8 Money Habits of The Rich: The Powerful Habits
So much of the uncertainties that cause by the coronavirus epidemic, economy unstableness and death toll worldwide are worrisome. Hopefully, the coronavirus epidemic will be gone soon and the numbers of casualties will be reduced and not increasing daily. Economically affected countries can slowly back to the operations again.
Despite reading the unfortunate news, as investors, we read more and research more. Here I stumble upon a good article from Thinkorswim. There are some good reminders about the behaviors of the wealthy: 6 Powerful Habits. There are very inspiring and powerful.
Each year investors will gather in Omaha, Nebraska to meet up and share the experience of investing. It also an opportunity to meet Warren Buffet, the 3rd wealthiest person in the world, to share his tips and advice on investing.
Learn how to safeguard your money and what are the habits of the rich here with great investors’ advice.
#1. Don’t think working for people is your only income source
Some people are never made more than $60,000 to $70,000 a year, adopt the habits of the rich, they are able to manage their money well, by saving up and place at the right place for it to grow.
They save actively and invest early and stay invested for the long term.
Hypothetically, if everyone’s wealth is combined and split equally to each of us, very soon the rich will make back their money, and make more, whereby the poor will become poor again due to not able to handle the money well. It is all because of the money habits of the rich, the powerful habits.
Let’s see what the rich do to stay wealthy.
#2. Always allocate money for your longterm goal
Financially educated people will tend to save a portion of their paycheck. That’s the most important thing to do first to reach their financial freedom goal. They will have a ready emergency fund for unexpected events, followed by settling bills for daily life. They spend frugally so that there are able to put money into hard work, investment.
Screen through monthly spending, minimize your budget, spend wisely. Everyone will be able to be rich if you plan for it.
“Do not save what is left after spending; instead spend what is left after saving.”―
#3. Start early and trust the compounding system
Wealth is able to accumulate with a good plan. The earlier we start the sooner we will reach our financial goal.
Understand the power of interest compounding system, you will have a more measurable early retirement goal.
Prioritize daily activities that will help to improve your personal finance and investment knowledge. Study and understand what you do, keep track of the investment you do, review your investments from time to time.
There’s no one-time-get-rich-fast-scheme here, that you think that you can be one in a million. Hard work plays a big role.
#4. Know what you do, do what you know
Investment and risk go hand in hand. What we can do is to do what we can to minimize risk. Understand the business, how much risk you can take, watch your emotions. Confidence build from researches, facts, and numbers.
Once you have done enough heart work, risks are much lower with the facts and information you found. Keep learning and testing the strategy you have, see the short term result, review it from time to time, decide to continue or stop the loss.
Emotions play a part, observe it and understand your stressfulness threshold.
It’s a good idea to review past mistakes before committing new ones. So let’s take a quick look at the last 25 years. -1989 letter
Wealthy prefers buying experience than physical items. Education is worth spending on.
Only buy things that you need. Once in a while, you can buy the things that you like. Always set a budget to prevent overspending. The wealthy will always have more than one option, several prices to decide from.
Understand the difference between price and value. Always go for valuable things at a discounted price (if possible)
Price and value can differ; price is what you give, value is what you get.
Getting more educated is the key to success. Do a lot of reading, research and stay open-minded to new age information.
According to Thomas Corley, author of “Rich Habits: The Daily Success Habits of Wealthy Individuals,” 67% of the rich watch TV for one hour or less a day. Only 6% of the wealthy watch reality shows, he wrote, while 78% of the poor do.
Corley, a CPA, and CFP found that 86% of the wealthy “love to read,” with most of them reading for personal self-improvement.
#7. Sleep well, eat well and work out
Successful people believe that everyone has an equal amount of time. They plan ahead activities that they want to do and start early. They watch what they eat and work out to stay healthy.
According to Corley, 57% of wealthy people count calories every day, while 70% eat fewer than 300 calories of junk food per day. Some 76% do aerobic exercise at least four days per week.
#8. Have a plan is always better than none
You might think you are not making a lot of money, and it’s hard to have a good game plan. But as long as you are making money, you can plan for your money. Start saving your penny, even it is just a penny. Keep searching for ways to invest, when the right time comes, your savings will be able to work hard for you.
Takeaways: 8 Money Habits of The Rich
- #1. Don’t think working for people is your only income source
- #2. Always allocate money for your longterm goal
- #3. Start early and trust the compounding system
- #4. Know what you do, do only what you know
- #5. Budget-driven
- #6. Keep learning
- #7. Sleep well, eat well and work out
- #8. Have a plan is always better than none
Feel free to leave me some comments, let me know why is it hard for you to start? I can give you some ideas! Meanwhile please take care and stay away from crowds.
Stay clean and sanitize.