What do you think of when you hear the word “rich”?
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 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 dividends. 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 Joneses and stay within your budget for things like your house and car. If you pay $1,000 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 make do with a smaller home? Could you live life with less expensive clothes? Be honest in your assessment, or you’re wasting your time.
3. Haggle.
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.
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. 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?
{ read the comments below or add one }
And such is the meaning of LIFE. Someone who GETS IT.
I can’t choose the option of being in debt forever nor do I only want to save. I rather strike a balance, give myself the comforts of life at a low rate in the beginning and then climb the lifestyle ladder and get to where I want to be. The key is just starting early in life.
The secret in just to start. Simply start. And that starts the momentum.
It ain’t rocket science. You can’t “go back” but you can start afresh. Whether your 20 or 60. The secret is to START. Once you’ve started then you’ve got the ball rolling.
I have been doing these things for years and just thought that was what I was suppose to do! It did pay off though, I achieved financial independence in my late thirties. Yes, it does work!
There are people who scrimp and save all their lives and then die of a heart attack or similar and have not been able to use the saved money. Live life and enjoy the present is my principle.
…and there are people who don’t… so, what’s your point?
Oh, I know, you live for the moment.
Sounds like a sound strategy. To die broke with all that life has for you… NOT!
Wow! I would rather be in debt FOREVER than have any property/connections to a country so ridden with human rights violations. That sounds like blood money to me.
So the secret is to… oh, I know, having those goals. Sounds like a plan.
Every one of these are excellent points. I remember just out of college my goal was to make $50k a year some day. I was earning $14k a year then. Several years later I raised the goal to $100k. When I made it I was happy because I could live on $30k a year. Last year I made $950,000 in wages alone. I can still live on about $75k a year, so after taxes take about a third of my wages, the rest is excess. I started my own business 5 yrs out of college. I bought another business 15 yrs later. The businesses have made all the difference. It was a big risk, but I wanted to be self employed no matter what. I figured the money would come eventually. If you want to go my route, be smart about it. Know yourself. Be sure you want to work 80 hr weeks in the early years as your business grows. Understand the things you will have to give up to do it. At times you give up family, friends, lots of social gatherings and vacations. I didn’t even get married till I was 40 because my businesses were demanding. That being said, I could have retired in my 40’s, but choose to keep working— at a vastly reduced 20 hrs a week now. I’ve had a different kind of life from most folks. I’ve never done things with “the crowd”. I’m very independent. Very solitary. That’s probably one reason I’ve done well financially. It was easy to keep the distractions away. But, do it on your own terms and your own timeline. Start early in life if you can. For me, wealth came slowly at first. And most of it has come in the last 10 years or so. It took me 25 yrs to save $1 million. 5 yrs later I had $2 million. Lately, every 2 years I’ve been able to add another $1 million or more to savings. Its from saving and also from growth of my investments in stocks, bonds, etc. Its fun now. Hasn’t always been, but is now. I’m glad I did it.
All the naysayers should read that comment. Then read it again, and again and again. Then they may, repeat may, change their outlook on life.
Great set of tips! I think one of the keys is setting goals but not things that are so easily achievable. People act like there is something wrong with saying you want to run your own company or sell multi-million dollar real estate. When I tell people some of my goals they look at me and say why are you setting yourself up to be disappointed. I just shake my hand and wonder when will be get it.
Setting goals and having a plan have helped me tremendously in life. I have heard of a lot of millionaires with nice homes, rental properties but they drive used honda accords. I think a lot is that we spend money on things and the rich spend money on things to make money and build wealth.