5 BIG Things the Wealthy Do Differently
Imagine you had the chance to sit down to coffee with a group of successful and wealthy individuals, and you could talk about anything. What questions would you ask? Perhaps you would want to know what their secrets are? What do they do differently? Especially when it comes to their relationship with money?
I have been lucky to work with a uniquely successful group of clients that possess not just material wealth, but also true wealth: A focus on bringing more freedom, greater peace and richer meaning into their lives and the lives of the people they encounter. How do they do this? Here are a few of my observations:
#1: They Focus on Ownership
We are taught to “work hard and earn a good income”. And it is true a high income can lead to becoming wealthy. However, business owners are far more likely to become millionaires. This has to do with something called “skin in the game”: if you want a share of the upside, you also need to also share in the risks of downside. Here is a fascinating statistic from the book The Millionaire Next Door by Thomas J. Stanley and William D. Danko:
“20% of the affluent households in America are headed by retirees. Of the remaining 80 percent, more than two-thirds are headed by self-employed owners of businesses. In America, fewer than one in five households, or about 18 percent, is headed by a self-employed business owner or professional. But these self-employed people are four times more likely to be millionaires than those who work for others.”
To build real wealth, focus your efforts on finding out how to build equity ownership by owning a business or working at a company that gives you ownership. Another way to do this? Take cash flow from your successful (but hard to scale) small business and invest it into ownership in a portfolio of other successful public or private businesses.
#2: They Focus on Investing Over Saving
Saving is all about having cash for short term goals. Investing is about growing your money to help pay for your future.Here are three basic types of savings that everyone should have:
Foundational Savings: Provides enough immediate cash to survive unforeseen calamities and can allow you to enjoy a sense of security.
Fun Life Goals Savings: Makes your life worth living in the immediate future and can help you take new risks or try new things.
Future Self and Legacy Savings: Allows your future self and family to have the same great lifestyle you enjoy today.
The wealthy prioritize Future Self and Legacy Savings and invest those savings into markets. Instead of always focusing on saving for the next thing to ‘buy’, the wealthy buy themselves more freedom in the future. The wealthy always ensure a solid percentage of their income is being invested for the future.
#3: They are Good at Spending on Things that Bring them Joy
Wealthy people take the time to understand the things in life that bring them happiness (aka Fun Life Goals). It might be vacations with their family, a nice home, giving to organizations they love, etc. The key here is that they spend on those areas and cut out the areas that don’t bring them happiness. It is hard to build wealth if you must have the nicest possessions, vacations, lifestyle, etc.
In the book The Millionaire Next Door, the authors thought that the wealthy were the ones that wanted caviar, the nicest aged bottles of wine, etc. but what they realized was that the wealthy did not want that. They were the ones who avoided spending money on lots of luxury goods and that is why they became wealthy. Keeping up with the Jones’ is not how you become wealthy.
#4: They Lean on Experts
The wealthy understand that they only have so much free time and knowledge and that others can help them in areas that aren’t their specialties. They can put their ego aside and leverage the knowledge of others. They work with financial planners, tax strategists, business coaches, attorneys, etc. to help fill their knowledge gaps. This allows them to build wealth in a more efficient way with less mistakes than they would make on their own. It also frees up their time so they can spend it in other important areas of their life.
#5: They Have a Plan
The wealthy understand that everything good in life comes by planning for it.But they also understand that the plan often needs to be changed because life changes quickly. As such, they create a plan often, then review and make adjustments to it regularly to coincide with what is going on in their life. They fully understand that “A goal without a plan is just a wish.” So, they stop wishing and plan - always.
Start Thinking Differently
Perhaps you are ready to start on the path to true wealth. My challenge to you is to escape the norms of a life lived within your comfort zone. Book a complimentary 30-minute discovery call to have all your questions about what the wealthy do differently answered today.
