Recently I spent some time with a friend who in my book is well off. Without getting into personal details, I will just say that she was a medium six figures income, owns various personal and business properties and never has to worry about retirement.
During the time we spent catching up, I was able to get to know her better, what she was up to and observe some interesting behaviors that never made themselves evident in the past. Now that I think about her qualities and habits, they coincide with those of many wealthy people. Here are some of the qualities that people who are well off exhibit:
Habit #1: They work hard.
My friend paid her own way through school, worked long hours and never quit at anything. The assumption that people with money don’t work hard is so far from the truth that I believe many of us assume there is some sort of a shortcut to riches.
Habit #2: They live frugally.
I was surprised to learn just how frugally my friend lived her whole life after not seeing each other for a long time. Consistent savings are high priority in the lives of successful people. One of the reasons she was able to do well, was because of aggressive early savings that began during college years and allowed her to buy a business early in life. She bought her first business before buying a house.
Habit #3: They invest early and often.
With a habit of saving early in life, my friend was able to buy her own business as an investment in her own career and real estate. Fast forward many years and she now owns several homes in U.S., various rental properties, a large business park and large stock holdings. Interestingly enough she does her own type of investing which doesn’t fit the mantra of “The Intelligent Investor” that I’ve been reading about.
Habit #4: They don’t rent.
I’m the type of person who likes to rent apartments for my own reasons. I’m also the type who won’t get rich because of it. My friend refuses to pay money into anything that doesn’t generate a return. Renting is a waste of money in her book and I’m a big idiot for doing it. If you want to make money, don’t rent – buy instead.
Habit #5: They never pay more than they have to.
While out at lunch I had a chance to observe my friend’s tipping behavior and noticed something strange. She wasn’t tipping like me – a flat dollar amount with paper money. To most this is no surprise, but to me this was odd. Instead, she tipped an even 10%. Seeing this once was enough to conclude that she tips this way every time no matter the amount on the bill. She even put it on her card, which leads me to the next habit – spending.
Habit #6: They spend with rewards in mind.
Rich people pull out a wad of cash to pay for things, right?
They use credit cards to earn rewards. Any means that will extend the value of a dollar spent is taken into consideration. In my friend’s case, she used a frequent flyer miles credit card to earn bonus miles to help cover frequent flights she takes.
Habit #7: They finance purchases.
Although she doesn’t like to throw money away at rent, my friend is not afraid to take on new debt. She is all too familiar with mortgages and credit card financing. The trick is to act rationally and understand what’s involved. It doesn’t hurt to be financially literate to take advantage of financing mechanisms in a country that’s so eager to lend.
Habit #8: They seek out personal connections.
Whether the connection they make is good for business or good for the heart, people who are well off seek out and then value new friendships and acquaintances.
Over the course of our relationship I’ve come to learn just how many personal connections my friend has. Recently I found out that she has equally as many business connections. She values friendships, gives often to the needy and is extremely compassionate toward all aspects of human interaction. Personal connections with good people drive success.
Habit #9: They strive to achieve their goals.
Confidence, persistence and not accepting the possibility of failure are all characteristics of people who are well off, including my friend. They set goals and take steps to accomplish them no matter what stands in the way. You might imagine it helps to set achievable goals, not broad “I want to be a millionaire” type.
From our conversations it was easy to see that planning and taking steps to achieve goals was one of her strong habits.
Habit #10: They seek being content with what they have.
Don’t confuse this with “content with less”. My friend is always looking for opportunities to make more money, but money is not the number one motivator for her.
Family and friends are.
She works hard to provide for her family, to give to the needy and to enjoy life at every step of the way. If you were to take away all of her financial accomplishments in an instant, she would be perfectly content without any of it because of strong personal relationships she has developed over time. Actual possessions mean little to her which is evident in her frugal lifestyle. It’s the social experiences those possessions enable that make her content with life.