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Does it ever feel like everyone around you has way more disposable income? It can be hard to compare your financial reality to someone else’s, but you can still learn from what richer people do to improve your finances, as well.
See: 5 Money Moves for Millennials in 2023
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Here are five reasons why your friends might be richer than you and how to make changes that will help improve your financial health:
1. They have higher salaries
It’s no secret that earning a high salary is one way to accumulate wealth. If you want to level the salary playing field, it may be time to apply for a new role. Forbes stated that moving jobs every couple of years will increase your salary by at least 10% with each new position. If you changed jobs once every year, in five years, you could effectively increase your salary by 50%.
2. They take advantage of tax breaks and write-offs
Bank accounts with more zeroes typically mean that people are making the system work for them. Odds are, your friends are taking advantage of deductions and tax credits to reduce their taxable income and keep more of what they earn for themselves. Work with a tax professional to find out what tax breaks you’re eligible for.
3. They invest in long-term savings vehicles
Suppose your friends consistently invest in retirement accounts, brokerage accounts or other financial instruments with a solid history of returns. These savings vehicles are part of a longer-term saving strategy that will yield more wealth in the long term. Patience is a virtue; in this case, it’s also a financially stable future.
4. They avoid debt whenever possible
While taking on debt can be an excellent way to finance specific life goals, such as purchasing a home or paying for a college education, many of your friends likely have a debt management strategy that helps them stay in the green. This doesn’t necessarily mean the absence of debt. It just means that they are careful with how much debt they accumulate and have the means to pay off purchases quickly.
5. They maintain a budget and stay frugal
One of the most important habits that many of your more affluent friends may have is maintaining a detailed budget, monitoring their spending regularly and practicing frugality by finding ways to live well on less money. Staying on top of your spending and saving goals can significantly impact your bank accounts.
Learn: Do You Really Need To Budget? Experts Weigh In
Find: 5 Ways To Start Financially Fresh for the New Year
When you’re struggling financially, it can seem like everyone around you has it figured out. But the good news is that by being friends with rich people, you are more likely to become rich. By learning from their example, focusing on your financial well-being, and making intelligent choices about managing your money, you can also build financial security and wealth for yourself.
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