12 Things the Rich Do That You Don’t
Did you ever wonder just what the wealthy do that you don’t? There are noticeable differences between the money habits of the rich and the rest of the population.
It all boils down to making the right moves. Not everyone who is rich was born that way. Many worked extremely hard over a number of years to reach their financial goals and are now reaping those rewards.
When it comes to setting themselves apart, here’s what financial experts say the rich do different.
1. Plan for the Long-Term
It can be very difficult to plan for the future when you’re struggling in the here and now. Yet, it’s necessary to get out of the cycle of being broke. So how do you plan for the long term? You start looking at what you can do today.
Instead of opting for short-term gratification, like that new iPhone that just came out, think of the long-term rewards you can earn. That doesn’t mean the same typical “don’t buy that $5 cup of coffee” advice, but rather, making strategic efforts to save money and put it away where it’ll work for you.
2. Pay off Debts
This may seem like a no-brainer, but the reality is debt is a real surefire way to put a kink in your financial freedom. According to Business Insider, the average American has more than $100,000 in debt. Consider that only 37.5% of people make more than that in a year, and you can see where the problem is.
That’s not to say rich people don’t take out loans or use credit cards, but they tend to pay off those balances quicker than the average person.
3. Manage Their Money
One thing people do that comes back to bite them is spend money they don’t have. Whether it’s borrowing from a friend or family member, or opening up a new credit card, they will put themselves into debt paying for everyday items.
That’s not to say it’s never okay to do these things. In an emergency, you might not have another option. But it should never be a way of life. Instead, save up for the big things, but also, save up for the future. That’s more important.
4. Invest
Many of those who have amassed wealth have done so by making sound financial investments. Many of those moves aren’t even complicated, they’re just based on compounding interest that continues to grow over time.
But, here’s the thing. It’s never too late to invest. You might never reach millionaire status, and that’s okay. As long as you can make enough to live your life the way you want, it’s a win.
5. Pay Less Taxes
In the overall scheme of things, it may seem that because the wealthy make more, they pay more. However, they often work with financial managers who are very adept at finding ways to legally reduce the amount of money they owe.
This includes investments, purchasing assets, donating money, and finding all of the deductibles that reduce what they owe Uncle Sam every year.
6. Remain Conscious of Spending
There are definitely exceptions to this rule, but many among the rich are actually pretty conservative in their spending. Let’s look at Warren Buffett as an example. The financial guru still lives in a home he bought back in the 1950s. He also buys non-flashy cars and pays under the sticker price for them.
Just because you have money doesn’t mean you should spend it all. Rather, make smart decisions and put your money to work for you, rather than toss it at the shiniest new thing to catch your attention.
7. Live Below Their Means
Obviously, if you’re wealthy, you can manage to live below your means pretty easily, but you can do it if you’renotwealthy, too. One of the biggest financial traps that most people fall into is increasing their spending as their salaries increase. Doing that, you’ll never get anywhere.
Rather, look for a home that doesn’t eat up half your income, whether you rent or purchase. Be cost-conscious about your utility use. Put money away every paycheck. These small actions can add up big time and give you more financial freedom.
8. Create Multiple Streams of Income
Where the average person goes to work for an 8, 10, or 12-hour shift and calls it a day, the rich want money coming in from every avenue possible. They will set up multiple revenue streams, from investments, businesses, and other opportunities.
Setting up multiple streams of income really isn’t that difficult. Strive for passive income, like investments, and you can literally have a set-it-and-forget-it model to set you up for the future. That’s not to say there’s no work involved, there is. But it’s not like going to a full-time job every time.
9. Set (And Achieve) Goals
How many times have you set a goal only to turn around and push that date back, or worse, let the idea go altogether? This is where the rich differ. They set their goals much like everyone else, but stop at next to nothing to achieve them.
That means overcoming challenges and being persistent in their pursuit. Next time you set a goal, be realistic about what you need to do to achieve it and make it happen. Then, apply that to your financial life. Make it a goal to save a specific sum, then go beyond that.
10. Own Assets
One way to build wealth is to own assets. In addition to commercial and residential real estate, this could be private equity, hedge funds, bonds, artwork, and farmland.
Several wealthy people make money as investors in other companies, whether it’s a major or minority ownership, or as an angel investor.
11. Work Harder
That’s not to say the average person doesn’t work hard. Rich people just work harder. They tend to throw themselves into projects and set goals they work strenuous hours to achieve.
In the end, though, the effort pays off and they don’t have to work as hard. It’s a lot of time and investment in the beginning for the opportunity to reap the rewards at the end.
12. Learn From Others’ Mistakes
Using Warren Buffet as an example once again, he believes in consistent learning, and that means learning from others’ examples. Their failures and successes. By learning from the mistakes others make, they can forge a new path and find more success. That’s not to say they won’t make their own mistakes, they just hopefully won’t be the same ones.
