These 7 Habits Will Help You Become Rich
Humans are creatures of habit, and a lot of us creatures are in debt.
What habits got us there? How did we fall into a life of anxiety over credit card bills, paying off loans and avoiding calls from debt collectors?
It was largely a matter of habit. Thanks to research by Thomas C. Corley, we know what those habits are.
Corley is a financial planner and author who spent five years studying millionaires. He wasn’t out to discover the investment strategies they shared. He wanted to find out general stuff, like how they lived, what TV shows they watched, what they ate. Those habits can be as crucial to building wealth as investing in the right stocks.
Corley interviewed 233 people who make at least $160,000 a year in gross income and have $3.2 million in net assets. The majority of them, 177 in all, were self-made millionaires.
Those creatures obviously have the right habits to acquire wealth, but what about the other side of that coin? Do low-income people share lifestyle habits?
Corley interviewed 128 Americans who make $35,000 or less in gross annual income and have $5,000 or less in liquid assets.
The research showed wealthy people indeed have what Corley calls “rich habits.”
Among them are they don’t watch more than one hour of TV daily, they count calories and – at the risk of sounding like your mother – they floss their teeth.
You might not see the connection between good oral hygiene and a healthy bank account, but flossing takes discipline. If you don’t have that, it’s easy to fall into what Corley calls “poverty habits.”
If you want to get rich, here are seven “poverty habits” that handcuff people to a life of low income:
1. Plan and set goals.
Rich people are goal-setters. They list what they want to achieve daily, weekly, monthly, and they can tell you where they want to be in 20 years.
Poor people just sort of wing it.
“Ninety-five percent of the poor people in my study had no life plan,” Corley wrote. “Without a blueprint, without long-term goals, we are like leaves on a fall day, floating in the air aimlessly.”
The bottom line is you don’t have to be rich to make a plan. You do need a plan if you want to be rich.
2. Don’t overspend.
The simplest and surest path to wealth is to save money and invest it. It’s like planting an acorn and watching it sprout into a tree. The problem for millions of Americans is acquiring an acorn to plant.
A 2018 Federal Reserve report found that four in 10 adults would not be able to cover an unexpected $400 expense much less an emergency fund. The U.S. Bureau of Labor Statistics put it at 6%, the lowest level since the 2008 financial crisis.
If you barely make enough money to pay your bills and can’t save, the obvious solution is to make more money. That leads us to the next poverty habit.
3. Create multiple streams of incomes.
A 2019 U.S. Census Bureau study found that only 8.8% of women and 8.0% of men have two or more jobs.
Corley found that 65% of wealthy people had at least three different streams of income set up prior to making their first $1 million.
“Poor people have one income stream,” he wrote. “Their eggs are all in one basket.”
So, if you lose your job, you run into a medical emergency or you fall behind paying bills, you’re single source of income probably isn’t going to be enough to bail you out.
4. Read and educate yourself.
Wealthy people not only work dual jobs, they make time to read. But they’re not reading Stephen King or Danielle Steel.
They read educational and self-improvement books. Corley found that only 8% of low earners read educational or self-improvement books.
“Success requires growth, he wrote. “That growth comes from reading and educating yourself on a daily basis.”
5. Avoid toxic relationships.
Psychology plays a huge role in wealth accumulation. It may sound corny, but a Can-Do attitude is a must. It’s hard to maintain one if you associate with Can’t-Do people. Corley found that only 4% of low-income people associate with “success-minded” people.
“You are only going to succeed in life if you surround yourself with the right type of people,” he wrote. “That is to say, people who are encouraging, positive, curious, and helpful.”
6. Don’t engage in negative self-talk.
When it comes to psychology and money, the only thing worse than surrounding yourself with losers is believing you’re a loser.
Do you say things like, “My job is too demanding,” “It’s not my fault,” or “I’m not smart enough.”
Say that enough, and you’ll believe it.
“When you allow negativity to rule your thoughts, you are programming your brain for failure,” Corley wrote. “You’ll have no chance in life at breaking out of your current financial or life circumstances. These negative thoughts will become beliefs that act like computer programs.”
7. Live a healthy lifestyle.
Are you a couch potato who can’t resist nachos, beer and a Girl Scouts Coconut Caramel Swirl Inspired Frozen Chocolate shake from Dunkin’ Donuts?
If so, chances are you’ll never be able to afford a new couch.
Making money takes will power and work. So does exercise and eating right. Taking care of your finances and your health go hand-in-hand.
“Poor health habits create detrimental luck,” Corley wrote. “This is a type of luck that is a byproduct of poor habits, poor behavior, and bad decision making.”
If you’re a creature who has more than a couple of these habits, chances are you might need help getting out of debt. A nonprofit debt management program is a proven way out.
Certified counselors will work with creditors to reduce interest rates and lower your monthly payments to an affordable level. What’s more, they’ll teach you budgeting habits that will put you on the road to wealth.
They also understand being in debt is nothing to be ashamed of. Nobody is perfect, and the key is to have more good habits than bad ones.
“Adopting one rich habit,” Corley wrote, “has the effect of eliminating many poor habits.”
So, if you’re in debt, stop watching so much TV, read more, start making plans, think positively and find extra income streams.
And don’t forget to floss.