Developing solid financial habits is crucial for everyone, regardless of income level. It may seem like a daunting task, but building a strong foundation of savings and debt management is something that everyone can strive towards. To achieve this, it’s important to focus on building financial literacy and adopting high-quality habits.
One way to achieve this is by taking inspiration from the money and lifestyle management approaches employed by some of the world’s wealthiest individuals. While their lifestyles may differ significantly from the average person, many of their habits can be adapted to fit into daily routines. From prioritizing savings to getting enough sleep each night, these habits can act as a blueprint for overall daily improvements.
They Aren’t Afraid to Ask for Advice
The world’s wealthiest individuals are not afraid to seek out guidance from others, whether it be from financial advisors, colleagues, or peers. They understand that seeking advice is a common practice that can help them make better decisions and navigate the complex financial landscape. In fact, they embrace the idea of surrounding themselves with knowledgeable and confident people, even if they are more capable, experienced, or smarter than them.
By surrounding themselves with such individuals, the world’s wealthiest are able to tap into a wealth of knowledge and expertise that can help them unlock new opportunities and achieve greater success. They understand that seeking advice from others can help them overcome knowledge gaps and process biases that might otherwise hinder their progress.
Moreover, the world’s wealthiest routinely seek out advice from others, recognizing that doing so can help them stay ahead of the curve and make informed decisions. They understand that no one person has all the answers, and that seeking advice from others can help them see things from a different perspective and make more informed decisions.
They Set an Early Alarm
One consistent habit among the ultra-rich is waking up early. Many millionaires and billionaires pride themselves on being early risers, and this habit has become a common theme among successful people.
Waking up early has several benefits for those who aspire to emulate the wealthy. Firstly, it helps establish a routine of early activity, often before others begin their day. Secondly, it ensures enough sleep, which is essential for peak performance during the day.
Moreover, waking up early allows for an early start to the day, giving one a head start on their daily tasks and allowing for extra time to dedicate to their morning ritual and mental preparation. This extra time can be used to incorporate other beneficial practices that high earners prioritize, such as exercise, meditation, or reading.
Many of the habits that successful people incorporate into their daily lives require a time commitment, and waking up early provides the perfect way to create additional mental space for these practices. It is a simple yet effective way to free up time before engaging in the tiring tasks of the day, allowing for a more productive and fulfilling day ahead.
They Engage in Dream Setting
Engaging in dream setting is a practice that many successful individuals use to achieve their goals. This technique involves taking time to explore one’s ideal future self and envisioning a future in which all of their dreams have come true. Self-made millionaires and many wealthy individuals have been found to take time out to engage in dream setting.
According to recent surveys, 61% of self-made millionaires claimed to have used this technique to contextualize their road to riches. Dream setting is a powerful mental exercise that helps individuals develop a set of goals and prioritize a roadmap that can help them achieve those things.
To engage in dream setting, one needs to first consider what their ideal life might look like. After that, they should sit down with a pen and paper, or at their computer, and write a page or two that explores these features and feelings in greater depth. Taking a few minutes in the evening to think through goals and the dream life that one would love to one day enjoy can make for a transformative experience that helps them positively approach strategies to make that dream a reality sometime in the future.
They Read Extensively
Reading is a critical habit for many successful individuals, including Warren Buffett. The billionaire investor reads approximately 500 pages daily to prepare his mind for the complexities of new opportunities. For Buffett, reading and thinking go hand in hand, and the more he spends time thinking, the better he becomes at distinguishing between good and bad investments, business deals, and everyday life decisions.
Aside from Buffett, many other wealthy people also cite reading as a crucial habit. Reading can establish new pathways of information and reasoning within the brain’s structure. As a result, readers become more capable and thoughtful individuals. Reading enables individuals to form ideas, consider new opportunities, and speak confidently on a variety of topics.
Moreover, reading can also help individuals socially. Engaging with stories creates emotional attachments to the characters and locations explored in the imagination. Readers become more emotionally perceptive and available, allowing them to forge meaningful relationships with people in the real world, whether socially or professionally.
They Avoid Debt Repayment Obligations
The world’s wealthiest people share the trait of reducing or eliminating debt repayment obligations, especially those that carry high interest rates. By doing so, they maintain financial stability and avoid the erosion of their wealth caused by high-interest costs.
Credit card debt is the primary culprit in this regard, but high-interest borrowing such as car loans and personal loans should also be used sparingly and paid off as soon as possible. While it may not be feasible to eliminate the use of credit cards and lending products completely, everyone can apply the lesson by only using them when they have a plan to pay them back.
To avoid the pitfalls of debt repayment obligations, wealthy individuals plan to keep their assets for the long term. For instance, when they purchase a new car, they plan to keep it for as long as it runs. This way, they avoid the need to take out new loans and reduce their overall debt burden.
They Prioritize Emergency Funds
An emergency fund is an essential part of financial planning for everyone, regardless of their income level. It serves as a safety net to help cover unexpected expenses, such as medical bills, car repairs, or job loss. Ideally, an emergency fund should be able to cover three to six months’ worth of expenses.
Despite its importance, a staggering 57% of Americans cannot afford an emergency expense of $1,000 without resorting to financial tools beyond their savings. However, the wealthy prioritize emergency savings above many other financial goals. They understand that being financially prepared for emergencies can prevent long-lasting financial difficulties.
They Do Their Best to Stay Healthy
Wealthy individuals understand the importance of prioritizing their health and wellness. While they may not have the time to exercise like a professional athlete, they make sure to incorporate physical activity into their daily routine. By doing so, they reap the benefits of improved bone and muscle strength, mental acuity, brain health, and reduced disease risk.
Regular physical exercise is a crucial aspect of a fulfilling life. Wealthy people have spent their work lives accumulating fortunes, and they want to enjoy the fruits of their labor. To fully take advantage of their financial success, they understand the importance of taking care of their bodies. By doing so, they can avoid physical ailments that may limit their mobility or overall health.
Exercise is not guaranteed to prevent all physical ailments, but it can certainly minimize their onset or effects. Wealthy individuals understand this and make sure to incorporate exercise and healthy eating habits into their daily routine. This helps them maintain their physical health and enjoy their wealth to the fullest.
Many Prioritize Competitive Sports
In addition to general fitness, many wealthy individuals prioritize participation in competitive sports such as tennis, soccer, and bowling. These activities provide foundational benefits that an active lifestyle can generate, but with added depth.
Participation in competitive sports can be a valuable learning opportunity for children, and the life lessons that come through competition do not end when childhood does. Competing against others imparts fantastic habits that translate into the workplace and social life beyond it. Those who take on the challenges of the field, arena, or court are often well prepared to handle adversity while managing emotional responses to hardship or even those of successes.
They Explore Additional Moneymaking Opportunities
Wealthy individuals understand the importance of having multiple streams of income to ensure financial stability. These income streams can come from various sources such as dividend-paying investments, real estate income, business opportunities, and more. Initially, these streams may only provide a small amount of additional capital, but over time they can grow into solid earners that generate significant financial value.
One example of a potential income stream is investing in real estate for rental income. Although it may take a few years to break even, rental prices typically increase over time, resulting in a significant return on investment. As a result, owning rental properties can become a profitable venture that provides a steady stream of income.
It is important to note that the majority of wealthy individuals do not solely rely on their primary income source to achieve financial stability. Instead, they focus on building and maintaining additional income sources to ensure long-term financial success.
They Begin Planning for Future Expenses Early
The world’s wealthiest individuals understand the importance of planning and saving for future expenses early on. For instance, when it comes to college fund planning, wealthy Americans start preparing financially for their children’s education even before they are born. The average cost of a four-year education in the United States is approximately $150,000, with yearly costs averaging around $36,500.
By spreading out the required savings goals over a long period of time, wealthy individuals can make the seemingly insurmountable costs of college more manageable. With compounding returns and time on their side, setting aside a little over $8,300 per year from the birth of their child can help them achieve their savings goals without feeling the financial burden.
This approach is not unique to the wealthiest individuals. People from all walks of life understand the value of planning and saving for future expenses early on. However, the world’s wealthiest individuals tend to act on this knowledge with greater regularity, which contributes to their ability to make and maintain massive fortunes.
They Prioritize Sleep
Wealthy individuals not only wake up early, but they also prioritize their sleep. Sleep is essential for the body and mind to recover from the previous day’s activities. Inadequate sleep can lead to chronic health issues, and it also affects hormone regulation, which is fundamental to overall wellness.
The wealthiest individuals understand the importance of a good night’s sleep for a highly functional day of work. They make it a priority to get at least seven hours of sleep per night. Contrary to the “rise and grind” mentality, the best way to emulate financial titans is to recapture those nighttime hours. Going to bed at a reasonable hour repurposes a nighttime routine that might otherwise be occupied by late-night television or other hobbies that create imbalances in physical and mental functionality.
Sleep not only improves metabolism and heart health but also respiratory and immune systems. It enhances the ability to reason, perform fine motor functions, and interact socially with others. Wealthy individuals understand that sleep is a crucial component of their overall well-being and success.
They Prioritize Savings: Paying Themselves First
Wealthy individuals have a habit of prioritizing savings above nearly all else. They mentally place savings at the front of the line when allocating money to bills, expenses, and other spending considerations. This means that savings contributions come before things like vacation spending or new clothing purchases in the budgetary math of wealthy people.
Paying yourself first becomes a positive habit, and it is essential to stick to it. When savings falls to the back of the line, it’s incredibly easy to slip and not make a contribution. Failing to invest in your future can also develop into an ongoing practice.
Savings contributions don’t have to be massive slices of the total budget, but they should be placed ahead of nearly all other spending categories. Wealthy individuals understand that they need to prioritize saving for the future, whether it’s building up an emergency fund or adding to a retirement account.
