4 things people who are good with money always are willing to buy
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- People who are good with money have a lot of habits in common — often, they're frugal and prioritize putting money towards things that build wealth.
- For many, this means spending on things like investments in the stock market or real estate, educational expenses for themselves or children, or home improvements.
- People who are good with money also tend to buy used cars, since cars lose value over time.
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People who are good with money aren't necessarily who you picture when you think of "wealth."
Oftentimes, these people are spending on things that aren't flashy, noteworthy, or awe-inspiring — they're spending on things they need and using the rest of their money to build wealth.
They tend to be frugal people, found author Thomas J. Stanley while interviewing millionaires for his book "The Millionaire Next Door," buying things on discount or sale constantly. And they tend to focus on long-term objectives, says money and budgeting expert Mykail James of The Boujie Budgeter.
Here are the things that people who are good with money are always willing to spend on.
1. Home improvements
Your home is one of your biggest investments, and many people want their homes to increase in value over time. However, homeowners aren't always the best contractors, and while DIY-ing might be cheaper, renovations may not always be done right. Instead, people who are good with money will pay the price necessary for quality work.
"There's this misconception that a lot of people that are good with money are huge DIY-ers. And that's not always true," James says. DIYs take a significant amount of time, and many people who are good with money know that they could capitalize on other strengths by hiring someone else to get the work done.
People who are good with money are going to think about the opportunity costs for them to do the work, and ultimately they'll spend the money to have it done right.
2. Used, reasonably priced cars
For the most part, cars aren't an investment —they lose value quickly over time. So people who are good with money "do not like to spend a lot of money on depreciating assets," James says.
Many people who are good with money don't enjoy expensive cars because they project a lifestyle they're not willing to keep up with. In "The Millionaire Next Door," Stanley interviewed a self-made multimillionaire whose friends had pooled together money to buy him a Rolls-Royce as a gift. The multimillionaire lived in a middle-class town in a modest home and had never owned a car more expensive than a domestic sedan, and decided he couldn't accept the gift.
His reasoning? He couldn't drive it to the manufacturing plant where he worked, to his favorite hole-in-the-wall restaurants, or to the lake where he spent his weekends fishing without feeling out of place, he told Stanley. For many people like this multimillionaire, a luxury car doesn't fit their lifestyle.
People who are good with money also prefer to buy used. Cars lose a lot of their value over time — automotive pricing and information site CARFAX estimates the typical car loses 20% of its value in its first year. "I'm not going to say that rich people don't buy new cars, but more times than not, a person that's good with their money is not going to buy a brand-new car," says James.
People who are good with money get more joy out of buying a share of a stock or mutual fund than they do a material item.
Anyone who's good with money will always spend on "something that makes them more money," says James. "So, that may be investing in the stock market. It might mean spending your money on specific types of stocks if you want dividends to provide cash flow."
Other investors might consider real estate. "They're always thinking of something that provides cash flow and adds to that passive income. That might be buying an investment property to rent out," James says.
James says that people who are good with money see education as an investment rather than an expense. "They're investing in education and tools that help them make more money," she says.
Oftentimes, this goes for both the wealth-builders themselves and their children. Stanley writes in "The Millionaire Next Door" that "paying for an education is the equivalent to teaching your children how to fish." According to Stanley's research, most wealthy people agree that their education is of use to them, and many feel compelled to pass that gift along to their children and grandchildren when they are able.
People who are good with money know that education brings income, and income can bring wealth if used correctly.
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