The Beliefs and Habits of Wealthy People

The famous American novelist, F. Scott Fitzgerald, said, “Let me tell you about the very rich. They are different from you and me.” Hemingway, another famous writer, responded, “Yes, they have more money!”

I've spent a lot of time with rich people over the years, and I can tell you they have a lot more going for them than just more money – particularly those who've earned it. What they have is a set of beliefs and habits that allowed them to amass their fortunes in the first place.

You can't walk through an airport bookstore without tripping over a dozen books on how to get rich. Likewise, the Internet is awash with get-rich blogs and websites. Most are helpful, but some are exceptional, like Peter Adeney's Mr Money Mustache and Ramit Sethi's ‘I Will Teach You to be Rich.'

Anyway, I thought I'd give you something much smaller and simpler; something you can digest in five minutes flat. Here's what I know about the beliefs and habits of wealthy people. They just so happen to be mine, too.

Wealth Beliefs

More than anything, your beliefs shape your life – including the level of wealth you attain. It comes as no surprise, then, that wealthy people tend to have similar beliefs, including:

  • Financial literacy is a critical life skill.
  • The Government is not responsible for your financial wellbeing.
  • Take responsibility for your failures – even if they're caused by someone else.
  • Remain a student for life – through books, courses and mentors.
  • Don't take your financial cues from the media, celebrities or social media.
  • Money is not the root of all evil. Poverty is. And money solves a lot more problems than it creates, especially where money works. Try running a charity with no money.
  • You have all the time you need, so prioritise your time based on what truly matters to you.
  • You get paid based on outcomes, not hours.
  • Autonomy is more valuable than status – freedom is the highest form of status.
  • Hard work is the only thing you can control. Do it when you don't feel like it and remain consistent.
  • Honesty beats sneaky tactics hands-down. Every deal must be a win-win, or else it's always a lose-lose.
  • Using versus owning is often smarter. Example: instead of owning a million dollar holiday house (and all the headaches it entails), rent a three-million-dollar one whenever you choose. That's what I do.
  • One income source is risky. Have at least three.

Money Habits of the Wealthy

Beliefs are wonderful, but on their own, worthless. They need to manifest as actions, and those actions must become habits. Anything you habitually do becomes your life. Pay attention – these are pearls right here:

  • Pay yourself first – even if it means going without, and especially when you can't afford it. Earl Nightingale (The Strangest Secret) and George Glason (The Richest Man in Babylon) both advocated saving at least 10% of what you earn.
  • Invest in long-term growth assets like quality real estate and index funds. Nothing else offers the leverage and tax breaks of real estate, and index funds have proven to outperform 96% of stockbrokers, so it's hard to go wrong. Be patient (10-30 year timeline), and with real estate, always look for ways to enhance the asset's value.
  • Ignore the Joneses. Define success with your own metrics, and don't buy into compulsory consumption.
  • Live with fewer things, but own good things. They last longer (costing less over the long term) and they bring you more joy.
  • Seek functionality and quality over confected value (usually driven by brand perception). Example: Victorinox watches are Swiss made and contain ETA movements also used by Omega and Tag Heuer, yet cost a fraction of the price.
  • Only take advice from those who've consistently achieved (over a few market cycles) what you want to achieve.
  • Be hypersensitive to fees. Even small fees can kill an investment because they compound losses.
  • Be very careful who you spend your time with as you'll either sink or rise to their level.
  • Guard your time like it's your most valuable asset. It is.
  • Never borrow for depreciating goods – only for appreciating assets. For most people, that means real estate.
  • Leave yourself a financial buffer for emergencies and market corrections.
  • Check your monthly expenses (especially direct debits like insurances and subscriptions) once a year. Seek a better deal upon each review.

I'm sure there are plenty we could add to both lists (I didn't mention sleep, exercise or charitable giving), but 99.99% of people won't do a tenth of these things, anyway. And for the cynical among you – remember, money is neutral. It isn't good and it isn't bad. It provides choices, that's all.

We owe it to ourselves (and those we wish to help) to earn what we deserve. If you're not earning enough, look at your beliefs and habits, and see how they measure up. Most of us can do better.

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