Five secrets of financial planning of millionaires

Millionaire. The word is the envy of many—for good reasons that go beyond the obvious financial benefits. According to Northwestern Mutual’s 2024 Planning and Progress Study87% of American millionaires say they have a good idea of how much they should save for tomorrow and spend today, compared to just 66% of the general population. They also feel much more prepared: 87% of millionaires expect to be financially prepared for retirement when the time comes, more than 30 percentage points higher than the average American.

Until be “very rich” remains elusive to most people, the wealthy practice five financial habits to accumulate and preserve their wealth that anyone can use to achieve more financial security.

1. Focus on the big picture

When it comes to wealth, millionaires look beyond today’s challenges, but plan for a brighter tomorrow. Eighty-four percent say their financial plans are designed to mitigate long-term risks such as market ups and downs, while only 52% of the general population say the same.

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As life expectancy continues to rise, millions of Americans will live longer, so most financial experts agree that financial plans should be made with longevity in mind. Many economic changes are likely to occur over a long period of time, including declineperiods of high inflation, higher taxes and rising health care costs. By anticipating and planning for key financial risks—and the big picture—people can ensure long-term financial security.

2. Take action, but don’t overdo it

Even though rich people have money, they are not satisfied with their finances. They know the value of a solid financial plan, and 78% describe themselves as disciplined or very disciplined planners, but they have specific financial goals and take the steps necessary to reach them.

AND financial plan can help people assess where they are today, set goals for tomorrow, and take the necessary steps to achieve them. Together with experienced financial advisorpeople can develop a comprehensive financial plan that does just that. By following it and seeking advice from their advisors, they can ensure they are following a plan to achieve their long-term wealth-building goals.

3. Don’t take any chances

Millionaires are risk averse when it comes to their money, and their financial advisors help ensure that their financial plans take into account situations that may put them at risk. Eighty-nine percent of the rich have emergency fundcompared to 60% of the general population who say the same. In addition, 79% of wealthy people have a plan to solve the problem health care costs — against only 49% of the population as a whole. And 68% of wealthy people have long-term care built into their financial plans; only 40% of the population as a whole.

A comprehensive financial plan is vital and should include an emergency fund, medical expenses, and long-term care. The plan should provide for approximately three to 12 months of living expenses (depending on the individual’s situation) in savings to provide the flexibility and financial security needed in the event of financial uncertainty. If an emergency situation leads to permanent incapacity, income insurance against loss of working capacity can help protect people’s most valuable asset: their ability to earn an income.

4. Stay optimistic about things you can’t control

Inflation, economy and Social security. Wealthy Americans tend to remain bullish on these issues because of their well-designed financial plans that can withstand key risks. Eighty-four percent of millionaires have a financial plan, compared to 52% of the general population. Even if people cannot control the future, a good financial plan can help them anticipate and face the future with confidence, no matter what happens economically or politically.

5. Seek professional financial advice

Sixty-nine percent of millionaires work with a financial advisor, compared to just 33% of the general population, and wealthy individuals list financial advisors as their most trusted source of financial advice – four times more than any other source, including spouse or wife. friend. With an experienced financial advisor at your side, people are more likely to take the strategic actions needed to achieve their long-term goals.

According to Northwestern Mutual’s 2024 Planning & Progress Study, only 1 in 3 millionaires feel “wealthy.” For most, they say, “feeling like a million bucks” isn’t so much about believing they’re rich as it is about radiating confidence and clarity about the future.

Only money does not create clarity – financial habits and a reliable financial plan. When people have a comprehensive plan designed specifically for their lives, and an advisor to help them see their opportunities and blind spots, feelings of anxiety decrease and a sense of security increases—as they build wealth and protect what they’ve already created.

This article was written and represents the views of our consultant and not the editorial staff of Kiplinger. You can check advisor records using SEC or with FINRA.