Top 10 things wealthy people do to manage their money – P2P lending

Wealth. The aspiration of many, and the true obtainment of few. Sure, billionaire-status may be unattainable for most of the world’s population (sad thought, indeed—but don’t worry, it gets better). But is it really so far-fetched to become financially independent? We think not, and we certainly wouldn’t be in the fintech—much less peer-to-peer lending (P2P lending)—sphere if we didn’t deem it feasible. Many financial experts, researchers, and self-made millionaires point to simple (and easily adoptable) lifestyle and financial management behaviors that led to—and help to maintain—wealth and success. In fact, we try to keep these behaviors top of mind when we develop our P2P products and platform. Below, we list the top ten things wealthy (and successful) people do to manage their money and briefly note how that fits in with peer-to-peer lending and investing.

In no particular order:

They have and utilize the ability to delay gratification

Wealthy people understand the importance of delayed gratification and avoid making impulsive decisions when it comes to their finances. They weigh out the costs and benefits before making a big financial decision, often running the numbers of all possible variables or options. They also understand that making sacrifices now (such as not immediately making luxury purchases as soon as some money rolls in) can benefit the long-term goal. The ability to delay gratification may be innate or dependent on different factors (as outlined in a new study revisiting the famed marshmallow test), but it doesn’t hurt to try to learn and instill this practice as soon as possible. Try to practice by visualizing yourself in the future with a larger reward—this will help you to be patient and avoid impulse.

So what does this have to do with peer-to-peer lending? Well, greater financial reward is achieved for those who understand that investing in P2P lending can help them attain their long-term financial goals. Sure, P2P lending platforms can be simpler and can offer faster liquidity than other options, but it’s best utilized with an understanding that it is a long-term investment tool. If you have little experience with investing, P2P lending could be a great way for you to dip your toe in and practice investing now for a greater long-term award (aka, delayed gratification).

They connect daily tasks to long-term goals

As previously mentioned, wealthy people constantly think long-term. They connect their daily tasks to their long-term goals, and often reassess to maintain efficiency. If they find themselves doing a lot of daily tasks that don’t align with their future goals, they shift things around to make sure they stay on the right path. This isn’t to say that short-term goals are invaluable, but everything is done with the long-term financial goals top of mind.

to do list - Bondora

The previous point nicely covered how long-term goals relate to peer-to-peer lending, but we’ll just note that P2P lending platforms can help you to keep your long-term goal top of mind. Look for a P2P lending platform (with a good UX) that puts your long-term goals at the forefront when helping you first set up your investment.

They know the difference between wants and needs

Wealthy people are able to focus their spending on necessities and essentials—often, things that will contribute to their future wealth. They understand how to categorize their wants and needs separately, and focus their spending accordingly. That’s not to say wealthy people never treat themselves (is a yacht ever really utility), but they don’t confuse things they need with things they want. Budgets may be made, with a certain percentage set aside for non-essentials, and that separation is critical to staying on track.

difference between wants and needs

Peer-to-peer lending platforms may allow you to have multiple portfolios/accounts. This will help you segment your investments with different goals in mind, which in turn will help you to maintain the difference between needs and wants.

They have more than one source of income

You’d be hard-pressed to find a wealthy person who only relies on one source of income. Building more than one income stream is a key factor to achieving financial success. As nothing is finite, it is important to have more than one source of cash flow in case the main source runs dry. On top of income from a career, this includes investments—but there are additional options to Wall Street’s typical stocks and bonds.

source of income

You’d also be hard-pressed to find a financial advisor that doesn’t stress the importance of a diversified portfolio of investments. Wealthy people typically juggle multiple investments, and investing in peer-to-peer lending is an easy way to get to get started. Picking the right investment is really easy if the P2P lending platform offers automated investing, and there typically are more manual options for those who want to pick and choose their own investments. More automated P2P lending investments also allow for more passive income, which is ideal for wealthy people with limited time.

They maintain an emergency or rainy day fund

Jobs can be lost, the economy may take a turn, etc. Wealthy people understand the importance of having funds set aside for an emergency. This also speaks to the previous point of having multiple sources of income, so as not to be in dire straits if one dries up. A back-up plan may seem unnecessary at the present, but is a saving grace when it’s there if needed. This can also avoid going into debt, which is the next point.

We already touched on this, so for brevity’s sake, you can passively use a peer-to-peer lending platform to generate extra income to add to a rainy day fund. Don’t put all your eggs in one basket by having the entire fund as one investment, but it can be an ideal supplement to a back-up fund.

They don’t get into debt

This one is pretty cut and dried—successful wealthy people don’t get themselves into debt. They live within their means, and a lot of them even live below their means. Warren Buffett  has an estimated net worth near 90 billion, yet he lives in the same home he purchased 50 years ago (for a whopping $31,500).

They do not get into debt

There are always risks involved with any type of investment—including peer-to-peer lending— so it is important to assess and understand everything involved. Seek advice from financial advisors and experts, and make sure (once again) you diversify your investments.

They’re aware of what’s coming in and what’s going out

Many may call this a budget, but a lot of wealthy people don’t adhere to the strict definition of the word. They may have a team in charge of their finances, but they are always aware of what money is coming in and what money is going out (and to where it’s going). This not only allows them to keep a grasp on their finances, but allows them to notice patterns of unnecessary spending, thus aids in eliminating waste.

track of your investments

Most peer-to-peer lending platforms will have a dashboard, which will help you to keep track of your investments, see your daily accrued interest, and basically keep a grasp on your investments. While it can be automated and passive, you should still have the ability to understand what’s going on with your investment.

They invest in what they know

If they have amassed wealth and success by being a leaders in their industry, it usually means they know all of the nuances, trends, and workings of that industry. It only makes sense, then, that they typically invest within that industry. Those who have achieved wealth and success in tech typically invest in tech, and so forth. That isn’t to say that they don’t broaden their investments—when they do, however, they make sure they know everything about it or seek counsel from those that do.

8. They invest in what they know

Many people, including younger generations, have a hard time understanding (and trusting) the nuances and inner-workings of banks and typical financial institutions. Peer-to-peer lending cuts out the middle man, which may make things simpler for those looking for high-yield investments. But, as with any investment (and following the behavior of the wealthy), do your homework so you understand the process.

They seek financial advice

Successful wealthy people know their strengths, but more importantly they are fully aware of their weaknesses. They aren’t afraid to seek help in order to fill the voids—this includes seeking advice from financial advisors, tax advisors, and legal advisors. They hire others to manage most of this for them (yet keep a pulse on what’s happening) so they can dedicate time toward whatever it is that made them wealthy in the first place.

seek financial advice

Investing in peer-to-peer lending, although very popular with experienced investors, is an ideal choice for those who haven’t yet acquired extensive knowledge of the investing sphere. It’s easy to understand and offers attractive returns, so those who want something more passive can use the automated tools on a P2P lending platform to have their money work for them. Obviously, and as stated before, seek the advice of financial advisors, but you don’t have to commit to investing large amounts and can test the waters before you jump in.

They never stop optimizing their knowledge

While a formal education in the form of a degree may not be necessary (we’re looking at you, Bill Gates and Mark Zuckerberg), wealthy individuals are strong proponents of consistent self-education. They never stop optimizing their knowledge, which allows them to continue to grow, thus avoiding stagnancy. In order to remain relevant in their fields, it is crucial that they continue learning and stay up to date with industry news so they can adapt their business (and investments).

never stop optimizing knowledge

As stated, peer-to-peer lending platforms offer a lot of automation, so you can use them as a source of passive income. This will allow you to spend less time on manual administrative tasks with investments (they’ll do it for you) and more time cracking the books.

What are some other things wealthy and successful people do to manage their money? What do you do to manage your money? Let us know in the comments.

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