10 Habits for a Richer, Happier Life

I traveled the road to financial freedom, but it wasn’t a weekend trip. I didn’t get here by winning the lottery, selling books, or writing viral posts. Nope, I did it walking the same long, winding, and sometimes dimly lit path you’re on. Here’s my flashlight.

1.      Take stock or stay stuck.

 Get control of your income and expenditures. Understand all your sources of income and where that cash is going. If you don’t know where your last dollar went, it’s tough to plan where your next dollar will go.

To achieve any measure of wealth, you need to understand and internalize this one simple rule: spend less than you make.

Saving cash every month is how you get wealthier. Spending more than you earn makes you poorer. Break the cycle of living paycheck to paycheck by saving cash early and continuously.

2.      Make a plan or make excuses.

Develop a robust and dynamic planning process covering life’s accumulation and withdrawal stages. Your plan needs to be purpose-built and goals-driven.

What gets measured, gets done.

Your life evolves and adapts and so too, should your plan. Periodically review progress and make needed course corrections focusing on key drivers: contributions, withdrawals, realistic goals, investment selection, and following a dynamic planning process.

Whether you develop the plan on your own or with the assistance of an advisor, you need to understand it and take responsibility for its path to financial independence.

No one will care about your money as much as you do.

3.      Use debt wisely—don’t let it use you.

Debt is neither bad nor good but rather a powerful tool that comes at a cost you should respect. Paying interest is nothing more than giving the lender your money in exchange for temporarily borrowing their money.

If your goal is to accumulate wealth, avoid giving your money to other people whenever possible.

Just like a chainsaw or a bottle of bourbon, debt is a powerful tool. Used carefully and judiciously, it can make your life easier and amplify positive returns. If used indiscriminately, debt can undermine your decision-making or worse, wipe out your investment portfolio.

Those who understand interest earn it. Those who don’t, pay it.

4.      Don’t just save, invest.

The discipline of saving and investing every month puts compounding on your side while limiting the impact of emotional decisions during periods of market volatility.

Let the power of compounding portfolio growth do the heavy lifting—without interruption.

You don’t need to be a mystical stock picker. For the core of your portfolio consider low-cost, broad-based index funds. Vanguard’s Total Stock Market ETF (VTI) or S&P 500 ETF (VOO) is a good place to start your search.

5.      Don’t speculate.

Investors need to remain mindful of company fundamentals, and cautious of blindly following a fluffy narrative and the crowd to dizzying heights. Investing is probability-based. Speculating is gambling.

But if you can’t resist the urge to have some “play money” in the stock market, keep it to no more than 10% of your portfolio. And good luck.

6.      Skill pays, luck strays.

There are a lot of folks who have knowledge and years of experience but who fail to recognize the difference between quality decisions and simple luck. Or worse, they continually believe their decision-making skills are superior and their less-than-stellar track record is attributable to just bad luck. Appreciate the difference and focus on what you can control.

The amount of your monthly contributions and monthly withdrawals are the two most important factors in your financial planning, and both are completely within your control. Bull and bear markets are luck of the draw.

7.      Block out the noise.

Nothing undermines rational financial planning and investing behavior more than the relentless onslaught of media noise. In fact, the World Economic Forum’s 2024 Global Risk Report identified misinformation and disinformation as the most severe short-term risk the world faces.

The daily barrage of “breaking news” is not generally relevant to a long-term investment plan. Because of the sheer volume of market data and the tendency of social media to spread misinformation, it’s essential you have faith in your planning process and stick to it.

Don’t chase the hot hand, the hot stock, the hot story. Stay calm and remain cool.

8.      Seek out wisdom.

Read, learn, and discuss with those you trust. A study of 1,200 wealthy individuals noticed one trait the rich all have in common: They self-educate by reading. “The middle class reads novels, tabloids, and entertainment magazines. Rich people would rather be educated than entertained.”

We can learn from our own mistakes, but I can assure you that learning from the mistakes of others is less expensive.

Read and learn from those who have already traveled the road that lies ahead of you. Develop your own informed perspective and do not forget the lessons history has taught us.

9.      Recognize there are only seven ways to get rich (Don’t pick #3!)

1.      Inherit money

2.      Marry money

3.      Steal money

4.      Leverage a unique talent

5.      Get extraordinarily lucky

6.      Own or run a successful business

7.      Spend less than you make and invest wisely for the long-term

The first six ways are rare, often unreliable, and at least one of them will land you in jail.

Follow number seven, and you’re destined to eventually become wealthy.

10.   Enjoy the journey.

Life is not a dress rehearsal: there is no do-over. Considering both current-you and future-you, decide what truly makes you happy and then spend – or save – accordingly.

Balance today’s joy with tomorrow’s freedom.

You can look wealthy or be wealthy, but you probably won’t be around long enough to achieve both. So regardless of who might be watching, every now and then get up and dance.

As always, invest often and wisely. Thank you for reading.

The content is for informational purposes only. It is not intended to be nor should it be construed as legal, tax, investment, financial, or other advice. It is merely my own random thoughts.

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