Did you know that rich people really do have a different mindset to poor people? And I’m not talking a spendy mindset either.
What rich people do is often quite different to what you expect them to do. And I should know.
My extended family is extremely diverse, wealth wise.
Among my extended family I have bricklayers, (Queens Counsel) barristers, care workers, solicitors, SAHMs, American corp VP’s, teachers and those with an inherited private income.
Yep, you read that right, there are still people in this world who inherit an ongoing annual private income.
I don’t just read about how the other half live, I can see it when we have big family gatherings! And it makes for very interesting conversations and people watching.
I can be as nosy as the next person but I don’t like to go asking these distant relatives how much they earn or inherited, how they got rich and the like.
Of course I’d love to ask though!
No I go people watching instead and love finding out snippets from our conversations about every day life.
I’ll be honest, having been frugal for so long, starting out as a teenage single parent, seeing others with much more money than I will ever see in my lifetime takes a little getting used to.
What I have found fascinating is the mindset of my more wealthy family individuals. They just don’t think, work and live in the way that I, as a poorer person, expected them to.
So what are these differences? What do rich people do that poor people don’t?
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11 Simple Things That Rich People Do
If you are looking for magical answers that prove that you can never be rich then I am going to disappoint you.
Because every one of these habits are things you could start doing today. And every day thereafter.
They are not the preserve of the rich and famous. They are habits you could adopt if your choose to.
The question is, are you willing to do what rich people do in order to become wealthy?
Long Term Goals
Goals and targets are very important to wealthy people. I’m not talking just about financial goals either, although they are very important.
I’m talking life goals, life expectations for the family and targets they want to achieve within certain time-frames.
When you set goals you are also creating a plan on how you are going to get there. Because you have those long term goals you do what you need to do in order to achieve them.
Without goals you have nothing to strive for, nothing to make you stretch your comfort zone.
ACTION – Take some time now and draft your long term goals.
- Where do you want to be in 5 years time?
- What financial situation do you want to have achieved in 20 years?
- How much money do you want to have saved for retirement in 10 years?
Review your goals every quarter or monthly to check progress and plan how to achieve them.
Budget & Prioritize
Whether you like it or not, a budget is truly a wonderful thing and rich people know this. A budget organizes your money.
What rich people do with their money is to make sure every dollar is accounted for and every bill is paid on time so no charges are incurred.
When you budget your money you prioritize how your money is going to be spent.
Spend it wisely, according to your long term goals and you will be building wealth.
Be determined, disciplined and dedicated to your budget and you will reap the rewards of this habit.
ACTION – if you haven’t already, set your budget and monitor your spending to make sure you are true to your plan.
Don’t Spoil Kids With Material Goods
As a parent I have always budgeted for Christmas and birthdays, trying hard, in my mind, to not spend too much.
Knowing that many families around me (both with and without money) think nothing of spending much more, as in hundreds of dollars more, on each of their kids at Christmas.
Buying presents is one area where the habits of the wealthy vs the poor are often starkly different.
My wealthy family members really don’t splash the cash on their kids at these times.
Indeed they might only get 2 or 3 presents in total and not to the tune of hundreds of dollars.
In fact one Christmas it was remarked upon how many presents DD2 had received – oops! I had tried so hard to stay on budget but I also tried to ensure she had a number of presents to open.
This year she had loads, they were on the cheaper end so I hadn’t completely blown my Christmas budget!
ACTION – consider using the 4 present method at Christmas:
- Something they want
- Something they need
- Something to wear and
- Something to read
Focus On Self-Improvement
Rich people utilize their spare time to improve their knowledge on many different things.
They read books from many different genres, including business, finance, economics and self improvement. They keep up-to-date on world affairs through more than just the nightly TV news.
When you have the right mindset, you understand that learning is a lifelong endeavor. Not something you leave behind when you finish college and start working.
Indeed rich people treat self-improvement as a hobby, as something they want to do and as a treat to themselves.
The more knowledge you have, the more you understand the world around you, the more you can utilize this to help you increase your wealth.
ACTION – Visit your local library and take out 2 recommended books in different sectors such as self-Improvement and personal finance.
Don’t Watch TV
Having read the above self improvement habit, you might be thinking – but I don’t have time for all that.
Yes you do.
Time to improve yourself can easily be found through not watching TV. Many of my family members do not own a TV, nor do they watch via live streaming or anything else.
They just do not watch TV.
They value their time too much to spend it watching TV. They would rather spend their valuable time on things that benefit them and their family in the long run.
That is 4 hours every day that you could spend developing your knowledge and applying it to your life.
ACTION – Start to value your time. Have a TV ban. If you watch it daily, start with 2 nights a week and fill your time with learning something useful for long term personal growth.
Choose Investments Over Cash
The best form of money is money that is working for you to make more money. Rich people don’t save money, they invest it.
If you have been wondering how you can get rich without working, then this is it. Get money working for you so it makes you money.
What rich people do with their money is to invest it for the long term as this is how money makes money. They might have a cash buffer, but not much. Just enough for their emergency fund.
Invested money takes time to grow. Save when you are young and you will benefit from many years of compound interest. Which is where the interest you earn, earns interest itself.
Through the hours they have spent on self improvement they have researched investments and spread their money across multiple sectors.
I have been saving money for our future for a long time but I spent the first 10 years or more saving money into cash savings.
Yes, it’s nice to see that money grow (slowly) but these days it doesn’t even keep pace with inflation so you are, in effect, losing money.
Money makes money by being investing in stocks and shares worldwide. In real estate both in funds and bricks and mortar. And in businesses.
Start out small, investing in shares through an index tracker or individual stocks if you have done your research. And keep building your investment base from there.
ACTION – Use your newly found self development time to up-skill yourself on investments. Where can you start investing your money?
A good education is key to a successful career, a great education is even better.
Wealthy people recognize the power of a good education so will prioritize this over many other things.
They will live in crap digs in order to pursue their education. They will go without many things in order to save enough money for their kids to get into a decent school or college.
A family friend sent her kids to private school (a UK private school = one you pay thousands for) and didn’t have a single holiday or getaway weekend for 8 years.
Not with the kids or without them. Because their money only went so far and education came first.
ACTION – Consider what steps you are willing to take to get the best education for yourself and your future children.
Have you ever bought something only to find it disintegrates after a few uses? There is a saying “Buy cheap, buy twice” and unfortunately it’s true.
When you buy quality items this doesn’t happen. You might pay more initially (or you might not) but quality items last.
I am fed up of buying white goods when they only last a few years. My washing machine is on its last legs.
When it finally goes, I will be buying the quality brand which comes with a 20 year guarantee. I will pay double the price but it should last 3 times as long.
ACTION – Buy less but buy quality. Do your research, don’t impulse buy and buy items that will last.
A brand new car loses almost 10% of it’s value as you drive it off the forecourt. Rich people understand value for money and a brand new car is not that.
When you understand the value of your money and recognize what you can do with it then you will want to ensure you stretch it as far as possible.
ACTION – When you are in the market for a new item, do your research to find it used and marvel at the savings you make.
Sites like Ebay, Craiglist, and Gumtree are good starting points. Get to know your local thrift stores/charity shops for new to you quality clothing.
Pay Yourself First
When you have long term goals, you have one eye on your long term future. In order to make your future goals a reality, you should prioritize the future you.
The future you (and kids) need you to be saving your money today, for them tomorrow.
If you spend all your money now you cannot invest, or improve your situation.
ACTION – set up an automated payment into a savings account today for the future you. Then do your research on where to invest this money longer term.
Don’t Conspicuously Spend
Rich people do not splash their cash. They are not conspicuous lifestyle spenders.
Indeed, reading the descriptions of the millionaires, how they dress and the cars they drove, in Millionaire Next Door you would be hard-pressed to identify any of them as rich, never mind millionaires.
Because rich people don’t dress rich. They dress quality but the clothes they wear might be 10+ years old.
I don’t think any child born into the wealthy side of my extended family has ever had a brand new cot.
Nor have they had many brand new clothes. Because hand-me-downs are very much a tradition of wealthy people.
When there are perfectly serviceable baby items hanging around the family, it makes money sense to use them. Why spend money for the sake of it?
And what do rich people eat? Very often reduced food, just like me!. I have wealthy family members who make a beeline for the reduced aisle of their grocery store every time. And yes, it is Waitrose, the upmarket store, not Aldi or Asda!
Wealthy people will also use coupons just as much as you or I. Why not use a coupon if you have one? You are leaving money on the table if you don’t.
ACTION – only spend on necessities. Things that move you towards your life goals.
11 Simple Things That Rich People Do (And So Can You)
Seems to me the habits of the wealth vs poor are actually one and the same. Nothing mind blowing in these habits is there? In fact you probably know you should be doing most of them already.
But are you?
Are you actually focused on your long term goals? Focused on improving your life and spending wisely?
Don’t get me wrong, I’m not one of the wealthy ones and it took me a long time, too long, to learn some of these habits.
And no, I haven’t embraced them all. I still watch TV (damn you boxsets and dramas) and I really struggle with the quality vs. cost habit on expensive goods like washing machines and clothes.
What I can tell you is that taking on some of these habits has made a significant difference to our wealth.
We are not wealthy but we paid off our mortgage 10 years early and we have savings and investments. And we’ve only ever earned modest incomes – no six figure salaries here, not even half!
ACTION – What rich people do, you can too. Take note of these habits. Determine that you will do some or all of them starting today.