Thomas C. Corley, a financial advisor, has spent five years interviewing wealthy people. He now shares his insights about their habits and how they have been able to accumulate their wealth.
My research has shown that there are two types self-made millionaires. Those who take chances and those who have good habits. People with good habits do many of those same things that helped them to build their wealth. Two types of self-made millionaires are available: those who take chances and those who save. People who take on risk to achieve their wealth goals are those who take some risks. These people are entrepreneurs, business owners, or aggressive investors in stocks and real estate. They may also create a product or service that is so unique that it can be very expensive.
Millionaires who are willing to take chances are the most wealthy in my study. Their median net worth is $ 7.4 million. You must be brave and bold to take on risks. This is the high-risk route to riches. This requires courage, perseverance, cunning, and a strong work ethic.
It’s not for everyone.
Savers build wealth by living below their means and saving money to invest later. My Rich Habits research shows that it takes 32 years to reach wealth if you follow this path. Savers are generally able to avoid risk and work for the majority of their lives. They also have a moderate or low standard of living. My study shows that savers are among the poorest, with a median net worth around $ 3.4million.
But, saving is the best way to gain wealth without taking chances. This is the only way to wealth. You will need to be disciplined, diligent, and have a modest lifestyle.
My research has shown that savers all have a particular money mindset. These are the key strategies of billionaire savers.
94% of millionaires who saved more than 20% of their take-home or net income were able to become millionaires. They began saving right after they started to work, well before they had accumulated their millionaires.
Save 10%, 5%, or even 1% every time you get your salary. It is important to establish a savings goal that you can stick with. This will encourage saving habits.
If you are looking to make a millionaire from your own efforts, the ultimate goal is to save 20% of your monthly take-home income and to invest that money wisely. This strategy will help you grow your savings and investments over time.
Since 2004, I have been researching the daily lives of the poor and the wealthy. This has allowed me to gather a lot of data about both the rich and poor.
My study found that 67% of wealthy people are frugal. They defined frugal as spending their money wisely. This meant purchasing high-quality goods and services at low prices. My study revealed that most of the wealthy were raised by middle-class or poor parents who tried to instill good values in their children. They carried the good habits of frugal living with their parents into adulthood. You can be frugal by seeking quality and value.
Frugality won’t make it easy to be rich. But, it can help you save money by shopping wisely and keeping quality and price in your mind.
Many people who see an increase in their income suddenly start spending more.
The golden rule of the wealthy is to stop lusting after your money. Instead, invest your money to increase its value. This will provide financial resources you can use to sustain your standard of living in the future.
Spending money is like a thief. You are losing money when you experience bad times like losing your job.
One of my closest friends who is wealthy has shared his secret to financial success with me:
“The same house, same wife, same car”
These words are full wisdom. These words are a reminder that you shouldn’t compromise your standard of living, no matter how much money is made. Don’t spend too much on things that you don’t need. Keep your life simple and practice delayed gratification. This means putting off what you need today to make room for the future.
You can make your money invisible by putting it to use immediately, before you see it in your account or feel tempted to spend it. This is also known as “automating savings.”
Save money. When you get your salary, transfer a certain amount immediately to your savings account. This will make it so you can only spend what you have in your regular account.
Millionaires who have saved millions of dollars and are strict about how much they spend. These are just a few of the strategies you should follow.
Spend less than 25% of your monthly income at home. It doesn’t really matter if the house is yours or rented.
Spend less than 15% of your monthly income on food. Entertainment should not exceed 10% of your monthly income. This includes restaurants, bars, and movies.
Do not spend more than 5% on your monthly salary for car rentals or loans.
Spend less than 5% of your annual salary for vacation.
Never gamble. You should never gamble if you plan to place a bet on the lotto.
Don’t accumulate debt with your credit cards. You are living beyond your means if you use your credit card for house payments.
Make wise investments with your savings. Don’t invest in the belief that you will become rich quickly. There is no such thing. You can make your savings grow and become rich by using the power of composition. With a monthly savings of $ 250, you can accumulate $ 500 362 over 40 years. This is a profit margin of 5%.
Maximize the contributions you make to your company’s retirement fund. Great if your company matches your contributions. This is your chance to win free money. Profite from the free money whenever possible.
Self-made millionaires are known for their willingness to network with like-minded people. Avoid spending with someone you know. Spend more time with someone you are close to if they look for your money.
You can adopt money habits if you surround yourself with people who do. It is possible to follow good money habits for the rest of your life if you surround yourself with people who share your same views.
Millionaires who are self-made are often married to people with similar money habits. They choose a spouse who shares the same money values and money habits as them. They can work together as a team to save money, spend it, or invest it.