategies, ensuring continued financial health.
They Are Patient and Long-Term Oriented: Good financial management often requires patience and a long-term perspective. People good with money understand that wealth is usually built over time and not overnight.
In conclusion, adopting these seven traits can significantly improve your financial wellbeing. While everyone's financial situation is unique, incorporating these habits into your daily life can help pave the way to a more secure financial future.