There’s a reason people have been using the expression “the rich keep getting richer” for so long. It’s true.
Do you ever question the reason why? Unless they are born into wealth, what separates the rich from the poor is their ability to manage their money and make smart choices with it.
One thing that many people fail to realize is that you will never build wealth or become rich if you do not pay attention to your finances. This post will cover 9 things that rich people do to get richer. All are all things that you can start implementing in your life today on your journey to build wealth.
1. Good credit is money in the bank
Unless you’re an idiot, the more income and money you have, the easier it is to maintain a good credit rating. A good credit rating means paying less for everything from borrowed money to car insurance.
2. RICH PEOPLE BUILD MULTIPLE STREAMS OF INCOME
One sure way to never be rich is to rely on one source of income. The rich are always looking for new ways to add money to their pockets. The more money that comes in, the more that they are able to put into other investments or ventures.
There are many ways that you can start today in building additional streams of income. Just to get you thinking, here are a few examples:
- This is a great way to earn side income once you get it up and running. Note, this is more of a long play, as it takes time to build traffic to your site.
- Drive for Uber: If you love driving, this is a great way to earn a bit of side cash; particularly if you are struggling to make ends meet
- Tutor Students Online: You can tutor those wanting to learn English on a site like iTalki and you don’t really need any more experience than being a speaker of the English language.
- Rent Out a Room: Have extra space that is unused in your house? Use a site like Airbnb to rent it out for extra cash. There are even sites that allow you to rent parking spaces and storage space.
- Start a Service-Based Business: If you have an online skill that you would like to offer up (think Graphic Design or Digital Marketing), you can offer that to people for a fee using sites like fivver
3. They’re frugal.
Frugality — a commitment to saving, spending less, and sticking to a budget — is one of the wealth factors that help millionaires build wealth, according to Sarah Stanley Fallaw, the director of research for the Affluent Market Institute and an author of “The Next Millionaire Next Door: Enduring Strategies for Building Wealth,” for which she surveyed more than 600 millionaires in America.
Many of the millionaires Stanley Fallaw interviewed stressed the freedom that comes with spending below their means.
“Spending above your means, spending instead of saving for retirement, spending in anticipation of becoming wealthy makes you a slave to the paycheck, even with a stellar level of income,” she wrote.
4. Rich People Are Goal-oriented
Goals inspire us, motivate us and give us purpose. Many of us have common goals, such as paying off debt, buying a house and retiring by a certain age. Maybe you have another goal of starting your own business or buying a second home. Unfortunately, goals are easily overshadowed by the daily stresses of life and all too often forgotten and neglected. When goals are just fleeting thoughts in your mind, they lose their meaning and influence over your behavior. This leads to bad financial habits, and your dream of becoming rich stays just that — a dream.
To make it a reality, the rich stay focused on their goals by committing the time to think about them, prioritize them and assign a target saving amount to each of them if possible. They also display their goals in places where they can be reminded on a regular basis, which keep them accountable and help them stay on track.
5. RICH PEOPLE BUDGET THEIR FINANCES
The next thing that the rich do is budget their finances. Now, this is most important for those working to become wealthy. Why? Because it’s crucial to know where EVERY dollar goes. Here are a few reasons why everyone should budget:
Building Net Worth
For example, you can make over six figures a year and still not have anything to show for it if you don’t budget. And someone who earns $50,000 / year, but is better at managing their money could potentially save / invest more than the one with the high salary. This would allow them to actually build more wealth than the person with the higher salary in the long run.
Getting Rid of Unnecessary Expenses
Another reason why you should budget is because when tracking your expenses it’s easy to see where you’re overspending or just unnecessarily spending. You can then make active changes to how you spend, saving you more money in the long run.
When you know how much you spend and plan for large expenses, that allows you to avoid any debt that you don’t need. Which ultimately means money is cheaper for you. And by avoiding your debt, your net worth won’t take the hit either.
6. Rich People spend more time studying and planning for investments.
Millionaires’ preferred investing strategies might be fueled by their research. Millionaire investors spend more time — an average of 10.5 hours a month — planning for investments.
That’s nearly two hours more than under-accumulators of wealth, defined as those with a net worth less than one-half of their expected net worth based on age and earnings, who spend 8.7 hours a month doing so.
“Their literacy in financial matters means that they are more tolerant of taking investment-related risks. “Future outlook and financial knowledge typically relate to taking greater financial risk, so the time they spend in managing and researching investments helps in decision-making.”
7. Spend money to make money
It’s true that there’s a price to pay for wealth, but unless you’re Warren Buffett, it is not gambling — and losing — on stock picking. Impulse, naiveté, and emotions, particularly greed and fear, can seriously hinder your chances of being rich if you let them. The best way to protect yourself and get a step up on your financial goals is to first invest in a team of financial professionals. This means hiring a qualified and experienced financial adviser, accountant and in complex cases, an estate planner. Yes, working with pros will cost you, and you can still do some DIY investing, but their objectivity, expertise, personalized guidance and ongoing monitoring can be well worth it (and relieve you of the huge burden of figuring it all out on your own).
Make sure that you interview several candidates so you can find pros you trust, feel comfortable with and whose approach is a good fit for your situation. And even if you work with an adviser, make sure that you’re still involved and aware of where your money is going — and why.
8. Rich People Sleep Less And Work More
Rich people are hardworking. They make valuable use of their time. Whether that be reading or coming up with new ways to make money, their time is always used efficiently. Just think about how hard working the uber wealthy like Bill Gates, Mark Zuckerburg, and Jeff Bezos are. At this point there is not any need for them to work at all, but they still do it anyway.
“If you trust in yourself…. and believe in your dreams…. and follow your star… you’ll still get beaten by people who spent their time working hard and learning things and weren’t so lazy.”
9. Rich People Don’t Follow The Crowd
Most people desire to blend in, to acclimate to society, to be a part of the herd, that they will do almost anything to avoid standing out in a crowd. Failure to separate yourself from the crowd, is why most people never achieve success.
Instead of following the crowd, the rich and successful people create their own new herd.
You want to separate yourself from the herd, create your own herd, and then get others to join it.
The secrets I have given above are not hard to achieve. If you study and follow these secrets, you will be surprised on how rich you can get.