At one point, the “rich” were looked up to in society. We saw their accomplishments and thought, “one day I’m going to be rich and have that life.”
Today, “rich” has become another 4 letter word often causing as much contempt as it does respect. And, while we can spend time begrudging those who have more than us it’s more useful to focus on what we can learn from the rich. What habits or ways of thinking can we incorporate into our lives to make it better?
Six Rich Habits
1. They Pay Themselves First
Paying yourself first means before you spend a dollar of your paycheck, you route a specified amount of money into savings. The rich do this because they care about their future selves just as much as their current selves. If you think about it, investments are just “future spending” without having to work for it — which is a really smart idea.
To put this advice into practice, here are two “pay yourself first” tips:
- Invest in your company 401k plan. This is one of the easiest and most effective ways to pay yourself first. You set it up one time and every pay you have money routed towards retirement. If you’re already investing in a 401k plan, increase it by 1% every year for the next 5 years. You will hardly notice the 1% increase now, but it will make a significant difference in the future.
- Set up direct deposit to a separate savings account at an online or local bank. This builds the habit of “paying yourself first” while giving you a get-out-of-jail-free card if you need the money.
2. They Know Their Numbers
No, this doesn’t mean all wealthy people keep a watertight budget. Hardly. But, it does mean they know their most important numbers. This includes how much to save, how much debt is reasonable, and how much they can afford to spend.
So ask yourself, do you know your numbers? If not, check out this blog Budgets are Bullshit.
3. They Invest in Themselves and Others
Investing in yourself and those you love is just as important as investing in the stock market or real estate. The rich invest in workshops, seminars, and gurus to help them in their careers and to build their skill set. They invest in their children’s education by sending them to quality schools or for tutors. They invest in their health by hiring personal trainers or nutritionists.
How you can emulate them:
- Put money aside for continuous learning. Whether this is an investment in an online course or traveling to a conference in your field of expertise – learning new skills and networking is always worth the money.
- Start saving for your children’s education early. This will help to ensure that you have a healthy amount stashed away by the time they’re ready to go to college.
- Take care of yourself. You don’t need to hire a personal trainer or professional chef — you do need to eat healthy food and exercise regularly. Not only is this an investment in your physical well-being but it will also help you to avoid the high cost of future healthcare bills.
4. They Don’t Have FOMO
FOMO (Fear Of Missing Out) or keeping up with the Jones’ is a killer habit — and it is most definitely a habit. Those who engage in this way of thinking (and spending) don’t just do so in one area of their life — it’s a common thread. Not only do they own the fancy car, they also need the huge house, the fancy clothes, and the swanky jewelry.
If you want to be rich then just say “no”. It might sound like obvious advice but it’s worth saying. To ensure you can afford these higher-end purchases, apply a few rules of thumb:
- Pay cash for your cars
- Save at least 15% of your GROSS (before tax) income
- No credit card debt
While it’s not a foolproof plan, it’s a good start.
5. They Don’t Go It Alone
The rich understand the importance of making smart decisions, not only with their money but in all areas of their life. This means working with other professionals and subject matter experts to help them make the best decisions possible. They aren’t afraid to pay for professional help to avoid a bigger mistake by going it alone.
Having a team of professionals at your beck and call may not be feasible, but knowing when to pay someone for their knowledge and when not to is important.
For example, if you have a complicated tax return, it’s worth it to pay a CPA to ensure it’s done right and avoid an unnecessary heart-to-heart with your local IRA agent. Or, if you want advice on how to invest your money and save for retirement, it may be worth it to speak with a financial advisor.
6. They Aren’t Afraid to Fix Things Themself
I know I just proclaimed the importance of hiring help, so this might sound like contradictory advice. When it comes to complicated financial or legal decisions, leave it to the professionals. When it comes to troubleshooting your slow computer or painting your bedroom, these are things you can do by yourself in order to save money.
Before you become a “do-it-yourself master,” make YouTube and Google your new best friends. As you probably already know, you can learn almost anything on the internet. Instead of starting by making a phone call to your local fix-it-man (or woman), give it a shot yourself.
A small word of caution – when it comes to fixing anything that could be dangerous (like something electrical), it may be best to leave it to the pros. Safety first!
Some safe examples of things you can fix on your own:
- Computer repairs
- Small car repairs, issues (oil change, replace your tail light)
- Household maintenance (fix a leaky faucet, painting)
- Exterior maintenance (lawn mowing, snow removal)
Start living your rich life
It’s time to stop resenting the rich and instead set yourself up to join them. If you have dreams of being financially free and living the “rich life” then start incorporating these 6 habits. Building wealth doesn’t happen overnight but with some hard work, discipline, and time it is achievable.