Stop this Mindset trap if you want to manage your money like the rich

It’s tax time and you’re expecting a tax refund. You decide “this is my vacation money”. Meanwhile, you have credit card debt to pay off. What makes you see this money differently than if you would’ve gotten it in a paycheck? 

Mental accounting. 

Mental accounting is a behavioral bias that leads you to treat money differently depending on where it came from or what it’s meant for. While it might sound harmless, this kind of thinking can mess with your financial decisions. 

So, how do the 1% steer clear of these pitfalls?

Create a Financial Plan

Wealthy people tend to look at their money as one big pot rather than separate little pots based on where the money came from or what it’s for. They work off of a financial plan and see the bigger picture, which helps them make decisions based on their end goal.

Instead of getting caught up in the excitement of where money comes from, like a big bonus or a big commission check, wealthy people see it as part of the pie that will help their overall long-term financial goals. 

MAKE time for your finances

“I don’t have time” is such a lame excuse. If you knew you’d die a week from today, would you make time to plan your finances? Yes, you would. So stop telling yourself you have no time because that’s a bullsh*t excuse to procrastinate something you don’t want to do. 

Keeping a regular schedule for checking up on their finances helps wealthy people stay on track. It’s like a routine tune-up for their financial plan, making sure they’re always heading in the right direction.

Automate savings or investing 

Automation is a game-changer. By automatically moving money into savings or investment accounts, wealthy individuals don’t get a chance to think about spending that “extra” cash—it’s already working for them.

Educate yourself or find a professional

Wealthy people often spend time learning about common money traps and how to avoid them. They might work with financial advisors who clue them in on things like mental accounting, so they’re more aware of it in their daily lives.

Diversify

By spreading their money across different investments, wealthy individuals don’t get too hung up on any one source of money or one type of investment. This helps them think about their finances more evenly and rationally.

If you’re looking to protect and grow your legacy, reach out to my team and we’ll help you get there. 

Disclaimer: The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice. All content on this site is information of a general nature and does not address the circumstances of any particular individual or entity.

There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk. (26-LPL)

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