5 Habits of Rich People

What is a habit? A habit is something you do daily without thinking much about it. Habits can be extremely useful and it would be impossible to run our lives without them. Good habits serve to create routine, order and efficiency. Old habits may be hard to break but it is possible. Creating a foundation of healthy habits will benefit your life from today far into the future.

This article is based off the book “7 Habits of Highly Effective People” written by multi-millionaire Thomas C. Corely. Thomas Corley understands the difference between being rich and poor. For half a decade, Tom studied the daily activities of 233 wealthy people and 128 people living in poverty. He concluded that certain habits will increase your chances of becoming rich.

These five simple principles can help transform any individual looking to acquire financial stability. What you do today matters, your daily habits are a major determinant of your wealth.

Most of these are obvious, while others are might be little more surprising. Without question, these habits contribute to the maintenance of your wealth.

1. Live within your means.

Stay away from racking up credit card debit. Stay away from loans/leasing. Limit your entertainment. Create a budget sheet. Too many people spend money they haven’t earned, to buy things they don’t want, to impress people they don’t like.

Keep the 50/30/20 Rule in mind

2. Read every day.

Reading will increase your personal value. Knowledge is the quickest and safest path to success in any area of life. One of the greatest habits you can develop is to learn and internalize wisdom. Successful people read to improve themselves. This separates them from the competition.

Knowledge = Opportunities = Money

3. Set goals, not wishes.

What is the difference between a goal and a wish? A wish is not bound by logic and a does not need to be a guide to action. On the other hand, goals are things to which you can commit to and then use as a practical guide to your daily action. Those who are successful in life have three things in common: focus, persistence and patience. Create yearly goals. Create monthly goals. Most importantly, create a daily “to-do” lists to help with your yearly/monthly goals.

Chase your goals as if they were running away from you

4. Invest

If you save all the money you make without investments, you will never have more money than what you save. Have you heard the saying “It takes money to make money” ? By investing your money, you are getting your money to generate more money. Whether you invest in stocks, mutual funds, real estate, your own business, or even education, the objective is to make investments that will generate more cash for you in the future.

Make your money make money for you

5. Staying Healthy

Stay active, healthy and exercise. Exercise affects the brain on multiple fronts. It increases heart rate, which pumps more oxygen  to the brain. It also aids in providing nourishing environment for the brain.  Dozens of rich business leaders, from Mark Zuckerberg to Mark Cuban, make time in their busy schedules to workout.

You cannot be rich if you are dead

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How You Should Be Spending Your Money – 50/30/20 Rule

Budgeting isn’t always as complicated as it may seem — this simple formula makes it easy to allocate your money each month.

Are you in Debt? Have a Full – Time job that pays well but still no savings? Welcome to the 50 – 30 – 20 rule. The plan balances out the must-haves, wants and savings of a household, business, or individual. This rule helps determine which of your expenses fall into which category. With that, you can create a budget that helps you make the most of your money. The 50 – 30 – 20 rule can be flexible. You can alter the percentages to make it work better for you. This plan provides a framework for you to work within to keep your spending in accordance with how much you bring in.

50% of Your Income – Essentials

There is no question, half of your income should go to the absolute necessities in your life. These are the things you need to get by day to day. Things like Rent/Mortgages, Insurance/Car Maintenance, Hydro/Electricity, groceries, etc.

30% of Your Income – Personal

30% of the money you bring in should be used for personal expenses. This is everything you buy that you want but do not necessarily need. Things like going to the movies, travel/vacations, going out and drinking, relationships, eating out, etc.

20% of Your Income – Savings

Last but not least, dedicate 20 percent of your income towards savings, investments, and debt-reduction. You can think of this as your emergency fund incase you need to pay medical bills. You can save up and add to your “retirement” fund or maybe your children’s university/college fund! If you have any credit card payments to make or school debt use this to pay them off. As well as investing in stocks, bonds, real estate, education, and pretty much anything that will make you more money in the future.

 

Establishing good habits will last a lifetime. You don’t need a high income to follow the 50/30/20 rule; anyone can do it. This rule is highly effective if followed properly. The 50 – 30 – 20 Rule is not easy to execute immediately and will take time but you will get there eventually.