Research suggests that the divide between the rich and poor has never been greater. Other than being born into a massive inheritance, what is it that leads the rich to be rich in the first place?
Tom Corley, author of the award-winning book Rich Habits: The Daily Success Habits of Wealthy People, spent five-years studying 233 millionaires and 128 poor people and surmised that often one’s wealth has more to do with habits. For example, Corley notes that emotional purchases are something that rich people avoid. A wealthy person will think twice before purchasing that sports car or designer dress. Those items at the checkout counter meant to result in unnecessary spontaneous buys? A wealthy person will more likely take a pass.
Do all rich people choose elite gated communities with high property taxes? According to Corley’s research, that is not the case. Why not choose a more average home in a modest neighborhood? The taxes, utilities, and repairs will likely be lower which brings more wealth and savings across the board. The most notable example of this line of thinking is Warren Buffet who still lives in the same Omaha, Nebraska home that he bought in 1958 for $31,500 ($250,000 in today’s dollars).
The Millionaire Next Door
In Thomas Stanley and William Danko’s 1996 book, The Millionaire Next Door: The Surprising Secrets of America’s Wealthy, they too found that most millionaires are more often found in middle-class and blue-collar neighborhoods. Obviously, “affluent” neighborhoods exist, so who is inhabiting them? Likely, to use the old term, “keeping up with the Joneses,” these authors learned that the cost of keeping the most up to date luxury goods and items associated compromise the ability to build meaningful wealth. How can one invest his or her money in savings and investments if so much of his or her pay is going toward an expensive sports car or a remodeled kitchen every two years?
Wealthy people also avoid excessive consumption of television. Going back to Corley’s findings, he found in his sample that only a staggering 6% of wealthy people watch reality TV versus 78% of the poor. In the same study, it was found that 67% of affluent people agreed with the statement “I watch TV one hour or less per day” while only 23% of the poor respondents agreed. The idea is that wealthy people make more productive use of their time. Celebrity entrepreneur Gary Vaynerchuk puts it bluntly in advice for aspiring entrepreneurs “no more binge watching Game of Thrones.” To be successful and gain wealth, one must allocate his or her time wisely. Corley found that instead of watching television, more successful people spend more time reading and listening to self-help audio books aimed at improving themselves.
Choose The Right Friends
Another attribute found in these studies is the importance of spending time with the right people. Corley found that 86% of wealthy people associate with other successful people while 96% of those struggling financially, stick with others that are struggling. Successful people also know the importance of networking and building relationships. Building these relationships can help with future job prospects and serve as inspiration for better performance at a current job. Self-made millionaire Steve Siebold writes “we become like the people we associate with, and that’s why winners are attracted to winners.”
As 2018 approaches, take some of these ideas into perspective. Following some of these habits, and learning the value of budgeting, which we have touched on in this blog recently, can be small steps toward living a richer and fuller existence.