Spending Priorities Dictate Financial Circumstances

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How you prioritize what you do with the money you earn, dictates whether or not you will be sound financially. As I learned from my Rich Habits research, Saver-Investor Millionaires do things very differently from non-millionaires, when it comes to prioritizing their spending.

For the average non-millionaires out there, this is how they prioritize their spending:

#1 Priority – Short-Term Needs/Wants

  • Pay bills to meet standard of living – paid for out of earnings
  • Schooling for children (Includes college costs, if children are in college) – paid for out of earnings
  • Buy home-related things, with any excess earnings

#2 Priority – Long-Term Needs/Wants

  • General Savings
  • Retirement Savings
  • College Savings

For the average Saver-Investor Millionaire in my Rich Habits Study, this is how they prioritize their spending:

#1 Priority – Long-Term Needs/Wants

  • General Savings
  • Retirement Savings
  • School Savings (this includes college savings)

#2 Priority – Short-Term Needs/Wants

  • Pay bills to meet standard of living – paid for out of earnings. If unable to meet their expenses, they will reduce their standard of living or seek to earn more money by creating a second stream of income (2nd job or side business)
  • Schooling for children – paid for out of School Savings
  • Buy home-related things – paid for with any excess earnings

Because the spending priorities for non-millionaires is backwards and focused on the short-term, they never adjust their standard of living and wind up saving very little for their future.

Because Saver-Investor millionaires focus their spending on the long-term, they are able to pivot and make adjustments to their standard of living in order to continue to create savings, which they are able to invest for the long-term.

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Thomas C. Corley About Thomas C. Corley

Tom Corley is a bestselling author, speaker, and media contributor for Business Insider, CNBC and a few other national media outlets.

His Rich Habits research has been read, viewed or heard by over 50 million people in 25 countries around the world.

Besides being an author, Tom is also a CPA, CFP, holds a master’s degree in taxation and is President of Cerefice and Company, a CPA firm in New Jersey.
 
Phone Number: 732-382-3800 Ext. 103.
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