Rich Habits Poor Habits Episode 55 | The Thinking Actions of the Rich

One of the big separators between the rich and the non-rich is the rich have developed the Rich Habit of taking action.

Action is really two things:

    1. Thinking Action
    2. Physical Action

Thinking Action

We all think.

According to Psychology Today, the average person has 50,000 thoughts a day.

According to my research, the Thinking Actions of the rich are very different from the poor:

  • The Rich Are Positive Thinkers – 67% of the self-made millionaires in my study forged the habit of being positive and upbeat. A positive, mental outlook is critical to overcoming  problems, obstacles, pitfalls, mistakes and failures. Staying positive is a critical component to becoming wealthy. Positivity is like a radar in search of solutions to intractable problems. Thus, positive thinkers are able to see opportunities, where others see only negative consequences. 42794377_l
  • The Poor Are Negative Thinkers – 70% of the thoughts of the average person are negative (Psychology Today). Negative thinkers are unable to see solutions to problems. Thus, they are unable to overcome obstacles, pitfalls, their mistakes and their failures. Opportunities pass them by because they are not looking for opportunities. They are too focused on the negative consequences.
  • The Rich Are Decision-Makers – 91% of the rich in my study were decision-makers. Forging the habit of making decisions is critical to success. Those who develop the habit of making decisions are sought after as leaders, by others. Decision-makers have forged the habit of overcoming the fear of making decisions along with the paralysis of analysis associated with those unable to make decisions. The rich do not over think, which is a form of procrastination. It is impossible to know everything you need to know before making a decision. The rich forge the habit of being comfortable being uncomfortable about making decisions.
  • The Poor Let Others Make Decisions – 98% of the poor in my study were not decision-makers. They succumb to the fear of making a decision. They get lost in analysis and over thinking, which is a form of procrastination. The poor feel uncomfortable about making decisions, so they defer to others.
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Rich Habits Poor Habits Episode 54 | Becoming Rich Means Taking Risk or Making Sacrifices

There are four ways to become rich:

  1. Live Below Your Means
  2. Expand Your Means
  3. Do Both
  4. Getting Lucky

Living Below Your Means

Living below your means and investing your savings prudently is the only guaranteed way to become rich.

But, this approach requires enormous sacrifices – you must manage your spending your entire life and that requires making sacrifices: small house in an inexpensive neighborhood, no vacations, no restaurants, no kids. Woman Spending Too Much Money For Shop

If you do have kids your kids are forced to sacrifice along with you.

They have to buy their own stuff: iPhones, movie tickets, toys, cars, college education, etc.

Most are unwilling to make those sacrifices.

We want the nice home in the safe neighborhood, we want the nice vacations, we want to give our kids their iPhones and a college education.

So, for the vast majority, living below your means requires too much sacrifice.

But, for those willing to make the sacrifice, wealth is virtually guaranteed.

So, the question is, how bad do you want to be rich? Is being rich so important to you that you are willing to make the sacrifices that are required?

Expand Your Means   Tired Man Working On Digital Device

Expanding your means usually requires taking on risk and working long hours, by pursuing a dream or starting a business.

According to my research and many other studies on wealth creation, about 80% of the multi-millionaires and billionaires make their money this way.

The upside is enormous wealth where everyone in your family benefits from your risk taking and hard work.

The downsides include time away from family due to long work hours or poverty, you could fail.

Doing Both

Living below your means and expanding your means requires the most sacrifice.

Getting Lucky

Getting lucky means you fall into money somehow without any real effort. lottery-ticket-win-luck-gamble-odds

Examples of this are big gambling wins such as hitting the lottery, the slots, horses, etc.

Or, you you inherit your wealth – you’re born into a rich family or inherit money from a parent, grandparent, aunt, uncle, brother or sister.

The reason so many gamble is because they are unwilling to make the long-term sacrifices required.

Almost everyone wants to be rich, but they want that wealth without having to take on risk, work long hours, or make sacrifices for themselves or their family.

Becoming rich is not easy

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Common Personality Traits of Self-Made Millionaires

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Rich Habits Poor Habits Episode 53 | Self-Determination vs. Predetermination

There are two opposing schools of thought that divide mankind.

School of Thought #1: Self-Determination Drives Life Circumstances

School of Thought #2: Predetermination Drives Life Circumstances

Those who subscribe to School of Thought #1 believe we are in control of our life circumstances.

There is no one out there, no higher power, watching over us, guiding us.

Those in this school believe success, wealth, failure and poverty are manufactured.

We turn left or right, decide A or B, or do X or Y as a matter of free will, instinct or internal guidance. long-term-investment-acorn-tree-growth-plant-learn

In other words, the circumstances of our lives are dictated by our own decisions, our own behaviors and the choices that we make.

We, in effect, create our own destiny.

Those who subscribe to School of Thought #2 believe we are not in control of our life circumstances.

Some higher power is watching over us, determining the circumstances of our lives.

Those in this school believe success, wealth, failure and poverty are outside our control.

We turn left or right, decide A or B, or do X or Y because some force of nature acts upon us, directing us in every aspect of our lives.

In other words, the circumstances of our lives are not determined by us, but by external factors we cannot possibly control.

We, in effect, are powerless over the course of our lives.

When you subscribe to School of Thought #1 you embrace the concept that you are in control of your destiny; that you have power over the course of your life.

As a result, you develop a mindset of self-reliance.

Through hard work and personal initiative you seek to create the life you desire.

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You pursue lifelong self-education, take calculated risks, seek feedback from others and carefully weigh every decision you make.

You search for mentors to help you forge good habits that put you on the right path.

When you subscribe to School of Thought #2 you embrace the concept that your destiny is predetermined; that you are powerless over the course of your life.

As a result, you feel you are not in control of your life.

You are a mere victim of the luck of the draw.

Because you feel you are not in control of your life, you do very little to affect the circumstances of your life.

You float along in life like a leaf on a fall day, carried by the wind.

Which are you?

Something to think about.

 

 

Bad Spending Habits Rich People Avoid

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Rich Habits Poor Habits Episode 52 | 5 Questions That Could Change Your Life

As I’ve mentioned often in my writings and interviews, self-awareness is a prerequisite to change.

So, I thought I’d put on my muse hat to help you confront the inner demons that are holding you back.

Here’s 5 questions to ask yourself that will help you better understand why you are where you are:

Question #1: Who Are My Mentors? 13794893_s

Question #2: Do I Have Toxic Relationships?

The fewer toxic relationships one has in life, the better their life will be.

Question #3: How Much Self-Study Do I Do Every Day?

Question #4: What Are You Passionate About?

Question #5: How Many Hours Do I Waste Every Day?

The hallmark of successful people is their productive use of time.

They devote hours to self-study, networking with other success-minded people and pursuing dreams and the goals behind their dreams.

They develop a blueprint for their lives and devote hours every day following that blueprint.

YOU MAY ALSO BE INTERESTED IN READING:

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Rich Habits Poor Habits Episode 51 | Raising Young Adult Children to be Financial Juggernauts

According to a study by Brown University habit study by Dr. Pressman, we pick up most of our habits from our parents.

If parents are bad at managing money, their kids will be bad at managing money.

When you’re bad at managing money it has a tendency to disappear.

That means no savings, no retirement assets, runaway debt and a life filled with financial worries.

No parent wants their kids to grow up to struggle financially as adults.

Yet, since most people do struggle financially, it’s clear parents have been and are failing to be financial success mentors to their kids.

Well, let’s put an end to this generational parenting malpractice.

In Tom Corley’s award winning and bestselling book Rich Kids, he shares many parent mentoring success strategies that help parents in raising their kids to succeed in life financially.

Here are a few of those strategies: parent money family

  •  Teach Savings – Saving is a habit that must be forged right out of the gate, with your child’s first adult job. Advice your adult child to start small, say 5% of net income. As their income rises increase their savings rate to 10%. The ultimate goal should be saving 20% of net income by the time they are age 30.
  • Teach Investing – Parents can help their young adult children by directing them to sound financial advisors who will help them safely invest their savings. Personally, I’m fond of CFP’s, since they are experts in developing financial plans. They also have to pass a rigorous exam and abide by certain, not so easy to follow rules, in order to keep their license. child-children-money-learn-teach-rich-poor-lesson-family-budget
  • Teach Frugality – Don’t mistake being frugal with being cheap. They are two very different things. Being frugal requires three things:
  •     * Awareness – Being aware of how you spend your money.
  •     * Quality – Spending your money on quality products and services and
  •     * Bargain Shopping – Spending the least amount possible, by shopping around for the lowest price.
  • Teach Delayed Gratification – As your young adult child’s income rises make sure they do not fall into the very common trap called Lifestyle Creep.

Lifestyle Creep is by definition: increasing your standard of living in order to match your increased income.

It’s a common Poor Habit among many who suddenly find themselves making more money. business-money-pink-coins21-1

The Rich Habit is to forgo the desire to spend your money today and, instead, sock it away into savings and investments that grow in value and provide financial resources that can be used in the future to maintain your standard of living.

That Rich Habit is called Delayed Gratification – putting off something you want today for something you want tomorrow – financial independence.

Now go out there and start mentoring.

YOU MAY ALSO BE INTERESTED IN READING:

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Rich Habits Poor Habits Episode 51 | Rich Habits Part 3

The gulf between Rich Habits and Poverty Habits is staggering.

If you’re well off already, chances are you already adhere to most of these Rich Habits.

Integrating the ones you’ve neglected will push you further.

But be assured: If you’re doing fine now without minding these principles, it’ll catch up to you.

Some of the differences between rich and poor are obvious, while others are a little more surprising.

Here are the most important Rich Habits you can take up to reach and maintain your wealth potential.

1. Avoid toxic people

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We are only as successful as the people we spend the most time with.

Of wealthy, successful people, 86 percent associate with other successful people.

But 96 percent of those struggling financially stick with others struggling financially.1

If you want to end your financial struggles, you need to evaluate each of your relationships and determine if they are a Rich Relationship (with someone who can help you up) or a Poverty Relationship (with someone holding you back).

Start spending more and more time on your Rich Relationships and less on your Poverty Relationships.

Rich Relationships can help you find a better job, refer new business to you or open doors of opportunity.

2. Don’t give up

Those who are successful in life have three things in common: focus, persistence and patience.

They simply do not quit chasing their big goals.

Those who struggle financially stop short.

3. Set aside the self-limiting beliefs holding you back light bulb idea leader think smart clever failure motivate thought

If you’re hurting financially, you’ve probably told yourself some of these untruths before: Poor people can’t become rich. Rich people have good luck and poor people have bad luck. I’m not smart. I can’t do anything right. I fail at everything I try.

Each one of these self-limiting beliefs alters your behavior in a negative way.

Almost four out of five wealthy people attribute their success in life to their beliefs.

Change your negative beliefs into positive affirmations by reading lessons from the greats of personal development, like Napoleon Hill, Dale Carnegie and Jim Rohn.

4. Get a mentor

Among the wealthy, 93 percent who had a mentor attributed their success to that person.

Mentors regularly and actively participate in your growth by teaching you what to do and what not to do.

Finding such a teacher is one of the best and least painful ways to become rich.

If you know your goals, find someone who has already achieved them.

You’ll be amazed by how many people want to lend a helping hand.

5. Eliminate “bad luck” from your vocabulary

Those struggling financially in life have a way of creating bad luck for themselves.umbrella-1588167_1920

It’s a byproduct of their habits.

Poverty Habits, repeated over and over are like snowflakes on a mountainside.

In time, these snowflakes build up until the inevitable avalanche—a preventable medical problem, a lost job, a failed marriage, a broken business relationship or a bankruptcy.

Conversely, successful people create their own unique type of good luck.

Their positive habits lead to opportunities such as promotions, bonuses, new business and good health.

6. Know your main purpose

It’s the last Rich Habit, but it might be the most important. chess-game-leader-investment-strategy-win-success-negotiate-300x235

Those people who pursue a dream or a main purpose in life are by far the wealthiest and happiest among us.

Because they love what they do for a living, they are happy to devote more hours each day driving toward their purpose.

Odds are, if you are not making sufficient income at your job, it is because you are doing something you do not particularly like.

When you can earn a sufficient income doing something you enjoy, you have found your main purpose.

Believe it or not, finding this purpose is easy.

Here’s the process:

  1. Make a list of everything you can remember that made you happy. success risk wealth
  2. Highlight those items on your list that involve a skill, and identify that skill.
  3. Rank the top 10 highlighted items in the order of joy they bring to you. Whatever makes you happiest of all gets 10 big points.
  4. Now rank the top 10 highlighted items in terms of their income potential. The most lucrative skill of all is worth 10 points.
  5. Total the two ranked columns. The highest score represents a potential main purpose in your life. Presto!

As you can see, the differences between rich and poor are simple—sometimes intuitive—but not insignificant.

Aim to take up all 16 of these habits, and you’re almost guaranteed to become better off.

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Rich Habits Poor Habits Episode 50 | Rich Habits Part 2

Intelligence, talent and charm are great, but more often than not these aren’t what separate the wealthiest among us from the poorest.

Instead, the differences are in our daily habits.

Do you realize that these subconscious, second-nature activities make up 40 percent of our waking hours?

That means that two out of every five minutes, all day and every day, we operate on autopilot.

It’s true: Habits are neural pathways stored in the basal ganglia, a golf ball-size mass of tissue right in the center of our brains, in the limbic system.

Here are the most important Rich Habits you can take up to reach and maintain your wealth potential:

1. Control your emotions

Not every thought needs to come out of your mouth.

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Not every emotion needs to be expressed.

When you say whatever is on your mind, you risk hurting others.

Loose lips are a habit for 69 percent of those who struggle financially.  

Conversely, 94 percent of wealthy people filter their emotions.

They understand that letting emotions control them can destroy relationships at work and at home.

Wait to say what’s on your mind until you’re calm and have had time to look at the situation objectively.

Fear is perhaps the most important negative emotion to control.

Any change, even positive changes such as marriage or a promotion, can prompt feelings of fear.

Wealthy people have conditioned their minds to overcome these thoughts, while those who struggle financially give in to fear and allow it to hold them back.

Whether you fear change, making mistakes, taking risks or simply failure, conquering these emotions is about leaning in just a little until you build up confidence.

It’s amazing how much confidence helps.

2. Network and volunteer regularly

You’ll build valuable relationships that can result in more customers or clients, or help you land a better job if you spend time pressing the flesh and giving back in your community. Families by state

Almost three-quarters of wealthy people network and volunteer a minimum of five hours a month.

Among those struggling financially, only one in 10 does this.

One perk of volunteering is the company you’ll keep.

Very often the boards and committees of nonprofits are made up of wealthy, successful people.

Developing personal relationships with these folks will often result in future business relationships.

3. Go above and beyond in work and business

Unsuccessful people have “it’s not in my job description” syndrome. business-2345812_1920

Consequently, they are never given more responsibility, and their wages grow very little from year to year—if they keep their jobs at all.

Wealthy individuals, on the other hand, make themselves invaluable to their employers or customers, writing articles related to their industry, speaking at industry events and networking.

Successful people work hard to achieve the mutual goals of their employers or their businesses.

4. Set goals, not wishes

You cannot control the outcome of a wish, but you can control the outcome of a goal.

Every year, 70 percent of the wealthy pursue at least one major goal.

Only 3 percent of those struggling to make ends meet do this2.

5. Avoid procrastination

Successful people understand that procrastination impairs quality; creates dissatisfied employers, customers or clients; and damages other non-business relationships.

Here are five strategies that will help you avoid procrastination: Business Patient

  • Create daily “to-do” lists. These are your daily goals. You want to complete 70 percent or more of your “to-do” items every day.
  • Have a “daily five.” These activities represent the crucial things that will help you get closer to realizing some major purpose or goal.
  • Set and communicate artificial deadlines. There’s nothing wrong with finishing early.
  • Have accountability partners. These are people you team with to pursue a big goal. Communicate with them at least every week, and make sure they hold your feet to the fire.
  • Say a “do it now” affirmation. This is a self-nagging technique. Repeat the words “do it now” over and over again until you begin a task or project.

6. Talk less and listen more meeting

A 5-to-1 ratio is about right: You should listen to others five minutes for every one minute that you speak.

Wealthy people are good communicators because they are good listeners.

They understand that you can learn and educate yourself only by listening to what other people have to say.

The more you learn about your relationships, the more you can help them.

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Rich Habits Poor Habits Episode 49 | Rich Habits Part 1

Tom Corley spent years studying the difference between the habits of our country’s rich and poor, questioning hundreds of individuals.

On the rich side, these were people with annual gross income north of $160,000 and net liquid assets of $3.2 million or more

Some of the differences between rich and poor are obvious, while others are a little more surprising.

Here are the most important Rich Habits you can take up to reach and maintain your wealth potential:

1. Live within your means.

Wealthy people avoid overspending by paying their future selves first.  money savings

They save 20 percent of their net income and live on the remaining 80 percent.

Among those who are struggling financially, almost all are living above their means.

They spend more than they earn, and their debt is overwhelming them.

If you want to end your financial struggles, you need to make a habit of saving and budgeting what you spend.

Here are some sensible ways to budget your monthly net pay:

  • Spend no more than 25 percent on housing, no matter if you own or rent.
  • Spend no more than 15 percent on food.
  • Limit entertainment—bars, movies, miniature golf, whatever—to no more than 10  percent of your spending. Vacations should account for no more than 5 percent of your annual net pay.money bill finance debt
  • Spend no more than 5 percent on auto loans, and never lease. Ninety-four percent of the wealthy buy instead of leasing. These folks keep their cars until the wheels fall off, taking great care along the way so that they save money in the long run.
  • Stay away from accumulating credit card debt. If you are doing this, it’s a clear sign that you need to cut back somewhere.
  • Think of savings and investments as two completely different things. You should never lose money on your savings. Try to stash six months of living expenses in an emergency fund in case you lose your job or your business goes belly-up.
  • Contribute as much as you can afford to a retirement plan. If you work for a company that matches your contributions up to a certain percentage, great. Always take that free money when you can get it.

2. Don’t gamble.

Talk about a sucker bet: Every week, 77 percent of those who struggle financially play the lottery.

Hardly anyone who is wealthy plays the numbers.

Wealthy people do not rely on random good luck for their wealth.

They create their own good luck.

If you still want to bet after knowing the risk, use money from your entertainment budget.

3. Read every day

Reading information that will increase your knowledge about your business or career will make you more valuable to colleagues, customers or clients.

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Among wealthy people, 88 percent read 30 minutes or more every day.

Just as important, they make good use of their reading time:

  • 63 percent listen to audiobooks during their commute.
  • 79 percent read educational career-related material.
  • 55 percent read for personal development.
  • 58 percent read biographies of successful people.
  • 94 percent read current events.
  • 51 percent read about history.
  • 11 percent—only 11 percent—read purely for entertainment purposes.

The reason successful people read is to improve themselves.

This separates them from the competition. By increasing their knowledge, they are able to see more opportunities, which translate into more money.

Comparatively speaking, only one in 50 of those struggling financially engages in this daily self-improvement reading, and as a result the poor don’t grow professionally and are among the first to be fired or downsized.

4. Forget the boob tube and spend less time surfing the Internet

How much of your valuable time do you lose parked in front of a screen? Social media buttons on keyboard

Two-thirds of wealthy people watch less than an hour of TV a day and almost that many—63  percent—spend less than an hour a day on the Internet unless it is job-related.

Instead, these successful people use their free time engaged in personal development, networking, volunteering, working side jobs or side businesses, or pursuing some goal that will lead to rewards down the road.

But 77 percent of those struggling financially spend an hour or more a day watching TV, and 74 percent spend an hour or more a day using the Internet recreationally.

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