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If you’re always paying bank fees, you might as well just flush your bills down the toilet. Successful, rich people are much too money savvy to waste precious dollars on fees that can often be avoided.
Interest on Credit Cards
A credit card can be similar to eating from a tub of ice cream. You might feel a little guilty for overindulging afterward, but it’s just too convenient. Sure, it’s easy to swipe plastic money — but you won’t catch wealthy people accruing high credit card interest. They know it’s a waste of money.
To avoid accruing interest, transfer or consolidate your debt to a credit card with 0% introductory APR. Just be mindful of the promotional period.
Henderson said another option is to “consolidate any non-deductible debt into a second mortgage or home equity line of credit, which may be deductible depending on your particular situation.”
Once you’re out of the red, live on less than you earn. “If you can train yourself to regularly and systematically put away money for your future, you can build wealth steadily and not need to rely on credit cards or other non-deductible debt,” said Henderson.
Now, that’s truly living like the rich.
3. Extended Warranties
Somewhere along the line — such as when you bought your flat-screen TV — you were probably asked, “Would you like to purchase an extended warranty?” A financially successful person has a simple answer when asked the question — no.
Although people want the most value from purchased products, generally, extended warranties don’t give you more bang for your buck. Often, they put more money in the pockets of large companies. In fact, according to Consumer Reports, retailers keep 50 percent or more of what they charge for extended warranties.
People with well-endowed bank accounts want to hold onto their money as much as possible. So, they do the research. For instance, check your manufacturer’s warranty before saying yes to an extended warranty. You might have more coverage than you initially thought. Also, compare the cost of potential repairs versus the extended warranty. If the repairs aren’t expensive, the extended warranty might not be worth it.
So the next time a salesperson tries to sell you on that extended warranty, shut the conversation down fast.
4. Lottery Tickets
If you truly want to strike it rich, don’t play the lottery. This is a sure way to burn money fast — and rich people know this financial gamble doesn’t pay to play. Your chance of winning the Powerball grand prize is about 1 in 292 million. Those odds are not in your favor.
Now, take a look at the math:
A Powerball ticket costs $2. That might not be much in your eyes, but if you play twice a week for a year — and buy two tickets each time — you’ll have put more than $400 in the hole.
Don’t waste your hard-earned money on chance when you can put it toward wealth-building goals, such as retirement or college tuition. With past studies that show “you are 17 times more likely to get hit by falling airplane parts than win a lottery,” Henderson said rich people normally make a more logical choice and “invest their money in other places.” You should do the same.
“Many studies have shown that people who are considered low income play the lottery much more regularly than higher-income people who typically only play when jackpots get very large and there is more media attention,” said Henderson.
5. Impulse Buys
Have you gone into a store with your mind set on purchasing one thing but come out with a cart full of stuff? Maybe it was BOGO at the grocery store, so you snagged a few items. Or, perhaps it was a flash sale on your favorite clothing site, and you bought designer shoes. Whatever the case might be, this isn’t a shopping practice of the wealthy.
Successful people are planners, and impulse purchases tend not to mesh with this quality. If you want to emulate their behavior, be much more cautious with your money, said Leslie Tayne, author of “Life & Debt.”
To avoid the urge, Tayne said consider going cash only to curb your spending.
“Use the envelope system, bringing with you only a predetermined amount of money to spend at each store,” she said. “This approach will help you stay on budget and curb any habits you might ordinarily have in impulse buying and overspending.”
6. Low-Interest Savings Accounts
Do you like stashing cash in savings because it’s secure and you can pull out money on a whim? Would you like to see more than pennies on your interest? If you answered “yes” to both, change your strategy to truly emulate a financial mogul.
Regular savings accounts don’t earn a lot of interest. The national savings account rate is a meager 0.06 percent — a stark contrast from what you can expect from a high-yield savings account.
You can find these types of accounts by looking beyond a traditional brick-and-mortar bank. Online banks, for example, frequently offer the highest return rates because they have no or lower overhead costs. Credit unions also offer attractive rates. In fact, a recent GOBankingRates.com survey found the best savings account rates in the country tend to be at credit unions, where some rates are as high and 5.00% APY and 7.52% APY.
If you’re looking to boost your wealth by making wise decisions with money, explore your online savings account options.
7. High-End Brands
You might see a lot of designer labels on the red carpet, but many rich people don’t choose designer labels for every purchase. Though they have the funds to splurge at luxury retailers, they understand that doesn’t always mean they should.
“Financially successful people compare shop and understand the importance of both quality and cost,” said Tayne. “They may go for a cheaper item or buy the higher quality item from a cheaper store in order to make the wisest financial purchase.”
Before you buy another $200 pair of designer jeans, stop and ask yourself if it’s really worth the investment — or will $30 Target jeans do the trick? Always shop wisely, and keep your budget and financial goals in mind.