7 traits of people who are good with money

Rich people are good with money and poor people are bad with money.

That’s what some people assume, anyway.

 In reality, there are seven-figure earners on the cusp of bankruptcy and average-income workers who are saving for the future during challenging times. 

So what do people who are good with money have in common? Here are 7 traits I’ve identified from more than 2,000 personal finance meetings with clients. 

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1. They don’t deny that money is important

‘More money, more problems’, ‘money is the root of all evil’ and ‘money won’t make you happy’ are just a few phrases used to deny the importance of money.

Increasing your bank balance won’t protect you from all of life’s struggles, but it can make life easier while blessing you with more freedom and choices. 

If you're someone who says: ‘money isn’t important to me’, this limiting belief could be holding you back. People who are good with money know how important it is and don’t shy away from making the most of it. 

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2. Their expenses don’t grow with their income

If you’ve experienced a significant increase in your salary, you might be tempted to move to a bigger house, buy more expensive clothes, and fly first class every time. Not so fast! This is known as lifestyle inflation and if these changes aren’t sustainable, you may be setting yourself up for financial chaos later on.

There’s nothing wrong with improving your lifestyle as long as you’re paying attention to your savings and investments too. Neglecting your future finances can be risky — especially when we’re going through a period of high inflation and rising interest rates. 

If you want to be good with money, keep your expenses the same and pretend that salary increase didn’t happen. For the time being, at least. 

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3. They use their money to create more personal time

There’s no limit to the amount of money we can make, but there is a limit to the amount of time we have. If you have a lot of money but you struggle to exercise, pursue passion projects and spend time with your family, you need to start outsourcing tasks.

You might start by hiring a cleaner, accountant and virtual assistant. Then, you might level up to a business coach or even a personal chef. 

People who are good with money are happy to hire professionals to take certain tasks off their hands. Not only can this help you free up time, it’s a great way to keep money circulating and help the economy. 

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4. They don’t make emotional purchases

If you impulse buy some new clothes or order a spur-of-the-moment Deliveroo at the end of a difficult day, this is completely normal. 

People who are good with money don’t shame themselves for the occasional impulse or emotional purchase, but they know when to nip it in the bud, too.

If they want something, they’ll think about it for a while. 24 hours or 4 weeks. You can set your own rules here. If you still want that thing after that period of time, spend freely – it’s obviously meant to be.

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5. They create and stick to budgets

It’s important to budget, no matter how much money you make, otherwise you could find yourself falling victim to the problems I mentioned in trait #2. 

Holidays, taxes, birthdays etc., people who are good with money will budget for them all. 

When the bill arrives, the money is ready in a separate pot. By keeping your finances organised, you can avoid having to take out a last-minute dividend to pay your personal tax bill.

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6. They automate their savings

People who are good with money spend what’s left after saving. Never the opposite way around. 

They automate their savings, investments, and pension contributions. If they use a credit card for points and bonuses, it’s paid off in full each month, without them having to think about it. They’ve gone paperless too. When all your bills are automated, you can reduce paperwork and admin. 

With all the essentials taken care of, they’re free to spend what’s left on whatever they like. Which brings me to the next trait…

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7. They understand the difference between wants and needs

When finance people talk about the difference between wants and needs, there’s sometimes a little shame involved. “Do you really *need* that £5 latte?” They might ask.

They might talk about how much money you’d have if you made coffee at home and invested that £5 a day instead, but there’s more to life than investing in stocks.

I see the wants vs needs debate a little differently. People who are good with money know exactly how much they need to get by each month. 

They know what it takes to cover their mortgage, bills and other unavoidable expenses. 

They know how much they need to save for the future and invest for retirement. 

Everything above this number is a bonus. Fun money, if you like.  

It doesn’t really matter if something is a want, rather than a need. Whether you want a Peloton, a new kitchen or a watch that’s worth more than your entire jewellery collection, you can buy whatever you want as long as the sensible stuff is taken care of. 

Don’t take the fun out of things by trying to justify every purchase. Money can give us protection and security in the future, but it also exists to be spent and enjoyed.