Fun fact – financial experts say that inflation and longer life spans mean you’ll need a cool $2 mil to retire with any reasonable standard of living. Essentially, if the average person wants to ever stop working, they’ll first need to be a millionaire.
Yet the number of people who actually achieve great wealth is relatively small. When asked, many people think wealth is something that only famous people or tech geniuses can possess. Not the case! There’s a lot of research identifying the habits of wealthy (and yet average!) people. And, there’s the key, “habits”. That’s where the great divide lies. Those that are willing to do the right things every single day to achieve success and those who won’t. So, if you’re ready to join the millionaire club, here are the top habits of wealthy people that anyone can implement (and some handy action steps to get you started):
“Believe you can and you’re halfway there.” – Theodore Roosevelt
Mindset is the foundation of building wealth. No, I’m not a millionaire, yet. I am also not shy about my own quest for wealth. I simply buy into the philosophy that believing you can have something helps you achieve it. Science has shown that if you can see it in your mind’s eye, your brain will find ways to have it. Everyone is entitled to a bad day or a negative thought now and then, but overall you must believe not only that you can, but that you will.
Action Step – Create a vision board. If you want to pay off your credit card debt or save 6 months worth of salary, find a picture that speaks to that goal and put it on your vision board. Be sure to set a deadline. Otherwise it’s not going to get done. Trust.
Pay Yourself First
“Don’t save what’s left over after spending, spend what’s left over after saving.” – Warren Buffett
It’s essential to pay yourself first if you ever want to build any real wealth. Wait, what? That’s right, take money right off the top of every check and save it (pay yourself). This philosophy is hard for a lot of people, myself included. For the longest time I thought “I’ll start saving when I’m out of debt” or “I’ll save what’s leftover at the end of the week”. The truth is though if you aren’t paying yourself first, you probably aren’t going to. So do your future self a favor and pay yourself before you pay anything else! Not only will you see your savings grow but once you start paying yourself first you’ll build the financial confidence to do other things that put you on the right track, like not buying that second latte. It’s a great side effect of such an easy change.
Action Step – Open a savings account and commit to putting a specified amount into that account every time you receive money. Whether it’s $5 or 15% just take that first step.
Live Below Your Means
“Live below your means but within your needs.” – Suze Orman
Again, many folks including myself struggle with this one, but it’s important to realize that living below your means does not mean you cannot have nice things. Here’s a real-life example. For most of my adult life I’ve had a car payment that exceeded $500/month. I made the payments on time, every single month. I could technically afford this payment, but I also realized that my money could be spent better. When it was time for a new car, I made the smarter decision to buy a used car that costs me less than half that amount. I’ve got leather seats, heated seats and a sunroof. It’s a pretty sweet ride that was in great condition but was a slightly older model. I’ve not once regretted my decision, I don’t feel like I’m missing out and I’m able to put that extra cash to good use. Wealthy people consistently live below their means and place value in the right things. A brand new fully-loaded car would be nice, but it’s only going to get older and it’s likely to get scuffed and dinged on the streets of Atlanta. Meanwhile, placing that money in a 401K or other sort of savings will only lead to more money. It’s not always easy to pass on the shiny and new for the boring and practical, but it’s definitely worth it in the long term. Just ask Warren Buffet. He still lives in the home he bought back in 1958 for $31,500. The trick is finding a balance that works for you.
Action step – think about some compromises you can implement to start making better decisions. Do you really need that premium cable package? Do you need cable at all? Commit to making one compromise that will make smarter use of your money. Bonus points if you put the money you’ll save into that savings account you opened!
Success is ultimately the sum of small efforts repeated day in and day out. A shift in mindset, paying yourself first, and living below your means are not only habits of the wealthy but things that anyone with any income level can incorporate into their lives and see great benefits from. See you at the millionaire club!