16 Rich Habits
Your
autopilot mode can make you wealthy or poor.
Tom
Corley
Intelligence,
talent and charm are great, but more often than not these aren’t what separate
the wealthiest among us from the poorest.
Instead,
the differences are in our daily habits. Do you realize that these
subconscious, second-nature activities make up 40 percent of our waking hours?
That means that two out of every five minutes, all day and every day, we
operate on autopilot. It’s true: Habits are neural pathways stored in the basal
ganglia, a golf ball-size mass of tissue right in the center of our brains, in
the limbic system.
This
neural fast lane is meant to save the brain energy: When a habit is formed and
stored in this region, the parts of the brain involved in deeper
decision-making cease to fully participate in the activity. However, we all
know there are good habits and bad
habits.
I spent
years studying the difference between the habits of our country’s rich and
poor, questioning hundreds of individuals. On the rich side, these were people
with annual gross income north of $160,000 and net liquid assets of
$3.2 million or more. I defined the lesser-off as those with gross income
of $35,000 or less and no more than $5,000 in liquid assets. When I was done, I
analyzed the results of my research and boiled down the responses to create a
picture of what allows the wealthy to prosper where others do not. My ensuing
book became a sort of instruction manual for how to become wealthy.
The gulf
between Rich Habits and Poverty Habits is staggering. If you’re well off
already, chances are you already adhere to most of these Rich Habits.
Integrating the ones you’ve neglected will push you further. But be assured: If
you’re doing fine now without minding these principles, it’ll catch up to you.
Some of
the differences between rich and poor are obvious, while others are a little
more surprising. Here are the most important Rich Habits you can take up to
reach and maintain your wealth potential.
1. Live
within your means.
Wealthy
people avoid overspending by paying their future selves first. They save 20
percent of their net income and live on the remaining 80 percent.
Among
those who are struggling financially, almost all are living above their means.
They spend more than they earn, and their debt is overwhelming them. If you
want to end your financial struggles, you need to make a habit of saving and budgeting what you spend. Here are some sensible
ways to budget your monthly net pay:
▲Spend no
more than 25 percent on housing, no matter if you own or rent.
▲Spend no more than 15 percent on food.
▲Limit entertainment—bars, movies, miniature golf, whatever—to no more than 10 percent of your spending. Vacations should account for no more than 5 percent of your annual net pay.
▲Spend no more than 5 percent on auto loans, and never lease. Ninety-four percent of the wealthy buy instead of leasing. These folks keep their cars until the wheels fall off, taking great care along the way so that they save money in the long run.
▲Stay away from accumulating credit card debt. If you are doing this, it’s a clear sign that you need to cut back somewhere.
▲ Think of savings and investments as two completely different things. You should never lose money on your savings. Try to stash six months of living expenses in an emergency fund in case you lose your job or your business goes belly-up.
▲ Contribute as much as you can afford to a retirement plan. If you work for a company that matches your contributions up to a certain percentage, great. Always take that free money when you can get it.
▲Spend no more than 15 percent on food.
▲Limit entertainment—bars, movies, miniature golf, whatever—to no more than 10 percent of your spending. Vacations should account for no more than 5 percent of your annual net pay.
▲Spend no more than 5 percent on auto loans, and never lease. Ninety-four percent of the wealthy buy instead of leasing. These folks keep their cars until the wheels fall off, taking great care along the way so that they save money in the long run.
▲Stay away from accumulating credit card debt. If you are doing this, it’s a clear sign that you need to cut back somewhere.
▲ Think of savings and investments as two completely different things. You should never lose money on your savings. Try to stash six months of living expenses in an emergency fund in case you lose your job or your business goes belly-up.
▲ Contribute as much as you can afford to a retirement plan. If you work for a company that matches your contributions up to a certain percentage, great. Always take that free money when you can get it.
2. Don’t
gamble.
Talk
about a sucker bet: Every week, 77 percent of those who struggle
financially play the lottery. Hardly anyone who is wealthy plays the numbers.
Wealthy people do not rely on random good luck for their wealth. They create
their own good luck. If you still want to bet after knowing the risk, use money
from your entertainment budget.
3. Read
every day.
Reading
information that will increase your knowledge about your business or career
will make you more valuable to colleagues, customers or clients. Among wealthy
people, 88 percent read 30 minutes or more every day. Just as important, they
make good use of their reading time:
▲ 63
percent listen to audiobooks during their commute.
▲ 79 percent read educational career-related material.
▲ 55 percent read for personal development.
▲ 58 percent read biographies of successful people.
▲ 94 percent read current events.
▲ 51 percent read about history.
▲ 11 percent—only 11 percent—read purely for entertainment purposes.
▲ 79 percent read educational career-related material.
▲ 55 percent read for personal development.
▲ 58 percent read biographies of successful people.
▲ 94 percent read current events.
▲ 51 percent read about history.
▲ 11 percent—only 11 percent—read purely for entertainment purposes.
The reason
successful people read is to improve themselves. This separates them from the
competition. By increasing their knowledge, they are able to see more
opportunities, which translate into more money. Comparatively speaking, only
one in 50 of those struggling financially engages in this daily self-improvement reading, and as a result
the poor don’t grow professionally and are among the first to be fired or
downsized.
4. Forget
the boob tube and spend less time surfing the Internet.
How much
of your valuable time do you lose parked in front of a screen? Two-thirds of
wealthy people watch less than an hour of TV a day and almost that many—63
percent—spend less than an hour a day on the Internet unless it is
job-related.
Instead,
these successful people use their free time engaged in personal development,
networking, volunteering, working side jobs or side businesses, or pursuing
some goal that will lead to rewards down the road. But 77 percent of those
struggling financially spend an hour or more a day watching TV, and 74 percent
spend an hour or more a day using the Internet recreationally.
5.
Control your emotions.
Not every
thought needs to come out of your mouth. Not every emotion needs to be
expressed. When you say whatever is on your mind, you risk hurting others.
Loose lips are a habit for 69 percent of those who struggle financially.
Conversely, 94 percent of wealthy people filter their emotions. They understand
that letting emotions control them can destroy relationships at work and at
home. Wait to say what’s on your mind until you’re calm and have had time to
look at the situation objectively.
Fear is perhaps the most important
negative emotion to control. Any change, even positive changes such as marriage
or a promotion, can prompt feelings of fear. Wealthy people have conditioned
their minds to overcome these thoughts, while those who struggle financially
give in to fear and allow it to hold them back.
Whether
you fear change, making mistakes, taking risks or simply failure, conquering
these emotions is about leaning in just a little until you build up confidence. It’s amazing how much
confidence helps.
6.
Network and volunteer regularly.
You’ll
build valuable relationships that can result in more customers or clients, or
help you land a better job if you spend time pressing the flesh and giving back
in your community. Almost three-quarters of wealthy people network and volunteer a minimum of five hours a
month. Among those struggling financially, only one in 10 does this.
One perk
of volunteering is the company you’ll keep. Very often the boards and
committees of nonprofits are made up of wealthy, successful people. Developing
personal relationships with these folks will often result in future business
relationships.
7. Go
above and beyond in work and business.
Unsuccessful
people have “it’s not in my job description” syndrome. Consequently, they are
never given more responsibility, and their wages grow very little from year to
year—if they keep their jobs at all. Wealthy individuals, on the other hand,
make themselves invaluable to their employers or customers, writing articles
related to their industry, speaking at industry events and networking.
Successful people work hard to achieve the mutual goals of their employers or
their businesses.
8. Set
goals, not wishes.
You
cannot control the outcome of a wish, but you can control the outcome of a
goal.
Every
year, 70 percent of the wealthy pursue at least one
major goal. Only 3 percent of those struggling to make ends meet do
this.
9. Avoid
procrastination.
Successful
people understand that procrastination impairs quality; creates dissatisfied
employers, customers or clients; and damages other nonbusiness relationships.
Here are five strategies that will help you avoid procrastination:
▲ Create
daily “to-do” lists. These are your
daily goals. You want to complete 70 percent or more of your “to-do” items
every day.
▲ Have a “daily five.” These activities represent the crucial things that will help you get closer to realizing some major purpose or goal.
▲ Set and communicate artificial deadlines. There’s nothing wrong with finishing early.
▲ Have accountability partners. These are people you team with to pursue a big goal. Communicate with them at least every week, and make sure they hold your feet to the fire.
▲ Say a “do it now” affirmation. This is a self-nagging technique. Repeat the words “do it now” over and over again until you begin a task or project.
▲ Have a “daily five.” These activities represent the crucial things that will help you get closer to realizing some major purpose or goal.
▲ Set and communicate artificial deadlines. There’s nothing wrong with finishing early.
▲ Have accountability partners. These are people you team with to pursue a big goal. Communicate with them at least every week, and make sure they hold your feet to the fire.
▲ Say a “do it now” affirmation. This is a self-nagging technique. Repeat the words “do it now” over and over again until you begin a task or project.
10. Talk
less and listen more.
A 5-to-1
ratio is about right: You should listen to others five minutes for every one
minute that you speak. Wealthy people are good communicators because they are
good listeners. They understand that you can learn and educate yourself only by
listening to what other people have to say. The more you learn about your
relationships, the more you can help them.
11. Avoid
toxic people.
We are
only as successful as the people we spend the most time with. Of wealthy,
successful people, 86 percent associate with other successful people. But
96 percent of those struggling financially stick with others struggling
financially.
If you
want to end your financial struggles, you need to evaluate each of your
relationships and determine if they are a Rich Relationship (with someone who
can help you up) or a Poverty Relationship (with someone holding you back).
Start spending more and more time on your Rich Relationships and less on your
Poverty Relationships. Rich Relationships can help you find a better job, refer
new business to you or open doors of opportunity.
12. Don’t
give up.
Those who
are successful in life have three things in common: focus, persistence and
patience. They simply do not quit chasing their big goals. Those who struggle
financially stop short.
13. Set
aside the self-limiting beliefs holding you back.
If you’re
hurting financially, you’ve probably told yourself some of these untruths
before: Poor people can’t become rich. Rich people have good luck and poor
people have bad luck. I’m not smart. I can’t do anything right. I fail at
everything I try.
Each one
of these self-limiting beliefs alters
your behavior in a negative way. Almost four out of five wealthy people
attribute their success in life to their beliefs. Change your negative beliefs
into positive affirmations by reading lessons from the greats of personal
development, like Napoleon Hill, Dale
Carnegie and Jim Rohn.
14. Get a
mentor.
Among the
wealthy, 93 percent who had a mentor attributed their success to that
person. Mentors regularly and actively
participate in your growth by teaching you what to do and what not to do.
Finding such a teacher is one of the best and least painful ways to become
rich.
If you
know your goals, find someone who has already achieved them. You’ll be amazed
by how many people want to lend a helping hand.
15.
Eliminate “bad luck” from your vocabulary.
Those
struggling financially in life have a way of creating bad luck for themselves.
It’s a byproduct of their habits. Poverty Habits, repeated over and over are
like snowflakes on a mountainside. In time, these snowflakes build up until the
inevitable avalanche—a preventable medical problem, a lost job, a failed
marriage, a broken business relationship or a bankruptcy.
Conversely,
successful people create their own unique type of good luck. Their positive
habits lead to opportunities such as promotions, bonuses, new business and good
health.
16. Know
your main purpose.
It’s the
last Rich Habit, but it might be the most important. Those people who pursue a
dream or a main purpose in life are by
far the wealthiest and happiest among us. Because they love what they do for a
living, they are happy to devote more hours each day driving toward their
purpose.
Odds are,
if you are not making sufficient income at your job, it is because you are
doing something you do not particularly like. When you can earn a sufficient
income doing something you enjoy, you have found your main purpose.
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