Rich Habits Blog

Tom Corley city_compressRich Habits is all about unlimited opportunity, achieving the American Dream and ending poverty.

It is the by-product of  a 5-year study I conducted on the daily habits of wealthy people and poor people.

Follow me on this blog and I will share with you many of the secret strategies that I uncovered in my research.

The discoveries I have made will dramatically improve your life!

Unraveling the Gordian Knot of Income Inequality

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Income Inequality is hot potato issue.

Certain politicians, who see themselves standing up for the poor, cry in outrage over the unfairness of income inequality.

The clarion call of these politicians almost always involves some scheme to redistribute the income and wealth from the have’s, to the have-not’s.

The problem with this scheme is that it fails 100% of the time.

Income inequality is a symptom of a disease that income redistribution can never cure.

That disease is Generational Poor Habits.

Generational Poor Habits are bad habits that you learn from your parents, culture, neighborhood or friends. These habits drag you down in life. They cause you to fail, struggle financially, and can even impair your health.

Generational Habits can also be Rich Habits – learned good habits which lift you up in life. These habits can help you to become successful in your business or career. They can also help you to become frugal, thrifty and financially secure. Lastly, Generational Rich Habits can help improve your health by inculcating in you the daily exercise habit or healthy eating habit.

With regard to poverty, there are obviously outlier causes that habit change can never cure:

  • Financial duress caused by exorbitant medical costs of family members due to cancer or some chronic health disorder.
  • Certain physical or mental disabilities that make it impossible to work or earn income.
  • Random bad luck that negatively impacts one’s ability to earn income – A fire that burns down a business, a hurricane, flood or earthquake that destroys a community, etc.
  • The death of an income earner.
  • Other circumstances for which a poor person has no control over.

Excepting these outlier causes, the vast majority of poor people are poor and will remain poor, due to their Poor Habits.

No political solution can cure income inequality unless that political solution forces habit change and reduces or eliminates Poor Habits.

The permanent solution to income inequality, therefore, is to teach poor people habits that will help to end their poverty and create wealth. These Rich Habits, put the poor on equal footing with the wealthy.

If you were to take a typical poor person and reprogram them with Rich Habits, within ten years they would no longer be poor. They will have risen to the middle-class.

After another ten years, that same poor person would become financially well-off.

After yet another ten years, that same poor person would become rich.

Wealth and poverty are two different processes producing two different results. At the heart of either process are habits.

With respect to wealth and poverty, Rich Habits put you on autopilot for wealth. Poor Habits put you on autopilot for poverty.

Sexual Harassment is a Habit Forged Over Many Years

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We all have habits. Some are good habits and some are bad habits.

One thing all habits have in common is that they take many years to form. Only through repetition, does any behavior become a habit.

Eventually, your habits will impact your life. How they impact your life, very much depends on whether they are Rich Habits or Poor Habits.

For example, saving 20% or more of your income every year and investing those savings prudently, is a Rich Habit. It takes, on average, thirty-two years for this savings and investment habit to pay off in the form of significant wealth accumulation.

Poor Habits also take many years before they impact your life.

For example, recently numerous celebrities, media personalities and politicians have been accused or admitted to sexually harassing women in the workplace. Sexual harassment is never a one-off, isolated incident of bad behavior. It is almost always a pattern of behavior. It is a pattern because it is a habit.

Eventually, like all bad habits, sexual harassment destroys the lives of those who have this Poor Habit.

[Read more…]

Here’s Why Scouts Are More Successful in Life

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The Boy Scouts and Girl Scouts may be on to something big. They follow one of the most powerful success principles that I uncovered in my five-year Rich Habits Study.

In my study, I identified three groups of self-made millionaires:

Entrepreneurs, Executives and Savers.

By far, the wealthiest in my study happened to be Entrepreneurs, with an average net liquid wealth of $7.4 million, which they accumulated over an average of twelve years. They accumulated twice the wealth in half the time of the Executives and Savers.

Why were the Entrepreneurs able to accumulate so much more wealth and why did it take them so much less time?

Entrepreneurs are experimenters. They experiment with different activities until they find one they are good at or passionate about.

Experimentation exposes your calling in life – your life’s purpose.

When you discover your calling in life, you come alive inside. You find yourself wanting to engage in an activity all the time. As a result, you spend much more time engaging in the activity, and as a result, become an expert in it.

What does this have to do with the Boy Scouts or Girl Scouts?

Becoming an Eagle Scout is the highest achievement or level one can reach as a Boy Scout. Only 4% of Boy Scouts become Eagle Scouts.

In order to become an Eagle Scout, Boy Scouts must obtain a minimum of 21 merit badges.

A merit badge represents one of 135 diverse activities a scout must engage in in order to receive a badge.

Here are a few examples of the merit badge activities offered by the Boy Scouts:

Business, Cooking, Dentistry, Entrepreneurship, Genealogy, Law, Journalism, Nuclear Science, Public Speaking, Robotics, Salesmanship, Space Exploration and Veterinary Medicine.

As you can see, many of these Scouting activities can be monetized, meaning they can become a career or profession that produces income.

Some of the most successful historical figures were Eagle Scouts:

  • Sam Walton – Founder of Walmart
  • Gerald Ford – President of the U.S.
  • Steven Spielburg – Filmaker (Star Wars)
  • Bill Gates – Founder of Microsoft
  • Neil Armstrong – Astronaut who became the first man on the moon
  • Ross Perot – Billionaire Founder of EDS and one-time Presidential Candidate

A nationwide study conducted by Baylor University found that Eagle Scouts were more likely to:

  • Achieve personal, professional and financial goals in life.
  • Become leaders in society.
  • Leave their mark on society through their life achievements.

The Girl Scouts have their own version of the Eagle Scout called the Gold Award.

The Girl Scouts Gold Award website touts the achievements of its Gold Award achievers:

“Gold Award Girl Scouts do well in life! They rate their general success significantly higher than their peers and report greater success in reaching their goals in many areas.”

And they have their own Who’s Who list of famous recipients.

Those who succeed in life and become millionaires all have one thing in common – at some point during their lives they discover an innate talent or something that makes their heart sing and then devote their lives to that one thing.

They find their main purpose in life by experimenting with diverse activities until they discover one that they are good at or love doing. They then spend their entire lives engaged in that activity, practicing it, perfecting it, and eventually becoming an expert in it.

When you become a recognized expert in anything, you get paid more and you are able to therefore accumulate more wealth.

Experimentation reveals your calling in life – an innate talent or a passion. When you find the thing you were supposed to do, life rewards you twice. The first reward is happiness and a sense of fulfillment. The other reward, wealth, is just icing on the cake.

Writing a Book = First Serve in Tennis, Promotion = the Rest of the Match

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Prior to writing my first book, I had never written a book before, never promoted a book before and I knew no one who did any of those things.

My journey has been the most difficult undertaking of my life. Everything I learned, I learned through the School of Hard Knocks.

But, eventually, I figured things out. I learned what to do and what not to do.

[Read more…]

Financial Success Rich Habits

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It takes time to become a self-made millionaire. Eighty percent of the self-made millionaires in my Rich Habits study became wealthy after age fifty. Somewhere along the line these self-made millionaires learned the secrets to saving and spending. In most cases, they either stumbled upon some mentor or read some book or watched some T.V. program or listened to some radio program that gave them the critical financial success habits that allowed them to save and moderate their spending.

Most, unfortunately, never forge financial success Rich Habits. As a result, the vast majority of people live paycheck to paycheck, one job loss away from being homeless. And when they retire, they live the remainder of their years in near or abject poverty.

Let’s take a look at the Financial Success Rich Habits of self-made millionaires: [Read more…]

My CBS Interview

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Here is a link to my recent CBS interview:

Hollywood’s Mentor

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Habits spread like a virus throughout your social networks, according to a study conducted by Nicolas Christakis, Yale University.

Once forged, habits tend to stick with you for most of your life, according to another study conducted by Dr. Pressman, Brown University.

One of the most important sources of habits are your parents. 

The second most important source of habits are mentors. Mentors share their habits with their mentees. Mentees, thus, adopt the habits of their mentor and those habits stick with them for most of their adult lives.

If you don’t believe me, just look at the latest headlines on this Harvey Weinstein Hollywood mess. Women are now coming out of the woodwork to share their stories of sexual abuse, not only at the hands of Harvey Weinstein, but also at the hands of other famous male Hollywood actors who suckled at the tit of Weinstein.

Harvey Weinstein was a major power broker in Hollywood, as head of Miramax Films. Anyone in a position of power becomes a mentor, good or bad.

There is no doubt in my mind that Weinstein mentored hundreds, if not thousands, of subordinates over his thirty years.

This means there may be thousands of men in Hollywood who, thanks to Weinstein, have forged the bad habit of sexually abusing women.

Because habits stick with you for most of your adult life, this means we are only seeing the tip of the iceberg in Hollywood.

Harvey Weinstein may be gone for good, but there are literally thousands of Harvey Weinstein mentees out there in Hollywood, just waiting for your young daughter to walk through their door for their “audition”.

Let that sink in for a moment.

 

How Successful Entrepreneurs Survive Adversity

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Eighty-two percent of the successful entrepreneurs in my Rich Habits Study, my millionaires, said they spent most of their entrepreneurial journey struggling with adversity. This ongoing battle often damaged their self-confidence and sometimes resulted in depression. They lacked confidence or became depressed because, despite their best efforts, they were unable to move the needle forward. Adversity never seemed to take a break.

So, what kept these self-made millionaires going? [Read more…]

Escaping a Culture of Poverty

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I was recently interviewed by the Washington Post. The Federal Survey of Consumer Finances had just released their 2016 report, showing the rising number of white millionaires in the last 25 years. The first question the Washington Post reporter had was why?

I told the reporter that many of the individuals who became millionaires over the last twenty-five years were baby boomers. Since most of those boomers were white, naturally there would be a greater number of white millionaires over the past twenty-five years.

Simple enough, right?

But the follow-up question the Washington Post reporter asked was really the more important question:

Why wasn’t the black community seeing a corresponding increase?

I told the reporter that we did not have a wealth gap in America, we had a parenting gap. Sadly, there is a culture of poverty in the black community and at the heart of this culture of poverty is one very alarming statistic – 72% of black children are raised without a father.

Why does that statistic matter?

According to my Rich Habits research, our daily habits are the reason why we are rich, poor or stuck in the middle-class. And where do we get most of our habits?

According to a study by Dr. Pressman of Brown University, we pick up most of our adult habits by the age of nine. And for most of those formative years, it is our parents who teach us those habits. Most of the self-made millionaires in my study confirmed that they were taught certain, specific habits by their parents that enabled them to succeed in life.

Children raised in single-parent households are at a clear disadvantage. And it’s not a 50% disadvantage, it’s a 100% disadvantage. Single-parents are the sole provider and this often means working long hours or taking on a second job in order to earn enough money just to survive. This leaves little to no time to mentor their kids for success by teaching them good success habits. This 72% single-parent statistic represents a culture of poverty. And until that culture changes, or until that one parent becomes a success mentor to their kids, children raised in single-parent households will forever lag behind children raised in two-parent households.

This single-parent statistic, along with the story of Ben Carson, motivated me to write my book Rich Kids, a book which shares the success habits self-made millionaires learned from their parents. It is also why I spent the past six years speaking to close to 2,500 high school and college students, specifically in lower-income school districts in the New York metropolitan area.

Dr. Ben Carson was raised by a single mother in the ghettos of Detroit. Concerned that their sons, Ben and Curtis, were taking the wrong path in life, Sonya Carson made a fateful decision that altered all of their lives forever. Sonya Carson, a single mother with a third grade education, turned the T.V. off for her kids, limiting them to only two hours of T.V. a week and forced her two young boys to read two books every week and then write a summary of what they read and what they learned from their reading. Each week they would hand their mom this summary for her to review. Sonya would mark up the summary with notations and hand the summary back to her boys. Reading for learning, soon became a daily habit for Ben and Curtis.

What the boys didn’t know until they were in high school was that their mother, Sonya, was illiterate. She could not read their book summaries. But intuitively Sonya knew that reading for learning was a way out of the ghettos. Sonya did not believe life was hopeless. That belief was pulled, like a weed, from their lives. Hopelessness never had a chance to take root in their family household.

Ben Carson went on to become a world famous neurosurgeon and recently ran for President of the United States. Curtis Carson went on to become a senior mechanical engineer with Honeywell, specializing in developing braking systems for aircraft. Sonya went on to get her GED, went on to college and in 1994 received an honorary doctorate degree from Spalding University. All of Sonya’s grandchildren attend college or graduate school in prestigious higher education institutions.

One good habit, reading, taught by one parent, literally lifted Ben and Curtis out of poverty. So, there is hope, even in single-parent households. The cycle of poverty can be broken, even in single-parent households. But only when that single-parent becomes a success mentor to their children. And in order to be a success mentor, you must teach your kids certain, specific habits that will help them succeed in life.

It’s Not How Much You Make – It’s How Much You Keep

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Conor McGregor, one week after receiving $30 million in winnings from his very lucrative loss to Floyd Mayweather, bought a super yacht reportedly worth $12 million. That’s on top of the multiple Lamborghinis, BMWs, Rolls-Royces and Range Rovers he owns. I’m not done. He also owns a 12,000 square foot home in Las Vegas worth $20 million and a mansion in Dublin, Ireland worth in excess of $2 million. Still not done. He has a luxury watch collection worth over $300,000. And, unless he finds some financial religion, his want spending will continue to get worse, until he finds himself one day sharing a room with M.C. Hammer.

The tabloids are replete with stories of prodigious earners who had nothing left after years of excessive spending:

  • According to The Daily Telegraph, the forensic accountant at Michael Jackson’s 2005 child sexual abuse trial stated that Jackson had been spending $20 to $30 million more than his earnings per year.
  • In 2012, the financial advisors of the former NBA champion Dennis Rodman reported that he was broke. Years of extravagances, wild spending was the reason given.
  • Courtney Love, wife of Nirvana’s Kurt Cobain, squandered over $27 million of Nirvana earnings on years of hard partying and wild spending.
  • Thomas Jefferson, founding father, author of the Declaration of Independence and America’s third president, had a half a million dollar a year (in current dollars) wine spending habit that left him penniless when he died.
  • Famed actor, Nicolas Cage, who made $150 million in his acting career, at one time owned a haunted mansion, a private island, a collection of shrunken heads and spent $276,000 on a skull of a Tyrannosaurus Rex. His reckless, excessive spending forced him into bankruptcy in 2009.
  • Johnny Carson sidekick, Ed McMahon, who made millions during his fifty year career, was forced to sell his home, or face foreclosure by his bank. In a 2008 Larry King interview,  McMahon told King, “Well, if you spend more than you make, you know what happens.”
  • Johnny Depp, according to Court documents obtained by The Hollywood Reporter, spends $2 million a month. His reckless spending over the years included $75 million on fourteen homes, an $18 million luxury yacht and $30,000 a month on wine.
  • Then there are the stories of the extravagant spending habits of Mike Tyson, Muhammad Ali, Toni Braxton, M.C. Hammer and many, many others.

This excessive spending is also known as

Lifestyle CreepIncreasing your standard of living in order to match your increased income. Lifestyle Creep is driven by want spending – spending your money on things you want but do not need. Left unchecked, want spending can become an addiction.

And it’s one of those Poor Habits I like to write about.

At its very core, being wealthy comes down to two things:

  1. Making It and
  2. Keeping It

Many ordinary individuals, like our celebrity friends above, are very good at creating wealth but terrible at keeping it.

You see it every day all around you. A friend, colleague or neighbor suddenly comes into money – a large bonus, a big promotion, stock vesting or an inheritance. Suddenly, they are finding novel ways to spend their newfound wealth: super sizing their home, new expensive cars, a vacation home or that boat they’ve always dreamed of.  Or, far more common, you probably know individuals who live beyond their means, relying on credit cards in order to fund their lifestyle.

Sometimes, lifestyle creep can get out of hand. How many of you know someone who has filed for personal bankruptcy? I know a few. Barring outlier causes (failed business, divorce, disease, or chronic disability), excessive spending is usually the main culprit for the vast majority of those who eventually find themselves broke.

According to Census Bureau data, there are approximately 30 million people who make more than they need but who are, nonetheless, one paycheck away from poverty. Far too many regular, ordinary individuals take a page out of the celebrity money mismanagement playbook, spending excessively and living beyond their means for too many years, one job loss away from being homeless.

Being rich is not always about how much you make, but it is always about how much you keep.