3 Smart Ways Young Millionaires Manage Their Money

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If you're lucky enough to wake up tomorrow as a young millionaire, it's time to learn a few tips to keep your wealth working for you. Here are three ways that financially-savvy millionaires under 40 manage their money wisely:

They Use Buckets

Good financial planners will tell you that it's not so much about the amount of money you have, but about how you spread that money out. It's a concept called diversification, and it doesn't just apply to your 401K mutual funds.

Millionaires under 40 understand can't rely on just one approach to save and grow their money. Instead, many young millionaires build an investment portfolio with the traditional securities, such as stocks and bonds, but also add in less-traditional investments like real estate, and other alternative investments.

Real estate is an excellent example of how young millionaires use buckets. They might hold a REIT (Real Estate Investment Trust) in their investment portfolio, and also have rental income streams that aren't tied to their job. Rental income provides an extra source of income that can be used for many smart purchases to grow even more wealth, like investing in a business or starting a small business to diversify further.

The best part of utilizing buckets is you're spreading your risk to avoid an all-out Bernie Madoff situation with your money. What young millionaires know is that if one bucket isn't performing, they can either reduce the exposure in that bucket or look to another bucket for growth or cash flow.

They Have a Cause

Millennials love a good cause. They're passionate and want to know that their money and time are going toward helping the greater good. Whether it's building an orphanage in Africa, rebuilding a community after a natural disaster, or marching in Washington to champion a cause, young millionaires believe in benefiting society.

There are many different options for socially responsible investing that young millionaires are incorporating into their financial plan. Most investment platforms now offer a selection of funds that either exclude certain companies, like oil and gas, or are inclusive of companies that focus on environmental or socially responsible products. Whatever your cause of choice is, there is a socially responsible investment to meet your needs.

They Are Curious

Most millionaires under 40 understand the importance of a financial adviser. When you get to the millionaire status, you probably also have a good lawyer and CPA on your "team." However, millionaires under 40 stay curious. They don't just rely on the advice of one person. They search for answers to money questions and read articles to find any other gems that might help them grow their net worth. They talk to friends and family about wealth as well.

It's a constant cycle that proves to be very successful with millionaires under 40. They understand that you need to spread your money around in different buckets to limit risk and maximize your growth potential. They become passionate about causes and want their money to make a difference in the world. At the end of the day, they stay restless and curious about finding more answers, asking more questions, and being ready to jump at opportunities.

Do you adhere to any of these — or other — precepts for managing your money?