Too often, people don't bother to learn about investing money until later in life. By then, they've probably lost years of potential compound interest, squandered away most of their money, and made countless financial mistakes. Instead of making money mistakes yourself, learn from some of the most well-known financial experts. Let’s explore eight financial lessons from famous millionaires that can help you.
"Live like no one else now, so you can live like no one else later." Dave Ramsey is a popular radio show host, author, and businessman, and he's well known for this quote. By making some sacrifices and making smart financial decisions early on in your career, you can live a great lifestyle in the future. Essentially, be frugal and make intelligent investments in your 20s, 30s, and 40s when others are frivolously spending money. That way, you can build up a nest egg so it will begin working for you and exponentially grow more and more as your money continues to snowball. It will allow you to live like no one else. Most of the time, financially irresponsible people can't tell you where their money went and why they're broke. Being smart with your money first will pay excellent rewards.
"The key to making money is to stay invested." Suze Orman is an author, financial advisor, motivational speaker, TV and podcast host. She's written many popular personal finance books. Orman says that in order for the average person to be a successful investor, they should stay invested over a long period of time. This includes holding on during market fluctuations, times of loss of income, and emergencies. Don't cash out your retirement accounts when the market drops or when you experience a temporary interruption in your income. She recommends keeping an emergency fund of eight months of living expenses to hedge against potential problems. Generally, it's recommended to keep three to six months of expenses saved up in a cash account, but keeping up to a year can be beneficial to some individuals. This savings will allow you to stay the course when and if extra money is needed in a hurry.
"Investing is not nearly as difficult as it looks." John Bogle was the founder of Vanguard and the man who created the first index fund, leading to many opportunities for investors. Bogle wanted to provide a simple form of investing, one that didn't necessarily require buying the perfect stock at the right time. Instead, he believed that you could make great money buying a sizable selection of stocks and dollar-cost averaging into them over time. He introduced the S&P 500 index fund in 1976, which allowed investors to buy shares of the S&P 500 for a very low cost. Instead of being fancy with your investments, focus on diversifying, keeping costs low, and avoiding making emotional investing decisions based on stock market swings. Invest for the long term and keep your money invested rather than trying to time the market.
"Arrival at a new destination only occurs from leaving your current location." Chris Hogan is a best-selling author of the book Everyday Millionaires and a personal finance expert. Having done the largest study ever on millionaires, he knows the qualities that make people successful. Many of us dream of retiring wealthy, but are you doing what you need to in order to make that a reality? If your current situation won't help you get there, you need to make some changes. Rather than dream all day, dream just a little bit. Once you've figured out your dream, lay out a plan to get there and start taking the steps that will bring you closer. Make a plan and revisit it regularly so you make sure it's bringing you closer to your goals.
"You're already a financial trader." Author, financial planner, and life coach Tony Robbins says that if you work for a living, you're trading your time for money. Robbins claims that this is just about the worst trade you can make, because you can always get more money, but you can't get more time. Once you realize that trading time for money is inefficient and not something you need to do, you can work on building systems to capitalize on this concept. The wealthiest people earn money while they're sleeping. Creating sources of passive income will take some time up front, but it will reward you in the future. Would you rather work to create passive income streams which will eventually pay you to sleep, or would you rather work like most people and never create those systems, causing you to get stuck in the hamster wheel forever? Focus on creating these passive income streams early on.
"The difference between successful people and others is how long they spend feeling sorry for themselves." Most of us know Barbara Corcoran from the TV show Shark Tank. She knows from experience that when you're close to hitting rock bottom, it's easy to feel sorry for yourself rather than take the necessary actions to improve. We often focus on problems we're having and how they impact us, without figuring out how to fix them. Corcoran says to identify your money problems and get started walking down that path to change your financial life for the better. You'll make much more positive progress by doing this. Besides, rough times are inevitable, so it's best to develop a process to deal with them effectively.
"You can't get rich watching and wondering. You have to take action." David Bach is best known for his book The Automatic Millionaire, which teaches people how to become rich on autopilot. He's also famous for his term "the latte factor," which demonstrates how much money you could end up with if you give up your daily latte and invest that money instead. It's not about saving five dollars or so; it's about the big picture of how small sums of money could grow to large amounts over time. Poor people often wonder how some people are able to build wealth as they wait for their six-dollar Starbucks coffee. By cutting small, meaningless expenses, even low-income earners have the ability to get rich over time. However, it's not just about saving on these small expenditures; you have to take action and direct that money into investments.
"We only get to play this game one time." Gary Vaynerchuk is an entrepreneur, investor, author, blogger, and motivational speaker. He wants people to remember that money is only one part of your life. It's an important aspect, and it's a tool that can enhance your experience here, but you need to take your whole life into consideration. In other words, you don't want to spend your entire existence obsessing over money. Position yourself so that you have the opportunity to retire early if you choose, because that will free up your time. You only live once, so make sure you're focused on making smart decisions that will get you closer to other goals that are important to you.
Learning from others is one way to keep yourself from making mistakes that are completely avoidable. Consider these lessons from famous multi-millionaires and money experts. Their knowledge could save years of frustration and help you reach your goals sooner.
