15 things you won’t hear money experts say

These two words are used to describe what people do with money they’re not actively spending, but they are entirely different actions. And while they both have their benefits, money experts are more invested in, well, investing.

“[Money experts] understand that their savings have to be invested in order to have the potential for compound growth,” says Wes Moss, certified financial planner. “Savers have a fear mentality, stash their money away in the bank, and never really get momentum from their assets. Investors, on the other hand, have their assets invested in areas that, over time, have produced high single-digit or low double-digit annual returns.”

It’s okay to treat yourself with your extra income, but money experts know that careless or unnecessary spending can turn into an ongoing self-destructive tendency. Bob Finley, owner of Virtual Asset Management, says that his high net worth clients question whether a purchase will really improve their lives before following through.

“Most of my clients don’t splurge on investments,” says Finley. “Despite being able to afford first class, most of my clients always fly economy because they know the cost of first class is multiple round trips in economy.” Many financially successful people also use other strategies to save on travel, such as Tripadvisor, which can help you with easy price comparison tools and advice from other travellers.

Don’t miss these ways to trick your mind into spending less.

High distinctions aren’t a requirement for success. “Those with exceptional academic performance can evaluate risk too stringently, coming up with dozens of reasons why an idea will not work, and refusing to act,” says James Whittaker, author of Think and Grow Rich: The Legacy.

“However,” he continues, “the most extraordinary achievers spend more time focusing on the opportunity. Obsessed with mission success, they surround themselves with the people who can bring their dream to life, and they get to work on changing the world.”

Instead of asking if they can afford to purchase something, financial experts teach their clients to ask a more important question: is it in the budget? Being purposeful with spending can help people afford the things that matter most to them. Shopping around at multiple stores to find the best deal on expenses that are in the budget can also be helpful.

Julie Ramhold, consumer analyst with DealNews says, “Those with little wealth should ask themselves how soon they can begin investing in assets, while those with more wealth can ask things like, ‘Can I pay for this big-ticket item in cash?’”

“Stop splurging on indulgences” and “Avoid getting the add-ons” are common sentiments you’re likely to hear in the world of financial advice. But Jimena Huaco, associate director of the Career Collaborative, disagrees. “The reality is, budgeting only has a chance at being successful if we can stick with it in the long run. If we only associate budgeting with constant restriction, we’ll hate budgeting and end up avoiding it altogether.”

Instead of an all-or-nothing approach, Huaco recommends exercising balance where personal finances are concerned. “If we need to make adjustments,” she says, “making one decision to get a roommate, for example, versus constantly having to decide to not get the latte on our way to work, can go a long way towards a healthier association with budgeting.”

When it comes to investing for retirement, the sooner you can begin, the better. Delaying your investment start date can cost you a lot.

“Investing favours those who start early,” says family finance coach, Andy Hill. “The longer you invest, the more time compound interest can work in your favour.”

Hill gives an example of how someone who starts investing $200 per month at age 25 could potentially have $1,000,000 by the time they turn 65 years old. But someone who waits just 10 years (35 years old) to start investing the same amount would only have around $400,000 by age 65.

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Source: RD.com