People who make their money work for them often display these 7 unique habits, according to psychology

There’s a stark contrast between individuals who allow their money to sit idle and those who make their money work for them.

The difference lies in habits. Those who make their money work for them have ingrained certain behaviors that set them apart. They’re not merely lucky; psychology backs this up.

These financially savvy folks adhere to seven unique habits, according to psychological studies. Best of all, anyone can adopt these habits.

So, let’s unravel these habits that can potentially put your money on the treadmill and get it working for you. This way, you’re not just earning; you’re building a sustainable future while enhancing your entrepreneurial skills.

1) They set clear financial goals

Imagine setting off on a road trip with no destination in mind. You might have a fun adventure, but you’re unlikely to end up where you want to be. The same applies when it comes to financial success.

Those who make their money work for them don’t leave things to chance; they set clear financial goals. This habit is backed by psychology.

According to a study published in the Journal of Consumer Research, clear goal setting is directly linked to higher motivation and achievement.

These folks know where they’re headed financially. They have a vivid picture of what they want their financial future to look like and they set specific, measurable, achievable, relevant, and time-bound (SMART) goals to get there.

But it’s not just about setting goals. They also review and adjust these goals regularly, making sure they’re on track and making any necessary course corrections.

If you’re looking to make your money work for you, start by setting clear financial goals – and remember, the clearer the goal, the easier it is to reach.

2) They understand the power of compound interest

Let me share a personal story with you. When I started my first job, I was in my early twenties, fresh out of college and not very money-savvy. I saved a bit here and there, but I didn’t understand the power of compound interest.

Then, a mentor showed me an illustration that blew my mind. It was a simple comparison between two people: one started saving at 20, the other at 30.

They both saved the same amount each month and retired at the same age. But the person who started at 20 had nearly twice as much money at retirement – all thanks to compound interest.

That day, I opened a retirement account and set up automatic monthly contributions. Years later, I can say with confidence that understanding and utilizing compound interest has been one of the most impactful money habits I’ve developed.

Now if you’re not already harnessing the power of compound interest, start today. The earlier you start, the more time your money has to grow.

3) They diversify their income streams

Ever heard of the saying, “Don’t put all your eggs in one basket”? This age-old adage holds true for those who make their money work for them. They don’t rely solely on a single source of income. Instead, they diversify, creating multiple income streams.

In fact, a report revealed that the average millionaire has seven different income streams. That could include a mix of a regular job, a side business, rental income, dividends from investments, royalties from a book or invention, and more.

Diversifying income does more than just increase your earning potential. It also provides a safety net. If one source of income dries up, you have others to fall back on.

So, if you’re aiming to make your money work for you, consider diversifying your income streams. The more sources of income you have, the better your chances of achieving financial stability and success.

4) They’re continual learners

People who make their money work for them understand that learning doesn’t stop once you leave school. They are lifelong learners, consistently seeking out knowledge and new skills – particularly around financial literacy.

This commitment to ongoing education isn’t just about staying current with industry trends or mastering new technologies.

It’s also about understanding the economy, the financial market, investment strategies, tax laws, and anything else that might impact their finances.

In a rapidly changing world, lifelong learning is crucial. As Albert Einstein once said, “Once you stop learning, you start dying.”

Stay curious, keep reading, attend workshops, listen to podcasts – never stop broadening your financial knowledge and skills.

5) They’re not afraid to take calculated risks

I’ve always been a bit of a risk-averse person. I like my comfort zone, and stepping outside of it can feel daunting. But I’ve learned that when it comes to making your money work for you, calculated risks are necessary.

Starting my own business was one of those risks. I left the security of a steady paycheck, invested my savings, and dove headfirst into the entrepreneurial world. It was scary, but it was also one of the most rewarding decisions I’ve ever made.

It’s important to note that these aren’t reckless risks. They’re calculated and considered, based on careful research and planning.

Yes, there’s always a chance things won’t go as expected, but the potential rewards – financial independence, increased earning potential, personal growth – make the risk worthwhile.

6) They understand the value of time

People who make their money work for them have a keen understanding of the value of time. They recognize that time is a finite resource and once it’s gone, it’s gone forever. They don’t waste it on unproductive activities.

Instead, they invest their time wisely in things that will contribute to their financial success. This could be anything from learning about investment strategies, finding ways to diversify their income, to networking with industry leaders.

These individuals also leverage the concept of passive income — earnings derived from a rental property, limited partnership, or other enterprise in which they are not actively involved. This way, they are making money even when they’re not working.

If you’re looking to make your money work for you, remember that time is money. Use it wisely and it could be one of your greatest assets.

7) They practice patience and consistency

Here’s the real secret sauce: patience and consistency. Making your money work for you doesn’t happen overnight. It’s a result of consistent habits practiced over time.

These individuals understand that building wealth is a marathon, not a sprint. They don’t seek out quick fixes or get-rich-quick schemes. Instead, they patiently stick with their financial strategies, consistently investing and saving, even when the market fluctuates.

They also understand the power of consistency in small amounts. Regularly investing a small sum can lead to significant wealth over time, thanks to the power of compound interest.

Now, if you’re striving to make your money work for you, remember: patience and consistency are key. Stick to your plan, keep your eye on the long-term goal, and let time do its magic.

The power of habits

The beauty of human behavior is its malleability. We are creatures of habit, but we also possess the power to change those habits.

These seven habits that people who make their money work for them have adopted are not elusive secrets. They are practical, achievable behaviors backed by psychology that anyone can incorporate into their lives.

From setting clear financial goals to understanding the power of compound interest, diversifying income streams, being a lifelong learner, taking calculated risks, valuing time, and practicing patience and consistency – these habits might be the key to making your money work for you.

After all, your habits shape your life more than you might realize. They are the silent architects of your destiny. So why not make them work in your favor?