Frank's 12 Key Traits of the Financially Successful I believe that anyone can be financially successful if they do the right things during their lifetime. The problem that most of us face is that our "financial education" consists of what we learn from our parents and extended family combined with “the school of hard knocks”. These examples may either be good or bad. Then to compound things we go through life, bombarded by advertising and pressures from society to buy, buy, buy. Advertisers try to convice us that our happiness will be determined by owning whatever they are trying to sell. Often we learn about the evils of credit cards by getting into debt because we heed those pressures. You are where you are today financially based on the knowledge that you have attained and the actions, good or bad, that you have taken based on that knowledge.Over the past twenty six years I have been teaching and, at the same time, learning the lessons of the financially successful and unsuccessful. The interesting thing I have discovered is that financial success leaves clues. Simply stated, financially successful people generally have habits and actions that lead them down the path of success, while those that fail, often continue making the same mistakes over and over.The job of a financial service professional is to teach the client what they should and should not be doing in their financial life. My goal is to share with you certain key traits of those that I have found to be financially successful. While practicing these traits does not guarantee success, I feel that it can improve your odds of success. The Twelve Key Traits of the Financially Successful 1. Your most valuable asset: YOU are your most valuable asset. Financially successful people constantly study and learn. Skills and abilities determine your earnings potential. It is important to choose a vocation that you enjoy so that you can then work at your vocation with a passion. Your career path is important, but it is your passion that will make you a success. Educate yourself in your chosen field and work to be the very best.2. A life philosophy: Successful people have a positive outlook on life and believe in their country. They are happy that they live in America. They believe that this is a great place to live where you can start anywhere and end up where you want to go. This positive outlook helps people make it through the good and bad times.3. Live within your means: This is the hardest of the 12 for most people. Financially successful people understand that if you make a dollar you cannot spend a dollar-fifty, at least not for long. If you make twenty-five thousand can you live on twenty-three thousand, if you make fifty thousand can you live on forty-five thousand, and if you make one hundred-fifty thousand can you live on seventy-five thousand? The answer is yes! I have met people who were broke that had substantial incomes. The reason they were broke was because they were spending beyond their means. I have met rich folks that have never received large salaries. The difference, between the two, was what each did with their earnings.4. Buy or invest in things that have the potential to rise in value: One of the greatest sources of wealth in America is home equity. Successful people rarely rent their home, they buy...often through a mortgage. Although we have experienced severe declines over the recent years normally over the long haul property values increase and add to your balance sheet.They invest through employee-sponsored plans, or choose IRA’s, mutual funds, ground, rental properties, real estate, businesses, limited partneerships, stocks, bonds, gold, silver, collectibles, savings accounts, and CD’s. These types of assets have the potential to go up while consumable goods like clothing, electronics and household goods may be fun to buy but will normally always be worth less or even be wothless in a few years.They have money working for them. Successful people understand that money can work twenty-four hours a day. Essentially your money can work harder than you can! Remember that Investing in things that have the potential to go up in value can be simple but involves certain levels of risk.5. Systematic savings plans: It is easier to live within your means if your money is gone before you can spend it! Personally I hide money from myself. I know that if it is at my fingertips (my checking account) it will very possibly be spent. I have found that successful people put money into things that help avoid this problem. Automatic saving deductions for IRA’s, company stock plans, or systematically buying savings bonds are examples of systematic savings plans.6. Needs versus wants: I need food, clothing, and shelter, but I want a new car! The question is, “Do I need a new car?” Do I need that boat, four-wheeler, timeshare, hunting camp, RV, or motorcycle? I have met people so busy working to pay for their toys that they had no time to enjoy them. They fell prey to the temptations of our society and soon found themselves immersed in debt. The cycle is even worse when these items are bought using loans. The payments with principal and interest can be overwhelming. Often folks find themselves working only to make payments and cover living expenses with little if anything left at the end of the month.7. Compound interest: There is an old saying, “The rich man earns interest while the poor man pays interest”. The reality, in our society, is that most of us have some debts, but successful people try to eliminate unnecessary or frivolous debts. They may have a home mortgage, but they have no credit card balances. They might have to take out a student loan but they get it paid off quicly once they have a job. The understanding of compound interest motivates them to save and invest. The Rule of Seventy-Two states that if you take an interest rate and divide it into seventy-two it will equal the number of years it takes money to double. For example... if you average ten percent on your investment, ten goes into seventy-two seven point two times. This means that an investment will double in seven point two years. This concept work for you and also against you. A loan balance works the same way. A credit card charging 18% on a $10,000 balance costs $1800 a year or $150 a month. This is a horrible use of anyones resources and should be eliminated as soon as possible. My website offers several calculators that are fun and easy to use.(The Rule of 72 is an approximation and is based on compounding a fixed rate of return over a long period of time. However, most investments generate fluctuating returns so the period of time in which an investment can double, cannot be determined with certainty. This is a hypothetical example and is not intended to represent a real investment. Both the principal and returns of investments vary over time. Seeking higher rates of return involves greater risk.)8. Find a good life partner: Divorce is expensive. If you keep dividing your assets in half it takes longer to create wealth. Be selective on who you decide to spend your life with. But once you have made the decision strive to be the best spouse you can. Do not neglect the family in your success journey. Many successful people regret not spending more time with their children while they were growing up. Plan activities and vacations; be involved in your family’s life.9. Taxation: Successful people have a more than basic understanding of the tax system. Our government uses the tax system to encourage and discourage certain actions. The successful take advantage of the incentives that are offered and use them to their advantage, for instance deductions for traditional IRA’s, mortgage interest, and property taxes. Once they have placed their money in tax advantaged vehicles, they rarely withdraw the money until the tax system allows them to do so penalty free!10. The law of sowing and reaping: The farmer knows that if he works hard planting the field and then waits patiently that the harvest will come. Successful people have learned from the farmer. They understand that success takes time and hard work.You study so that you can get good grades that allow you to enter a good career, college or training program. You spend time in that program so that you can get a better job. These actions, hopefully, put you in a position that allows you to earn more money. These habits begin when you are a child. Hard work and patience is the key. A financially successful man told me once that he became successful by working half days; his average workday was twelve hours. I am not encouraging you to become a workaholic, but sometimes it takes more than eight hours a day of effort to get to where you want to be.11. Money does not make you happy: Happiness makes you happy..."Live for today while planning for the future". Life is a journey not a destination...enjoy the ride! Our society is littered with unhappy-successful people, they just want a little more. Unhappy people think that when their bank account reaches a certain amount they will be happy. Do not get me wrong, I believe in striving toward your goals, but often reaching them can be disappointing if you did not enjoy the process. You can be happy with a small bank account as well as a large one.12. Invest in yourself, your family, your faith, and your community: Investing in yourself is as simple as reading an educational book or taking a training class versus watching a movie. I am not saying that successful people do not watch movies, but they do practice balance. They interact with others; they learn from others. They are active in church and/or community activities. You cannot succeed by yourself. If you end up with a million dollars but ruin your marriage, or have no friends, are you successful? Successful people sow and reap in all aspects of their lives.