By Jeremy Wallace and Andrew Hart
Ask 10 people their definition of success and you will get 10 different answers. Even among the world’s most successful entrepreneurs and businesspeople, answers will vary. Warren Buffet says “you’ll really measure your success in life by how many of the people you want to have love you actually do love you,” (1) but Jeff Bezos says that “success can come through iteration: invent, launch, reinvent, relaunch, start over, rinse, repeat, again and again.” (2)
While it may be difficult to pinpoint one single definition of financial success, when examining the lives and habits of successful people, we can find some commonalities. Let’s take a look at the top 6 habits to adopt if you are pursuing financial success.
1. Cultivate Financial Confidence
One of the best habits to build is financial confidence. Many people define financial confidence by how much money you have (e.g., having money gives you financial confidence). But it’s actually the opposite. Feeling confident in your ability to save money, build wealth, and make wise financial decisions is what brings financial confidence (and ultimately financial success), not the other way around.
Making the conscious mindset shift from one of cynicism and doubt to one of determination and confidence can make a huge difference in your ability to achieve your goals. In fact, recent research suggests that a positive outlook, in relation to personal and family goals first and then professional or business goals, makes you more likely to achieve them. (3)
Don’t be afraid to dream big financially. You have the power to achieve your goals by proactively planning, dreaming, and strategizing. Think of your most lofty financial goal and break it down into smaller substeps. Does it sound impossible to save $100,000 in five years? Think of saving $20,000 every year instead. It’s easy to get discouraged when it feels that substantial progress is so far away. So, try acknowledging and celebrating small milestones along the way. This can help you stay motivated to keep working toward your goals.
2. Improve Your Financial Literacy
Another great way to achieve financial success is by improving your financial literacy. It sounds cliche, but there is a reason the saying “Knowledge is power” is so commonly quoted. As with any topic, the more you know about finance, the more likely you are to make wise financial decisions. Sure, you can hire financial professionals to advise you along the way (see point 6), but nothing beats having a sense of agency over your own finances. You can rely on professionals, but you should also rely on yourself to grow your financial understanding and improve your financial literacy.
Reading books by financially successful people, listening to podcasts, reading magazines like The Economist and Kiplinger’s, or taking a financial education course are just a few ways to take your financial future into your own hands and improve your chances of achieving financial success.
3. Avoid Everyday Debt
You’ve probably heard it said that wealthy people avoid debt like the plague. Financially successful people live by this concept, understanding that credit should be used sparingly and not as a way to live beyond your means.
Credit can be a useful financial tool when purchasing large assets that will appreciate and bring value down the line (like a house), but it can be a slippery slope if used for everyday expenses or things you don’t need. Avoid overburdening your finances with credit card debt, and if you do use credit, make sure the balance is paid off every month. Revolving credit card debt is the quickest way to rack up interest charges and fees that can take years to pay off, which makes it exponentially harder for you to achieve true financial success.
Try shopping without your credit cards and planning ahead for large purchases instead. Minimizing the amount you have to borrow and creating a repayment plan are two ways to avoid the trap of everyday debt.
4. Don’t Keep Up With the Joneses
While you do want to follow the good financial habits of successful people, you don’t want to get caught up in thinking that your life needs to look exactly like theirs. This is especially true when you’re working toward a certain lifestyle. You won’t be able to afford that lifestyle right away, so don’t feel pressure to keep up with the Joneses.
In today’s social-media-driven age, it can be tempting to compare yourself to your peers, feeling pressure to surround yourself with nice furniture, designer clothes, expensive cars, grand vacations, and the latest technology. But these items will only set you back in your quest for financial success, especially if they were funded with everyday credit (see point 3).
Financial success is often built from doing the things that other people don’t want to do: tracking expenses, minimizing your spending, saving and investing religiously, etc. These small habits, when done consistently over time, will generate compounding growth and provide the framework you need for financial success.
5. Manage Your Risk
There are many ways a financial plan can be derailed. Whether this comes in the form of investment risk (hello, market volatility!), health risk, auto, liability, or homeowner risk, properly managing these potential obstacles is one of the most important ways to protect your accumulated wealth and build financial success. You can have a sizable amount saved, but it can be wiped out in an instant if you get sick, get in an accident, or experience any number of financial curveballs life may throw.
The good news is that though there are seemingly endless risks out there, many of them can be mitigated through proper insurance and estate planning. Get in the habit of regularly checking your insurance coverage amounts to ensure they’re adequate enough to protect what you’ve already built. Consider an estate plan to protect your wealth in the event of incapacity or death, and don’t forget that making sure you are adequately covered now will save you time, money, and energy in the future.
6. Seek the Guidance of a Professional
Though many of these points mention the importance of building your own financial confidence and literacy, working with a financial professional is also a great way to achieve financial success. Not only are financial advisors a good resource for additional education, but they can also help you stay on track and hold you accountable for the goals you want to achieve.
Advisors have access to industry tools, technology, and continuing education that make tracking, implementing, and projecting the overall state of your financial plan much easier and much more accurate than if you were to do it completely by yourself. Consider working with an advisor you trust to maximize your potential to achieve financial success.
Take the Next Step
Are you ready to take the next step in your journey to financial success? These 6 habits are a great place to start. But you don’t have to do this on your own. Learn more about how Wallace Hart Capital Management can help you achieve financial confidence through these habits and more by contacting us at 859.300.3030 or requesting an appointment online today!
Jeremy Wallace is founder and chief investment officer at Wallace Hart Capital Management, an independent financial services firm committed to offering comprehensive advice and customized services. Jeremy has 20 years of experience in the financial industry and is passionate about helping clients preserve and enhance their wealth so they can pursue their passions. Jeremy graduated from Emory University with a degree in international economics and a certificate in financial planning. Outside of the office, Jeremy spends most of his free time with his wife, Julie, and their three children, Isabel, Lincoln, and Reid. He is an avid Chicago Cubs baseball fan, and he enjoys golfing with his wife and traveling with his family. Learn more about Jeremy by connecting with him on LinkedIn.
Andrew Hart is co-founder and chief planning strategist at Wallace Hart Capital Management, an independent financial services firm committed to offering comprehensive advice and customized services. Andrew has 15 years of experience in the financial industry and strives to provide new and better strategies and processes to improve his clients’ lives. Andrew graduated from Wittenberg University with a bachelor’s degree in business management and holds a certificate in financial planning from Georgetown University and the CERTIFIED FINANCIAL PLANNER™ certification. When he’s not working, you can find him enjoying the city of Lexington, Kentucky, teaching at the University of Kentucky’s Financial Planning program, and spending time with his wife, Susan, twin sons, George and Ted, and daughters, Merritt and Philippa. To learn more about Andrew, connect with him on LinkedIn.