So you work hard every day. You save money. You follow all the rules. But it still feels like there is never enough.
Welcome to the club. I have my days. You're not alone.
Since I have was having one of “those days” I started to think and then I started to write because that what I love to do. And I made a bit of an observation.
There are a few things that rich people have in common.
Have you heard the phrase “The rich get richer”? It is a phrase that I have heard time and time again but it wasn't until I started earning a steady paycheck that I realized what in the world it meant.
What does it mean to be rich?
According the the Merriam Webster dictionary the definition of the word “rich” is:
having abundant possessions and especially material wealth
If that is the definition of rich then I am definitely not rich. At least according to that definition. Most of us aren't. However, that doesn't mean we will never be rich.
My definition of “being rich” is having financial freedom. Being debt-free, maintaining a low cost of living and having the ability to do what I want when I want without killing myself trying to make all the money.
Want to read more about getting your money in check. Check out Dave Ramsey's “The Total Money Makeover”. It is truly a game changer. You can check it out here.
So here are some observations I have made throughout my life and things I personally do to hopefully be included in that category of “The Rich”. My definition of Rich that is.
Top 12 Things that Rich People Do (that you should do too
1. Rich People Do Not Spend Money to Look Rich
Have you ever seen that person that always seems to have the latest iPhone, best car, and designer clothes? Yet, they can barely make their rent. Yup. That is the person I am talking about. The person that lives paycheck to paycheck, however, eats at the best restaurants and has the hottest gear.
Are you that person? If you are that person then you need to stop right now. I understand you want to look good. You want people to see you can afford these things. I get it. But that is not helping to build wealth. You are making someone else rich.
Some of the wealthiest people I know are the most modest and unassuming. They don't worry about how to look rich. They do not wear designer brands. They do not drive fancy cars. But what they do have is financial freedom. I'll take that every day over a fancy car.
2. Rich People Do Not Drive Brand New Cars
So on TV, you see all those billionaires driving fancy new cars but let's be honest. In the real world, most of the wealthy people I know buy a new car and keep that car until they drive it into the ground. Do you know what it is like to live life without a car payment? It's amazing. So why bother investing in something that has no return other than getting those coveted head turns at the light. Those head turns are not going to help you when you want to retire early. So take a note from some of the wealthiest people out there and resist the urge to upgrade your car every year.
3. Rich People Invest
The word invest is a scary word. Especially when you are in your 20s and 30s. However don't be scurred, I mean scared. Investing can mean a million different things. It can mean anything from setting up a savings account to working with an investment advisor. The best thing to do is to educate yourself. Even if you don't feel like you can afford it even the smallest investment can make a big difference. Which leads me to my next point.
4. Rich People Invest: Quality over Quantity
That is not a typo. Rich people make it a point to invest in the things they buy. It is not about quantity. It is about quality. Think about it. Let's say you find a great deal on a vacuum cleaner. It is $50. Except you have to replace that vacuum cleaner every year for the next 10 years. Well, that $50 vacuum cleaner just cost you $500. A rich person would instead invest in a $250 vacuum cleaner that will last for 10 years for a savings of $250. The same thing goes with furniture and apparel. Think about the cost per use as opposed to the deal you are getting when making purchases. This works out to the difference between being frugal vs cheap.
5. Rich People Read… A Lot
Rich people are always reading and learning. When I first graduated the first book I read was Get a Financial Life (You can find it here). This book changed my life. It gave me the guidance I needed not to make the same mistakes as my peers. Reading and learning definitely work in your favor. Instead of being intimidated go to your local library and pick up some money management books. Or check out some of your favorite bloggers. You will be surprised by what you will learn.
Here are some books that I have read or are currently on my reading list.
- Hustle Harder, Hustle Smarter by 50 cent. You can check it out here.
- Think and Grow Rich by Napolean Hill. Check it out here.
- You are a Badass At Making Money by Jen Sincero. Check it out here.
Check out or list of the best personal finance books of all time for more.
6. Rich people Live Beneath Their Means
During the housing crisis, there were a lot of people that found themselves unable to afford their homes let alone their lifestyles. Many people lost their jobs. Others went from having a dual income to only one and still couldn't afford the mortgage.
This taught me a big lesson. Live beneath your means. Just because you make more money doesn't mean you have to spend money. Bigger paychecks mean bigger bills. However, for those of us that live well beneath our means, a bigger paycheck means we are that much close to early retirement.
When most of us graduate college we are barely making it. Between rent, student loans, and just living there is barely leftover anything else. So it is natural that once you get that first big raise you lose your mind. I 100% agree that you should enjoy your money and your life however ask yourself. Do you really really really need it?
Instead of buying a bigger house or getting a fancier car take that extra money and invest or put it towards your retirement. You will thank me later. I promise. But, if you really want that bigger house or fancier car make sure you can realistically afford it.
Be prepared for the unexpected. There are too many people that are living paycheck to paycheck despite the fact they are making six figures. There is no reason why you should be in that position. I know people will have something to say about that statement but as someone that lives and works in New York City, one of the most expensive cities in the world, I am confident in making that statement. Be realistic people and make the decision to live beneath your means.
7. Rich People Do Not Have Debt
Good debt. Bad Debt. In my mind debt is debt. It is an extra bill that I am getting every month. Paying off your debt is the best way to get closer to becoming rich. And when I say rich I mean having liquid funds. Think about it. Let's say you have a credit card, a car payment, and a student loan. Let's say you paid all of those off. How much extra money would you have in your pocket every month? I am pretty confident it would be a good chunk of cash.
Most wealthy people do not have debt. They have liquidity. Which gives them the flexibility to spend when they need and want to.
I will say personally. The day I finished paying off my student loans I felt rich. I had no idea what to do with myself. I spent so many years forking over so much money that I learned to live without it. What did I do though? I took the amount I was paying in student loans and put it towards my savings and retirement. So I still don't see that money in my pocket but rest assured I will be enjoying that money soon enough.
8. Rich People Budget
The word budget comes across as a bad word to a lot of people. What do you mean I need to be on a budget? Well, guess what. Sitting down and coming up with a budget can be very beneficial to you for many reasons. One, it helps you realize how much you might be overspending on things you don't need. Second, it gives you an opportunity to assess your finances in a way that allows you to take action.
Rich people have a budget and they stick to it. This is how they are able to afford to live the life they live and still have leftovers for retirement and investing. Just because you have a lot of money doesn't mean you can lose your mind buying everything you see. You can live on a budget fabulously.
When was the last time you gave yourself a money health checkup? If you can't remember now is the best time to do one.
9. Rich People Love Their Job
It's human nature. When you love what you do you devote more time and energy to it. You give it your all. So it is no wonder that people that are wealthy are also successful in their careers. They love what they do. Therefore they strive to be the best which hopefully means more money.
Looking for some ideas. Check out the 4 Hour Work Week by Timothy Ferriss. I read this book a bit ago and loved it. You can find it here.
So find a job or career that you love. And when you do rock it out. However, let's not get greedy. In the words of the late Notorious B.I.G., Mo' Money Mo' Problems. This brings to me to my next point.
10. Rich People Are Not Greedy
I am by no means saying that poor people are greedy. When I say greedy I think of the person that only thinks about money and makes every life decision based on how much money they are going to get out it. That doesn't work.
Needing money because you are trying to pay your rent and wanting money because you want to show everyone you got money are two completely different things. It is about showing gratitude for what you have and not just chasing the dollar to chase the dollar.
11. Rich People are Risk Takers
Sometimes the biggest risk can yield the biggest rewards. You definitely shouldn't go too far out of your comfort zone however whether it is something as simple as trying something new, quitting your job to go to school or completely doing a 360 on your career this is the perfect way to move towards your goal of being rich someday.
As someone that is risk-averse, I went against my instincts, took a huge risk and have not looked back. I have never been happier.
12. Rich People Surround themselves with Other Successful People
Peer Pressure. It's a thing. I am the person I am today because of the people I am surrounded by. Remember when your parents used to come down on you for hanging out with the “wrong crowd”. They knew what they were talking about.
Rich people surround themselves around people that inspire them and push them to be better. So look around you. Who are you surrounded by and how do they motivate you every day.
Now before you come down my throat and say Hey. I'm Poor. And I do all of those things. That's not fair. Let me start by saying then you are on the right track. These are the things that I have noticed and observed are traits of people that are wealthy. I am not rich and I do all this stuff. However, if I didn't I probably wouldn't be able to pay my mortgage. So there is that.
The definition of the word rich is relative. If you asked me if I was “rich” I would say absofreakinglutely. Yes, that is a word. Why? Well because I have enough. I don't have everything but I have all I need to live the life I want.
So let's get rich together. And don't forget to download the Monthly Wealth Tracker to get started.
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