4 Money Habits the Wealthy Use To Avoid Feeling Broke
It might be hard to believe that someone earning well above the median household income can feel broke, but it happens more often than you think. A high income doesn't automatically mean financial freedom.
If most of someone's wealth is tied up in a home or investments, they may be cash-poor and have little money available for everyday expenses. Lifestyle choices are another factor. When income goes up, spending often does too. “Larger homes, expensive vehicles, private schools and lifestyle upgrades can consume every additional dollar earned, leaving little room to build real financial security,” said Danny Ray, Founder of PinnacleQuote, "The Life Insurance Experts."
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While there's no single formula for building wealth, experts say certain financial habits can help reduce money stress and create a greater sense of financial stability. Here are four of them.
Save Before Spending
After paying monthly expenses, wealthy people don't go on a spending spree with what's left in their accounts, they save first, according to finance expert Andrew Lokenauth of Be Fluent in Finance.
"The wealthiest people I worked with on Wall Street never relied on willpower; instead, they set up transfers that move 20% to 30% of every paycheck into savings and investments the moment it hits their account," he said. Then what's left in checking is guilt-free spending money.
This kills the broke feeling because they never have to do mental math at the store, according to Lokenauth. “I've noticed the anxiety around money comes from uncertainty, wondering if you can afford something,” he said. “When your future is already funded, spending $200 on dinner feels fine because the important stuff got paid first.”
Have a Cash Cushion
Having a substantial cash reserve is a habit many financially successful people prioritize. Lokenauth follows his own advice and keeps a year's worth of expenses in cash, which he learned while working in banking.
"I've met people earning $400,000 or more who felt broke every month because everything was tied up in their house, their cars and illiquid investments," he said. "A fat cash buffer changes your psychology because you stop fearing surprise bills and you make calmer decisions because no single expense can shake you."
Have the Right Mindset
The way you think about money can help build wealth and develop good habits. Rather than chasing a bigger paycheck, many wealthy people focus on making the most of the money they already have, according to Ray.
“The wealthiest people I know focus less on how much they make and more on how much they keep,” he said. “They treat saving and investing as fixed monthly expenses, avoid unnecessary lifestyle inflation and make purchasing decisions based on long-term value instead of appearances.”
Track Net Worth Every Month
Monitoring your accounts is a healthy routine that can help you stay on top of your finances and avoid surprises. It’s something that rich people do regularly, according to Lokenauth.
“Wealthy people look at the full picture (assets minus debts) rather than just one checking account balance,” he said. “A checking account looks scary right after the mortgage and credit card bills are paid and that snapshot makes even rich people feel poor, but net worth smooths that out.”
When you watch your total financial worth climb month after month, a low checking balance no longer triggers panic because you’re winning the long game, says Lokenauth. People with money don't always avoid financial stress because they earn more — they often avoid it because they've built habits that support long-term financial stability.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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