An ex-Wall Street trader who left her $600,000 job to help people improve their personal finances recently revealed a single financial habit that separates the wealthy from the rest. In a recent YouTube interview with Lewis Howes, Vivian Tu, the founder of Your Rich BFF, disclosed that buying liabilities instead of assets is the most dominant financial habit that separates the lower and middle class from the upper class.
Tu has authored a book on personal finance and even runs a podcast, imparting financial advice by breaking down the basics with financial experts, business leaders, and even celebrities. She has built a community of over 8 million people helping each other get rich.
She explained that the lower and middle classes buy ‘stuff that loses value over time or costs them money, and they do it to look rich!’ However, wealthy people will buy an ‘ugly duplex’ in some remote town before flipping it and renting it out for passive income.
‘They are not buying stuff. This isn’t a Gucci sweater. This is something that makes you money,’ Tu said.
Coming from a modest family of immigrants, Tu worked super hard through school and budgeted every dollar. She learned about growing her wealth during her job as a trader at JPMorgan.
She also warned about the shrinking middle class, highlighting that more people will move into the category of the rich or the ultimate suffering. Tu understands that life is not fair since many people are born in financially burdened households, but it does not mean you lose hope because the society we live in is not perfect.
Why Is It Absolutely Crucial to Make a Financial Plan?
When Howes asked why one person can achieve financial freedom and another with the same starting resources cannot, Tu said it comes down to having a financial plan. Tu shared that one of the biggest hindrances to managing finances is not having a long-term plan. The person without a plan will be motivated one fine weekend and try to ‘crash-diet’ their finances, trying to ‘change thousands of things at once’ and eventually get overwhelmed. Confused, they will put their haphazard plan back on the shelf and not look at it for another 12 months.
Meanwhile, those who take the time to make a financial plan covering both short-term and long-term goals realise that the changes required are so vast, they cannot be accomplished over a weekend. They often take up one or two tasks every week, and over time, these small fixes contribute to major milestones that align with their financial roadmaps.
Tu also recommended that when financial changes result in positive cash flow, one should prioritise building an emergency fund and contributing to 401(k)s to maximise employer-matching contributions, which is basically free money.
For those aiming to improve their finances by the end of 2026, Tu suggests choosing a goal that may currently seem unachievable but is one worth striving for. The goal should be SMART: specific, measurable, actionable, realistic and time-bound. It can also help to list the strengths that will aid in achieving the goal and, if possible, secure a mentor for guidance.
Tu recalled how her superior at JPMorgan encouraged her to get her finances in order. The executive taught Tu how to manage 401(k)s, how much to spend on rent, and other crucial financial lessons. ‘I credit a huge portion of my knowledge and success to her,’ Tu said.
Originally published on IBTimes UK
