Success is measured differently by different people. No matter how different a person’s definition of the word, building wealth seems to be a common factor among the various denotations of success. What makes reaching this level of success hard is that people don’t become wealthy by accident. It takes a lot of hard work, saving and determination (for most people) to become wealthy.
The best people to take notes from are the people doing what you aspire to do. For instance, if you want to become wealthy, you should look towards people who are already wealthy for advice and take note of their habits. To help you with this, here are a few habits of rich people that build wealth.
Associate With The Wealthy
To become wealthy and find success, you must surround yourself with like-minded people. Steve Siebold, author of How Rich People Think, said that rich people surround themselves with like-minded people. If you hang around successful and hard-working people, you are more likely to be successful as well. According to Siebold, this is due to the different mindset that the wealthy have about money compared to the poor. In particular, the rich:
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- Focus on earnings instead of saving
- Believe leverage creates wealth
- View money as a positive, not a negative
- Think big and take action on their goals
- Are optimistic and self reliant.
Since people often learn the correct mindset from those they associate with, Seibold argues it makes sense to associate with rich people. On the same note, you should stay away from people who belittle your ambitions.
Setting Goals
Millionaires set goals and typically meet them. For example, Mary Kay Ash, founder of Mary Kay Cosmetics, was a huge believer in setting goals. Setting goals for her own life and urging her representatives to also set goals led to her own success as well as the success of many other people.
In addition, the wealthy typically write down their goals in the form of a “to-do” list and are focused on accomplishing a single goal.
Deliberate Learning
What a lot of wealthy high performing people do is deliberate learning. So, they identify a specific set of skills, or subset of an area they need to improve on, and then with the help of mentors, get progressively better at practicing those skills. The rich however, spend a great deal of time on deliberate practice. In many cases, wealthy people spend up to 4 hours per day for 5 years before they master a particular skillset.
For more on this, consult Anders Ericsson, et al.’s paper titled The Role of Deliberate Practice in the Acquisition of Expert Performance (here).
Exercise
According to the Journal of Labor Research, regular exercise has a 6% to 10% impact on salary level, here. The same study also found that while some exercise is associate with high earnings, in general, the more someone exercises the more they earn. This is due to several reasons. First, regular exercise prevents a number of chronic healthy conditions which can impact your ability to work Second, regular exercise also stimulates blood flow to the brain, and improves focus and concentration – all of which help boost your earnings.
Get Rid of Debt
Another great habit of wealthy people is getting rid of debt and staying out of debt. When members of the Forbes 400, the wealthiest 400 people in North America, were interviewed 75 percent of them said that they made sure to pay off debt and stay out of debt. This is a key to becoming (and staying) wealthy.
Track Your Wealth
Wealthy people track their own net worth. You should too! You can easily track your net worth using a budgeting app, spreadsheet or other finance-related apps and keep up-to-date on your income-to-debt ratio. Your net worth should increase every year if you aim to build serious wealth.
Tracking your wealth has the other advantage of helping you manage it better. You’ll be able to see which assets are growing more quickly, or which ones are not. Tracking your wealth also lets you start utilizing some interesting planning techniques – such as the rule of 72 to determine how fast your portfolio will double.
Investopedia has more.
Drive a Modest Car
One of the biggest mistakes you can make is buying things that are overly extravagant or things that you don’t need. You may think that wealthy people are out buying the newest and the best of everything. However the facts are that the majority of millionaires drive modest automobiles. According to professor Thomas Stanley, author of The Millionaire Next Door, the median price paid by a millionaire for a motor vehicle was $31,367. And, according to finance personality Dave Ramsey, the top three models of cars driven by the rich are: 1) Toyota, 2) Honda and 3) Ford – not luxury brands like Porsche or Rivian.
Wealthy people drive modest cars so, if you aim to be wealthy, you should drive a modest vehicle as well.
Read Voraciously
One of the most wealthy people in the world, Warren Buffett, reads in his spare time. People who are successful also enjoy reading. Renowned economist Barry Asmus has said that leaders are readers so, if you are looking to be successful and wealthy, pick up a book.
Here is a video describing some of the better ones to read.
Finding the Best Deal
Even millionaires are still looking for the best deal. There are quite a few wealthy people that are still bargain hunters. Just because you have money doesn’t mean that you should spend it without thinking about it. The best and most common way to save a little when you shop is to clip coupons. Believe it or not, even wealth millionaires like Hilary Swank clips coupons!
Exercise Emotional Control
According to many researchers, the wealthy exercise emotional self control. According to author and researcher Tom Corley fully 94% of the wealthy in his study filtered their thoughts before expressing them. This is because relationships are the currency of the wealthy and expressions of anger or criticism can undermine important relationships, thus denying one access to financing, deals, or important market intelligence.
Final Note – Copy The Habits of The Rich and Hit The Books
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