Things That the Wealthy Do Differently
What do the wealthy do differently to make their hours count?
Living close to New York City has given me an amazing perspective on life—one that has been molded by the myriads of people I've met throughout my time wandering through the city.
In my years, I've met people who were dirt poor at birth, but became millionaires. I've met trust fund kids who have never been poor a day in their life.
I've also met people who started off wealthy but ended up sharing a studio apartment with 14 other people in the worst neighborhood of New York. I've also met people who grew up poor and stayed poor.
One of the things I've learned by hobnobbing with people from every walk of life is that there is a very distinctive difference between the wealthy and the poor. More specifically, I've noticed that wealthiness is as much a mindset as it is a bank account statement.
The wealthy of this country tend to act differently than those who remain poor, and at times, it is that behavior that keeps them rich. Ever wonder what the wealthy do differently from the rest of us paupers? Here's what I've noticed from my time around them.
The rich don't buy things that they can't afford.
It sounds so simple, and if you're broke, it also sounds like an attack. I ought to know, I used to be flat broke and hearing people tell me not to buy things I couldn't afford made me want to start shouting at them.
But, as much as I hate to say it, there's some truth to this.
Spending habits definitely are one of the things the wealthy do differently from broke or middle-class people. Some of the wealthiest people I've ever met come into work in sneakers, nondescript clothing, and drive older (but not antique) cars. If you were to walk into them on the street, you'd never guess that they were worth millions.
Though they could definitely afford a brand new Infiniti, or $2000 sneakers, they don't splurge on those kinds of things. Why? Because they know that it would put a dent in their savings, or because they feel that their money would be better apportioned elsewhere; with wealth, they have learned how to budget, allowing them to stay wealthy.
Heck, even Kim Kardashian uses a crappy little Blackberry instead of an iPhone. For the rich, brand names aren't always as important as they tend to be for "little people" like us.
Meanwhile, I look at myself and a lot of other people who've had financial problems. We tend to buy things that strain our budgets. Sometimes, it's affordable, but the fact is that it's not really affordable—even when our banks won't dip below zero if we buy it.
It's only natural to want to enjoy the finer things in life the first moment you have enough money to do so. Unfortunately, what usually happens is that the desire to buy luxuries ends up becoming a major addiction. This turns into a major money drain and ends up keeping us broke.
The rich pay themselves first.
When I first heard a wealthy person tell me to "pay yourself first," I didn't understand what they meant. Most people who are broke don't, really.
The rich noticed something that the poor don't fully absorb. When we get our paychecks, we have to pay phone bills, rent, food bills, car payments, and insurance bills. It's a lot of money, right?
At the end of the week, most people will end up choosing to spend the remaining money on a nice treat, such as beers out at a pub or a nice night out. This sounds harmless, but the fact is that they forget to actually invest back into themselves.
When the wealthy tell people to pay themselves first, they're telling people to invest back in themselves. They're telling you to sock money away in a savings account, stash some cash in an investment fund, and put away some money in the form of investment. This is one of the most striking things the wealthy do differently from us—they pay themselves!
If you keep paying everyone else before yourself, you're going to end up digging yourself into a major financial hole. This is how people end up living paycheck-to-paycheck for 40 years, and how so many people end up without any retirement savings whatsoever.
In other words, not saving at all will make you go broke. So, if you want to act rich, start saving and investing. It doesn't have to be a lot to start; even $20 a week can make a huge difference over the course of 20 years.
They network with other rich people.
Most people who are poor have a deep resentment of those who are wealthy. This is something I can definitely understand, especially when you're dealing with rich people who have no idea what it's like to go without food because you can't afford it.
Admittedly, talking to someone who is seriously wealthy can be very intimidating. They often have a different way of speaking, different mannerisms, and a different attitude. As a result, quite a few poor people don't want to talk to the wealthy—nor do they feel like they want to network with them.
However, refusing to network with the wealthy is not a good way to go through life. Statistics show that you will most likely earn the average of what the five people closest to you will earn.
This is because wealthy people tend to share knowledge, opportunities, and connections with one another. If you're not hanging out with the wealthy and refusing to connect with them, then you're missing out on knowledge, connections, opportunities, and more.
Networking with them isn't always easy, but if you're willing to reach out to them, someone will most likely help you out.
The wealthy also don't just stick to jobs.
A 9 to 5 is great for basic income. In fact, if you're flat broke, having a job can be a huge stepping stone to comfort. However, that's only half the equation. Most people who are moderately comfortable will have a job—but that's it.
Most of us commoners have a single job, or maybe two jobs, to make ends meet. Unless you have a $250,000 salary, this will only go so far. What the wealthy do differently is that they rarely, if ever, just "stick to a single job."
Rather, the wealthy don't just have jobs; they start their own businesses, have stock portfolios, and more. This is because they realize that making money often includes making sure you don't rely on a single source of income to keep you wealthy.
In today's world, working hard is not always the road to wealth. In order to really reach a good amount of money, you have to go above and beyond what is expected of you. Expecting things to work out just because you worked really hard is foolish and, realistically, most people don't get a salary enough to even consider that bet.
They read constantly about the markets, investments, and more.
This should come as no surprise to anyone, but one of the most obvious things that the wealthy do differently is they talk money, read money, and watch money.
I'll be honest; I can't recall the last time I saw any of my friends who were poor as dirt pick up a book on investing. I don't ever think I've seen them read anything finance-related—not even The Wall Street Journal.
This is a shame, since the majority of people who are super-wealthy have made their money through investments. After all, why work for money when you can make your money work for you?
Rich people are always, always looking for new ways to make their money work for them. They do this by reading about opportunities, networking with "up and comers" in a variety of industries, and keeping a close eye to ensure that the investments they want are worth it.
Wealthy people look before they leap.
The biggest mistake I've made when I started to invest was to just randomly plunk down $80 on stocks that I had no idea what they did. As of right now, I lost about $20 on bad trades.
Why? Because I had no idea what I was doing and just assumed it was a good idea to just plop money in a bunch of random stocks without really learning about how to invest my money.
I didn't really have much money to splurge with, but I learned my lesson. I should have researched the companies in question, taken into account the costs of every trade, and considered investing in more stable stocks.
Warren Buffett, one of the wealthiest men on this planet, spends most of his day researching companies in excruciating detail. Most wealthy people I know will ask a million questions before they choose to sign with a job, before they invest in anything, or before they buy any major product.
Most poor people I know, on the other hand, have gone headfirst into a bad decision without asking about the long term ramifications. Moreover, many of the less wealthy people I know also will go into investments they know are unlikely to pay off, thinking they will be the exception. This is how MLM companies get people to pay for their goods.
One thing the wealthy do differently is that they really get cautious with things and make calculated risks. If people were to look before they leap more often, and if people did the math and asked questions more often, they'd probably be a lot more well off.
Wealthy people are also very, very quick to cut ties with people they don't believe are good for them.
Of all the habits of wealthy people I've observed, this one is the most striking. The wealthy are insanely choosy when it comes to the people that they hang out with. I've actually heard of some wealthy people refusing to speak to people below a certain net worth—and frankly, I'd believe it.
To a point, this habit is actually a major point of resentment between the rich and the poor.
Poor people will often have a much longer fuse when it comes to keeping people in their lives. They are more forgiving, primarily because they are more sympathetic to peoples' plight and because they tend to feel a need to be there for others. Simply put, people who are broke tend to light themselves on fire to keep others warm.
Socializing is something the wealthy do differently—very much so. Meanwhile, the rich tend to put themselves and the people who are good for them first. If they see that someone is loyal to them, brings them opportunities, and helps them in their lives, they can be great friends and will keep them in their circles.
However, if they notice that someone may be toxic, if they believe that person is a fake, or if they notice that the person may be using them for money, they will cut them out of their circle almost immediately. The wealthier you get, the more likely it is that they will preemptively snub people.
For the poor, it's hard to understand why this happens—but if you put yourself in their shoes, you'd understand.
Imagine if you were wealthy for a second. You're worth $50 million bucks. If you hang out with people who are flat broke, chances are that you will not know who is there for you and who is there for your money. Not good, right? You'd probably feel more comfortable among other people worth similar amounts of money.
But, it gets even worse when it comes to personal relationships. Imagine what would happen if you dated someone who started to get controlling and mean. You put up with it, hoping they'll change. You marry them, and get bullied into agreeing to a marriage without a prenup. They divorce you. You just lost $25 million dollars or more.
When you're wealthy, you have a lot more to lose than if you're broke. It only takes one truly awful person to cause you to lose millions. As a result, the richer you are, the more guarded you are.
From personal experience, this is one of those things that the wealthy do differently as a result of it being a matter of self-preservation. You don't stay wealthy by surrounding yourself with people who drag you down.
The wealthy tend to keep their cool.
Without a doubt, the people who are the richest in my circles tend to be the ones who are the most mellow. There are two reasons for this: one which deals with the consequences of poverty, and another which deals with the way wealth is made.
It's very easy to see why the poor are more prone to lose their ability to control their emotions.
When I was scraping by on $1000 a month, I was an anxious wreck of a person. I was half a month late on rent, I regularly had to dumpster dive for food, and every little penny counted.
Hearing that you might have to take a day off of an hourly job was absolutely devastating. It's easy to see how someone who is struggling to feed themselves would be more prone to flying off the handle. So, to a point, it's easy to see how the rich may have an easier time keeping themselves calm and collected.
That being said, the rich also tend to be much better at keeping themselves collected in times of crisis. The reason why is because they tend to build up safeguards and they also tend to realize that being level-headed will accomplish a lot more than screaming at people.
As one of the wealthiest people I know said, "The moment you lose control of your emotions, you lose something major—connections, money, opportunities, or others' respect. Don't lose your temper."
They set goals and stick to them.
One of the most common things I've noticed among the perennially-broke people I've met is their lack of goals. They may come up with a goal, talk it up a storm, and then forget that they ever were supposed to do something about it. They don't take steps to see that goal to fruition, which in turn means that those goals never stick.
This is how you end up with people who talk about how they "wanted to write a great book" but never had the time. The thing that the wealthy do differently is that they actually pursue their goals, and actually do so wisely.
From what I've seen, the self-made wealthy tend to have to-do lists they follow to the letter. They tend to come up with goals, plans on how to attain them, and do at least one thing every day that helps them further those goals.
Most wealthy people tend to get wealthy by single-mindedly pursuing their dreams. Is it really that surprising that self-made millionaires keep telling people to set goals, knowing how far it got them?