Being rich is really about two things. In my Rich Habits Study, I interviewed 233 wealthy individuals (177 of whom were self-made millionaires) with at least $160,000 in annual gross income and $3.2 million in net assets.
I found that becoming and staying rich tends to come from two actions:
- Accumulating wealth
- Keeping the wealth you’ve accumulated
The first step, getting rich, requires that you forge certain specific habits that make getting rich possible. In my book “Change Your Habits Change Your Life,” I share some of the stories about how these self-made millionaires accumulated their wealth, but some of the most important Rich Habits for accumulating wealth include:
Pursuing daily growth. Daily self-improvement is a hallmark of self-made millionaires. They read at least 30 minutes a day to gain knowledge. They also devote significant time every day to practicing and perfecting their skills.
Dream-setting. The rich build goals around each of their dreams. This makes it possible to realize those dreams. Think of every dream as a rung on your own ladder. Your ideal, perfect life is realized when you reach the top of the ladder. Eighty percent of the self-made millionaires in my study built goals around their dreams.
Saving. Ninety-four percent of the rich saved 20% or more of their income for many years prior to becoming rich. They then put their savings to use by taking calculated risks.
Taking calculated risks. Fifty-one percent of the self-made millionaires in my study took a calculated risk in time and money. Calculated risk is a unique type of risk that requires you to do your homework.
Being optimistic. Seventy-one percent of the self-made millionaires in my study were optimistic about life. Their optimism infected everyone around them. They became magnets for other success-minded people.
Being open-minded. Being open to new ideas, new ways of doing things and the opinions of others is critical to learning and growth. Growth is the parent of success. You must grow into the person you need to be in order for success to visit you.
Finishing what you start. The rich don’t quit. They stick to something until they succeed, go bankrupt, or die. Eighty-percent were focused on achieving some goal and 55% spent one year or more on one singular goal.
But accumulating wealth is only one part of the equation. In my book “Rich Habits Poor Habits,” I share another equally important part of being rich: holding on to the wealth you’ve accumulated.
Staying rich requires that you forge certain specific habits that ensure the wealth you’ve accumulated does not disappear. Here are a few of the most important Rich Habits that will help you keep your wealth:
Putting your wealth to work. Putting your wealth to work means investing it wisely in stocks, bonds, real estate and other business opportunities. These investments create additional streams of income that pay dividends down the road.
Setting aside part of your wealth for retirement. Save 10-20% of the income you make and put that money into long-term retirement assets that you don’t touch until you retire.
Watching what you spend. Do you know where your money goes? You should. Tracking what you spend opens your eyes so you may know exactly where your money goes. Tracking your spending allows you to make adjustments to how you spend your money. If you don’t track your spending it can get out of control. This “lifestyle creep” can cause your wealth to disappear over time.
Avoiding spontaneous or emotional purchases. Never buy anything on impulse. It is almost always the wrong thing to do. That spontaneous or emotional purchase will lose its luster after only a few weeks. Then you’re stuck with something you don’t need and that does not generate any income.
Living below your means. Living below your means keeps you from falling into the trap of lifestyle creep. No matter what good fortune visits you in life, do not change your standard of living. Don’t supersize your life by buying things you really do not need. Live a modest, simple life.
Never forget wealth is a two-step process. The game doesn’t begin and end with getting rich. You must forge Rich Habits that guarantee the wealth you accumulate sticks around for a long time.