When you hear the word “rich,” what do you think of?
Yachts? Evening gowns? Travel?
That’s true to an extent, but not all rich people live that way. For this argument, we’ll define “rich” as having an excess of money, and “lavish” as obscenely using moolah like those in Hollywood.
Those who are rich, especially the self-made rich, are a different breed than most people. They do things differently. They live differently. They think differently. These differences get them where they are.
Without these actions (or an inheritance from your great uncle Earl), you’ll simply stay a reader, passive without action.
Let’s read and incorporate:
Financial Habits of the Rich (And How to Develop Them)
1. Build up cash by saving it.
Yes, the rich save their cash. Rather than eating out all the time, they tuck those dollars into stock mutual funds that pay out. According to Jean Chatzky in The Difference, 55% of the self-made rich got there by saving.
Take action: Where are you spending that you don’t NEED to? Be honest. Write it down. Get serious about finding cheaper alternatives. If you shop at Starbucks every morning, stop. Invest in a Keurig and drop the money you would have spent into a savings account. When you’ve built it up a bit, invest it in a stock mutual fund and watch it grow.
2. Don’t pay for what you don’t need.
In other words, stop trying to outdo the Jones’ and stay within your budget for things like your house and car. If you pay $400 a month for an SUV that’s drinking dollars each week, pare down. Do you really need an SUV? Would a minivan be a more cost-effective alternative?
Take action: Take a look at the places you pay for lavish upgrades, and scale them back. Could you do with a smaller home? Could you do with less expensive clothes? Be honest in your assessment, or you’re wasting your time.
Never ever pay full price for something. Always look for ways to get a cheaper price. Talk to the store manager. Wait and shop on days when clearance sales are running. If you’re an avid Target shopper, you probably already know their clearance schedule.
Take action: The next time you want something, try to find it on sale, use coupons, or negotiate for a better price. Take the money you saved and add it to your savings pile to forward on to the stock mutual fund option.
4. Just do it.
This is true on so many levels. The self-made rich are people with the mindset that they can (and will) change their situations. Instead of waiting for good things to happen (or wondering why they don’t), they get out there and make them happen. They invest in businesses. They start businesses. Or they invest in things that will have high returns.
Take action: Whether you’re at work, the mall, or the grocery store, look for ways to earn more money. Don’t sit idle wishing you could do something. If you want this, you must make it happen.
5. Set goals – and achieve them.
Doing is a lot more productive if you know what your goals are. The rich know what they want to earn, and they set a plan before they go out to do it. They research what will earn them the money they want, then they set and accomplish goals around it.
Take action: Set small financial goals you can easily achieve to help you build your confidence. As you reach your goals, set new ones — so that you always have your sights on a new horizon.
6. Live simply.
The self-made rich live lives that are simpler than most, because the more you have, the more you pay. Do you need 100 pairs of shoes? My wife does, but she’s the exception, or so she says. Do you need three laptops in the house? Can you survive with one? You see where this is going. We’re a consumer society, and it’s reflected in all the “stuff” we buy. And most of it we don’t truly need.
Take action: Go through your house, declutter, and get rid of the things you don’t need. Then vow not to replace it with more. Think three times before buying, and always go for simple.
7. Get fit.
Yep. The self-made rich take care of themselves, too. Who wants to pay hospitals thousands and thousands of dollars to fix what they broke? Not the men and women who’ve worked so hard to earn and save. They maintain their health by taking active roles in exercising and eating right.
Take action: If you already exercise, great! If you don’t, start. Increase your level of fitness and see how you feel (mentally and physically) after a few weeks. Your mind and body will love you.
Remember: You don’t get to pick and choose. If you want to become self-made rich, you have to incorporate these seven habits into your own life today.
What financial habits of the rich have you adopted? Have they helped you?