LOUISVILLE, Ky. (WDRB) -- Most people dream of being rich. But financial expert Mark Lamkin from Lamkin Wealth Management says it's no accident that some people have money and others do not.
Lamkin says it's about discipline, determination and accumulating wealth. Financially responsible and successful people don't build their wealth overnight. Becoming rich takes serious willpower and long-term vision. You have to be able to keep your eye on the prize of financial freedom, be willing to sacrifice your present wants for the sake of your future and develop good habits to win.
Five things Rich people do that most don't!
You can be your own worst enemy when it comes to financial success. It's all too easy to procrastinate and neglect what needs to be done and, meanwhile, give in to temptation and spend more than you should. It's the perfect recipe for not becoming rich.
The best way to protect yourself from yourself is to automate your savings. That means setting up recurring transfers on a regular basis from your checking account to your savings and investment accounts (or setting up auto deduction from your paycheck to your employer-sponsored retirement plan). This way, you force yourself to avoid bad money habits and save what you would likely otherwise spend. If you haven't already, set aside 15 minutes on your calendar now to do it. Not later, now. Your rich future self will thank you.
2. Get educated
Successful investors take the time to study key financial concepts, learn the dos and don'ts and stay abreast of current trends. They take advantage of opportunities to strengthen and expand their understanding and expose themselves to financial information on a daily basis. Take a cue from them and subscribe to The Wall Street Journal , watch CNBC , pick up Fortune instead of a gossip magazine and follow financial experts on Twitter . Become a devoted student of money, and you can master the science of getting rich. If you need an overall starting point, start with Dave Ramsey. For beginners, his material is among the best to get started.
Be careful not to overwhelm yourself, and only follow advice from credible sources, so you don't fall victim to progress paralysis or unsuitable and potentially dangerous investments.
3. Spend money to make money
It's true that there's a price to pay for wealth, but unless you're Warren Buffett, it is not gambling - and losing - on stock picking. Impulse, naiveté, and emotions, particularly greed and fear, can seriously hinder your chances of being rich, if you let them. The best way to protect yourself and get a step up on your financial goals is to first invest in a team of financial professionals. This means hiring a qualified and experienced financial adviser, accountant and in complex cases, an estate planner. Yes, working with pros will cost you, and you can still do some DIY investing, but their objectivity, expertise, personalized guidance and ongoing monitoring can be well worth it (and relieve you of the huge burden of figuring it all out on your own).
4. Maximize contributions
When it comes to retirement account contributions, you've probably been told to start small and then try to increase the amount by at least 1% every year until you max out. If you've been procrastinating, then yes, even a small starting contribution is better than none. The problem is that small efforts can lead to small results. If you want to be rich, you have to save like you mean it. And that means contributing the max amount allowed from the get-go (and at least as much as your employer will match in your 401(k) plan).
This is especially true if you are starting to save later in life and need to play catch up. You might worry that maxing out your contributions will squeeze your cash flow too tightly, but it is easier to get in the habit of spending less if you don't have that extra to money to spend in the first place. It's much harder to increasingly scale back your budget year after year to accommodate increasing contributions.
Think about this: If you invested $10,000 and left it to grow for 40 years, assuming an average return per year of 8%, you would end up with over $217,000. But if you waited 10 years and invested $20,000 - twice as much - you would only end up with just over $200,000.
5. Live like you're poor
Have you ever met someone who is unassuming and modest and then were surprised to later learn that they are actually rolling in dough? Lamkin says he had an older client who was stuck in 1983: he wore ugly brown suits and running shoes, drove a beat-up baby blue Volvo station wagon and lived in the same modest house he bought 40 years ago. Turns out, this man was an uber-successful entrepreneur and multimillionaire - and even richer because of his humble habits. Millionaires are all around us, and many of them are probably not who you would think. This is because they smartly live below their means and save their money rather than showcase it. Of course, it's easy to live below your means when you have millions, but even if you have far less, getting into the habit of spending minimally now will help you have a lot more later. The trick is adopting a "less is more" mentality and sticking with it, even when your income and net worth increase in the future.
Lamkin Wealth Management 5151 Jefferson Blvd., Suite 102 or 901 Lily Creek Drive Ste. 102 office: 502-961-6550 Office toll free: 866-961-6550 www.lamkinwealth.com "Securities and advisory services offered through LPL Financial, Member FINRA/SIPC and an Investment Advisor"