I subscribe to Success Magazine because I want to learn about other successful people in the hopes that I can better myself and increase my odds of being successful. My thinking is that I can learn some tips, tricks and ideas from people who are already successful and incorporate them into my life. In a recent issue, there was a story about the 16 habits of wealthy people.
Since I want to become rich, I read this story first. It was so powerful, I thought it would be interesting to talk about these 16 habits in detail. While some of them are ones I would classify as well-known to most of us, there are a bunch of habits on the list that I think many of us (myself included) tend to overlook. Here are the 16 habits of wealthy people and below them are detailed explanations to help you find ways to start using these tips to become wealthy.
16 Habits of Wealthy People
- Live Within Your Means
- Don’t Gamble
- Read Every Day
- Forget The Boob Tube and Surf The Internet Less
- Control Your Emotions
- Network And Volunteer Regularly
- Go Above And Beyond In Work And Business
- Set Goals, Not Wishes
- Avoid Procrastination
- Talk Less, Listen More
- Avoid Toxic People
- Don’t Give Up
- Set Aside Self-Limiting Beliefs
- Get A Mentor
- Eliminate Bad Luck
- Know Your Main Purpose
#1. Live Within Your Means
This one is pretty straight-forward. If you have to go into debt to buy something, chances are you cannot afford it. Granted, a house and a college education are exceptions (within reason of course), but for things like clothing, gifts, flat screen TVs, etc. you should not be going into debt.
According to the article, wealthy people save 20% of their income and spend the remaining 80%. In other words, they pay themselves first. Almost everyone who is struggling financially spends more than they earn. Learn to automate your savings so you are paying yourself first.
The easiest way to automate is to use a free service like Digit. They will transfer a tiny amount out of your checking account and into a savings account. For me, the amount is usually around $1. If I didn’t check my recent transactions, I would never know the money was taken out of my account.
But it adds up. In over a year, I’ve saved over $1,000 just through their free service. You can sign up here.
If you currently have student loan debt or a mortgage payment that is stopping you from saving 20%, work to get rid of the debt. You can refinance your student loans and save money. When it comes to your mortgage, there are many options for paying it off quickly.
#2. Don’t Gamble
I gamble, but I don’t gamble. What I mean by this is that I take part in a weekly football pool picking the winners of each week’s games. I also will spend $100 on slots/blackjack when my wife and I or my friends and I head to Atlantic City. And sometimes when the Powerball gets to $500 million, I’ll blow $20 and play. The keys here are:
- the money I spend is small in amount, and
- the money is spend is money I can afford to lose
This is important because too many people play the lottery on a daily basis hoping to strike it rich or they use money that they really cannot afford to lose. If you are choosing between buying a loaf of bread and buying 2 scratch off lottery tickets, you need to seek help.
The main difference between the rich and poor here is simple. Poor people rely on luck to improve their financial situation while wealthy people rely on themselves to improve their financial situation.
If you are going to play the lottery, do so for fun. When I play the Powerball, I don’t do so thinking I am going to win and the money will solve all of my problems. For those couple of minutes, it is fun comparing my numbers to see if I did win anything.
Make sure you are taking the time to improve your finances. This means setting up a budget and saving money like I pointed out in the first tip.
You could even go back to school for more education or even just read more about personal finance. The point is you need to take meaningful action to improve your life. You can’t just sit there and expect things to change.
#3. Read Every Day
I’ve gotten better at reading on a regular basis. Why is reading important? A few reasons come to mind:
- it makes you think
- it expands your horizons
- it grows your vocabulary
- it keeps your mind sharp
The more you work to better yourself, the more it will overflow into other areas of your life, like your career and income.
The key though is to read things that will improve yourself. Only 11% of those that read on a regular basis read for entertainment purposes. Most read career-development material, self development books, current events and biographies. You can check out my resources section for some great personal finance books to read.
If you don’t think you have the time to read, you do. Turn off the TV an hour before bed and read. Buy an audiobook and listen to it on your commute or during your lunch break. You have the time, you just have to commit to reading.
#4. Forget The Boob Tube And Surf The Internet Less
This habit is one of the more interesting ones I came across. The higher a person’s income, the less TV they watch. One reason is probably because they are out of the house more. Not necessarily working, but networking and taking part in groups, seminars, etc. Also, they tend to read more (the point above) leaving them little time for TV watching.
To put into perspective how little TV the wealthy watch, check out this cool chart from the General Social Survey.
As you can see, the wealthiest watch 2 hours or less television on a given day. While the survey doesn’t break down what they are watching, it would be interesting to know.
#5. Control Your Emotions
When I saw this one, my thought immediately went to investing, but surprisingly, this point has nothing to do with investing. It’s actually about watching what you say. Most of us get ourselves into trouble when we say something at a time when we are highly emotional. I’m sure if you take 5 minutes right now, you can think of a few such times.
Before you say what is on your mind, take a step back and think things through. Chances are you will be thankful you didn’t say what you were thinking from earlier. Why is it important to control what you say? You never know what will come back to haunt you. It’s as simple as that.
So while you may want to tell your boss who is letting you go where to stick it, you are better off biting your tongue. You never know when you might need a reference for a future job.
Another emotion that separates the rich and the poor is fear. The rich lean into their fear and slowly build confidence. This confidence gives them the courage to keep pushing forward. The poor on the other hand give into their fear and never build their confidence. This causes them to get stuck in their situation and never improve.
If you can learn to think before you speak and lean into fear, you will see a monumental shift in your life for the better. One great way to get started with this is by reading the book, The Magic Of Thinking Big.
#6. Network And Volunteer Regularly
Over 75% of wealthy people network and volunteer while less than 10% of the poor network and volunteer. Why are these important? There are a few reasons:
- Volunteering makes you feel good. Studies show that volunteering a few times a month provides the same feeling as if the person was earning a salary of $75,000 a year.
- It’s all about who you know. The more people you know, the more opportunities will come your way. These could be job opportunities or even the opportunity to go to conferences and other events where you can meet other like-minded people. You might even find new customers or clients when you network.
By doing good and expanding your network, you set yourself up to take advantage of situations when they present themselves to you. When you are happy and in a good mood, you are more likely to act on an opportunity as opposed to when you are unhappy.
So get out there and start volunteering, find happiness and grow your inner circle.
#7. Go Above And Beyond In Work And Business
I think this is a common point, but so few people actually practice it. When it comes time for their annual raise, they wonder why they are only getting the standard 3%. You have to become invaluable at work if you want to earn a higher income. I go into detail about this in this post, but I’ll tell a short story from my personal experience.
I was working a job once and I got finished with my work. I went into my boss’s office and asked him what work he had that I could do for him. After talking for a little bit, I found out there were a few tasks he had to do that he hated doing. He showed me how to do them and I took them over going forward. When it came time for my review, he remembered how I stepped up and took some of his work off his plate. I earned a 5% raise that year.
But it didn’t stop there. I was the first to get offered new opportunities and projects that would put me in front of executives and other directors within in the company. In other words, simply helping my boss with his workload spring boarded my career forward.
If you are someone who punches in and punches out at the exact times you were told are your working hours, chances are you aren’t going to get ahead and neither will your salary. I’m not saying you have to be at work 24 hours a day, but you do have to step out of your job description and take on more challenges and responsibilities if you want to earn a higher salary. This does mean that sometimes you will have to come in early or work late.
#8. Set Goals, Not Wishes
What is the difference between a goal and a wish? A goal is something you can essentially control the chances of it becoming a reality while with a wish you have zero control.
For example, I can wish for 5 million bucks. If I keep doing the same thing I’ve been doing up until this point in my life, odds are slim I am going to have 5 million bucks. But, if I set up a goal to have 5 million bucks, things change. I set up an action plan and take steps to better my chances of reaching my goal of 5 million bucks. I also start to track my progress.
Here is the best part of this: say I fail on my goal. Does that make everything I did to reach the goal a waste of time? Hardly. Chances are I am earning more money now or I have a lot more in savings. I might have failed on my goal of reaching $5 million dollars, but I am in a better financial place than I was before.
Additionally, I learned a lot about myself and grew as a person. In other words, trying to reach the goal made me much better off than I was before.
If you need another reason why you need to set goals, 70% of wealthy people set at least one major goal a year while only 3% of poor people set goals. Learn to set goals and improve your life.
#9. Avoid Procrastination
This is a big issue for many people. You know you have to do something, but the DVR has the latest episode of How To Get Away With Murder. It would be so easy to just put off that task for an hour and watch TV instead. The next thing you know, you’ve spent the entire night watching TV and got nothing done.
This is a problem because, wait for it….if you keep putting something off it will never get done. Shocking, I know. But if you never do it, then you will never be better. Everything will stay exactly the same. How boring is that?
To overcome procrastination, you need to do 2 things:
- Create a to-do list
- Have a partner
By having a to-do list you can keep track of the things you need to get done and then be motivated as you cross things off of your list. Just make sure you prioritize your list.
Make sure that you put the things that will have the greatest impact on your life at the top and the least impactful at the bottom. This will take some thinking.
For example, the laundry might seem like something that can be put towards the bottom of the list. But if your goal is to build your relationship with your spouse, then getting these chores out the way can have a major impact. Don’t just dismiss things that seem unimportant at the time. Think it through to understand what your goal is and as a result, what is important.
In addition to a list, find a partner to be accountable for helping you reach your goal.
By having someone to help keep you in line and to motivate you when times get tough and to celebrate with you when you reach goals, you will more than likely see your goals through. Having an outside influence goes a long way to helping you avoid procrastination.
#10. Talk Less, Listen More
We are horrible when it comes to listening. We love to talk about ourselves. Heck, this is why Facebook is so popular. We get to talk about our lives and how awesome things are. But the key to becoming wealthy is to learn to listen.
You can learn so much just by listening to others talk. You can learn how not to approach a problem versus how to approach a problem. You can learn tips and tricks others use and the things they have done to become successful.
The next time you are with others, stop talking and start listening to them. Ask follow up questions based on what they say and not try to tell a related story about your life. See what you can learn from them to make your life better and more efficient.
#11. Avoid Toxic People
I’ll admit, this one is much easier said than done, but it is completely true. You are the company you keep. This means that if you hang out with troublemakers, you too will most likely become a troublemaker.
You need to sit down and look over all of your relationships and cut out or limit those relationships that don’t improve your life. Like I said, easier said than done.
If you have friends that are toxic, it can be easy to cut them out of your life. Stop calling and texting them and do something else. But with family, it isn’t so simple. While you might not want to cut them out of your life completely, you can limit your time with them.
Only see them during the holidays or special events. Don’t get sucked into their stories when you are around them. In other words, come up with a reason why you need to leave. If you can’t leave, have a reminder on your phone. This reminder should be a note of all the good you have in life and what goals you are striving for.
Doing this will help you wash away the negativity that will affect you when talking to these people.
It is so important that you go through this process if you want to become wealthy and/or successful. Studies show that 96% of those struggling financially hang out with others that are struggling too, while 86% of successful people hang out with other successful people.
Where can you find successful people? They are everywhere. Join groups on meetup.com. Volunteer and network. Join a recreational sports team. The options are endless, you just have to start thinking.
#12. Don’t Give Up
Let me break it to you, you are going to fail. In fact, you will fail a lot in life. For many of us, failure is a bad thing. We think of failure as getting a bad grade or not being good enough. We need to change how we look at it and see failure as a good thing.
When you fail, you are trying something new and growing as a person. You are trying to be the best you can be. There will be times when you stumble and fall and this is OK. Just take a few minutes, think about why you failed and try again. You tried again after falling off your bike didn’t you? And again when you failed your driver’s test?
This failure is just another bump in the road. Look back on what you did wrong and make adjustments and try again. Odds are you will see success if you can objectively look at what went wrong and work on correcting it.
Learn from your mistakes and stop looking at failure as a bad thing.
#13. Set Aside Self-Limiting Beliefs
Some of us are great at putting ourselves down. Here are a few common ones:
- I’m not pretty enough
- I’m not smart enough
- I’m just poor, I’ll never become rich
- Things will never change
- I’ll never get that job or promotion
- I’m destined to be a failure
- I’m destined to be alone
They key to becoming rich or even happy in some cases is to turn off this switch and start thinking positively. When you say these things to yourself, you start to believe them. The next thing you know, they become true. You give up trying in life and just coast through.
If you change your thoughts to be more positive and start telling yourself that things can change, your outlook and mood will improve and you will start down a path of reaching and achieving your goals.
Remind yourself that many poor people have become rich. Why not you? Remember that new jobs are filled every day. Why not you getting hired? Start looking at all of the good things you have going for you and get into a positive mindset.
Don’t tell me you can’t think of anything you have going for you either. Watch this video and then tell me how bad you have it.
#14. Get A Mentor
Earlier I mentioned how having a partner can help you reach your goals. In that case, having a friend motivate you goes a long way. In this case, having a mentor is like finding a gold mine.
Seek out and find someone that has achieved the success you want to achieve. Befriend them and pick their brain. You’ll be surprised at how generous they are with giving you information to help you succeed.
In fact, over 93% of successful people have a mentor. It will be much harder to be wealthy or successful if you are blindly chasing it. By having someone on your side that has achieved the goal, you greatly increase your odds of success too.
After all, anyone who attempts to climb Mt. Everest takes along a team of Sherpa’s who have already achieved the goal.
So take some time to find other successful people and see if they are willing to mentor you.
#15. Eliminate Bad Luck
There is no such thing as bad luck. It is simply a state of mind. There is no such thing as good luck either. But then why do some people appear to be lucky? They prepare themselves for the opportunity.
No one knows what opportunities could come their way, but the people that catch the breaks and are “lucky” are simply in the right place at the right time. They prepared up until now to be ready for when opportunity presents itself.
They stay out of debt and save so they have the financial resources to take advantage of an opportunity. They network and keep a group of other successful people around so they can be the first to hear of new ideas and businesses to be part of.
It’s not luck, it’s preparation. If you follow all of the steps above, you too will see more opportunity come your way and will be “lucky” yourself. You just have to prepare so you are ready when the opportunities present themselves.
#16. Know Your Main Purpose
The happier you are, the more successful you will become. The key then is to do things that make you happy. If you are in a job you hate, the odds of you staying late to take on a new project or take over some of your boss’s work are slim. This means your chances of earning a decent raise are slim too. Your best bet is it cut bait and do something else.
I can attest to this. One of the jobs I worked, I hated. With a passion. I would show up on time, or sometimes a few minutes late, and would check out right at quitting time and sometimes a few minutes early.
I would leave for lunch earlier and come back later. I would surf the internet. I would take “extra” bathroom breaks. I would call out when I didn’t feel like working. It’s no surprise my raises were barely 2% each year.
Eventually I started blogging full time. I work more hours now than I did when I had a full time job and blogged part time. But the interesting thing is that I love every minute of it. It never feels like work. I enjoy it and it brings me a lot pleasure to talk about personal finance here and self development on my other blog. The fact that I make as much as I do blogging blows my mind.
The key for you is to find the things you love to do, the skills you have and see if you can earn a living doing those things. If you can do this, you will greatly improve your odds of wealth and success. You can read this post to help inspire you with ideas.
One final tip on this point. Don’t limit yourself. I hated English class and writing papers in high school and college. Yet, here I am, a writer. I enjoy it because I get to write about something that I enjoy and I don’t have to include a bibliography at the end.
What I am trying to say is don’t cross something off just because you don’t like it. You may not like something just because of the association it has with something else.
There is your template to becoming filthy rich and super successful. Study it, follow it and the world is yours my friend.
I know that doing all of these tips at once will be overwhelming, so start small. Turn off the television and read or spend that time on a hobby or with your family. After some time, add something else into the mix, like volunteering.
The key is to take things slow. It is not a race. The more patience you have with changing your routines, the more likely they are to stick for the long term.
The only thing left to do now is to not procrastinate and actually get to work!