Steven Covey’s book, ‘The 7 Habits of Highly Effective People’, is a great read and a book that had a significant impact on my life. (I recommend that you get a copy if you haven’t read it already).
However, seeing this is a blog entry about finance, I thought I would write about eight habits that wealthy people develop. The good news is that – apart from possibly the last one – we can all develop these habits which can help us increase our wealth.
1. They have a healthy attitude towards money
Probably nothing determines a person’s ultimate financial success more than their attitude towards money. If money is nothing to you then you will probably not end up with much; if it is everything to you, then you will probably die as a lonely, miserable accumulator with only money to show as the value of your life – a wretched end indeed. It’s simplistic to say that the middle ground between these two extremes is the best place to be, but everyone has to make some choice as to how important – or not – money is to them and to live their life in light of that conscious decision. What is important is to know that your attitude towards money will affect your life, so strive to have a healthy attitude towards money. Money is not everything – but it is also not nothing either.
2 They plan their success and set financial goals – preferably in writing
People who become wealthy always have a plan. Ignoring the lotto millionaires who win by chance (and who often lose it, as they know nothing about money!) no-one has achieved lasting monetary success without having a plan. While it may not have been outlined in painstaking detail, it usually involved achieving a certain monetary goal within a certain period of time. Often the most successful people have their plans written down. Why do you suppose that is..?!
3 They put their plans into action and stick with them
This is the toughest part. The wealthy are those who not only make plans, but they also act on them. It is not enough for a person to ‘want’ to be wealthy. Desire is insufficient; it must be accompanied by taking action and making the plan become a reality. Also, during the hard times and challenges that undoubtedly come about, wealthy people continue to stick with their plan through thick and thin.
4 They develop ‘money-awareness’
They wealthy are aware of money and how it works. They know that even small amounts can grow into large sums, and so they don’t like spending it but are constantly looking for more opportunities to invest their money and keep it working for them. They are always looking for ways to make and save more money. They convert temporary income into permanent income and they save something out of every dollar they earn – and get full value from every dollar they spend. They also avoid bad debt – like credit cards and consumer hire purchase – and they avoid fad investments and frivolous spending like the plague.
5 They constantly seek knowledge
Wealthy people are always looking to accumulate more knowledge. You will find that they read – and they read a lot!! They know that knowledge is one of the keys to increasing wealth. The home of every wealthy person contains an extensive library filled with books on finance, investing, law, history and biography. Again, why do you suppose that is? The wealthy also ask for – and listen to – professional advice, but do not accept it blindly. They will utilize the services of professionals such as lawyers, accountants, brokers, financial advisers etc., but they will always make their own decisions when it comes to managing their wealth.
6 They don’t follow the crowd.
If you do what everyone else is doing you will end up with the results everyone else is getting. Wealthy people do not follow the crowd, as they know that the crowd is usually wrong. They forge their own path and blaze their own trail to wealth. (If you’re short of ideas, read biographies about the lives of successful people which can help give you ideas of how to blaze your own trail)
7 They protect themselves from unforeseen events
The wealthy insure themselves against unforeseen investment disasters by using four means… (a) Knowledge (b) Diversification (c) Observation, and (d) Discipline. They know that the future is uncertain and that knowledge – especially of the past – is the key to protecting themselves from financial disaster. They also don’t put all their investment eggs in one basket, they keep an eye on their investments through regular check-ups, and they have the discipline to sell investments when they become overpriced and buy them back when they are being sold for a song!
8 They start early in life
It requires time for money to compound and grow, so it helps to get a head start in life. The super-wealthy all started young. Even delaying investing by just 10 years can radically reduce the amount of money you accumulate at the end of your life, as most of the money you make is made in the last five to 10 years. Starting in your teenage years is better than delaying until your 20’s. But whatever your age right now, it is never too late to begin. We’ll all be a decade older in ten years time!
Bryce – Fit 4 Life Staff