There are many many ways that people with money make the money, from starting their own business, to real-estate investing, to a having a highly successful career, or to investing in stocks. However, no matter how they make the money, the people with money have these 5 basic habits in common.
1. Create a budget
“A budget is telling your money where to go instead of wondering where it went.” – Dave Ramsey
It sounds simple, but a budget is your financial blueprint for success. While you may associate a budget with sacrifice and deprivation, a budget actually compels you to say NO to those things that provide you with little value, and allows you to say YES to what’s really important. It helps you live within your means, avoid debt, and invest in your financial future. By embracing a budget early in life, you’ll create a path to a financially lucrative future.
Don’t know how to create a budget? Consider the 50-30-20 budget plan. Fifty percent of your take home pay should cover necessities like food, shelter, groceries, health insurance and transportation. Thirty percent should be directed toward your “wants.” These are things that are nice to have but not absolutely essential like a smart phone, travel and dining out. Finally, twenty percent should be dedicated to paying off debts, building savings, and investing.
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2. Embrace failure.
“If there is no struggle there is no progress.” – Frederick Douglass
Success in life rarely follows a straight path. Rather it is a series of challenges with associated set-backs and advancements. Don’t be afraid to embrace challenges because of your fear of failure. Instead, be fearless in the face of challenge. Refuse to play it safe. Life doesn’t reward wallflowers.
As babies we never let the fear of falling keep us from learning to walk. If we had, we’d still be on all fours. So don’t shrink away from the new job, assignment or entrepreneurial venture for fear of failure.
Be fearless in the face of challenge. Refuse to play it safe. Life doesn’t reward wallflowers.
You will not succeed in all of your endeavors. But your failures will be just as important as your successes. In fact, plan to fail. Embrace and learn from your failures because they are stepping stones to achievement.
Walt Disney was fired from one of his first animation jobs because his editor thought that he lacked imagination. Walt went on to create Disney, one of the world’s most successful animation and movie studios.
Oprah Winfrey was removed from her first TV anchor job at a Baltimore television station. She went on later to create her own TV network, becoming one of the richest women in the world.
Bill Gates and Paul Allen’s first business venture, Traf-O-Data was a flop, but the experience gained from their failure was crucial in the creation of Microsoft, the company that would make them both billionaires. In a 2011 Newsweek interview Paul Allen explained, “… I have made my share of business mistakes, but Traf-O-Data remains my favorite mistake because it confirmed to me that every failure contains the seeds of your next success. ”
3. Pay yourself first.
“A part of all you earn is yours to keep, and if you cannot save money, the seeds of greatness are not in you” – W. Clement Stone
Before the student loans, rent, or utility bills are paid, the very first person you must pay is yourself. Set aside a small portion of your income to save or invest. A great place to start is with your employer’s 401k or 403b plan.
Many employers will match your contribution up to a certain percentage, automatically doubling your investment. Financial freedom is within reach if you just start saving and investing early enough because the power of compound interest snowballs small investments into sizable nest eggs over time. Learn to pay yourself first and you’ll eventually enjoy financial freedom that makes others envious.
4. Read your way to riches.
The rich have large libraries, while the poor and middle class have large televisions. If you want to earn more you have to read more.
Billionaire Mark Cuban, in his book How to Win at the Sport of Business, credits much of his success to reading, while Barrack Obama states that reading books played an indispensable role in his presidency.
African-American households watch more than seven hours of television per day. But, according to Dennis Kimbro, author of The Wealth Choice: Success Secrets of Black Millionaires, African-American millionaires read nearly two books per month.
Self-development guru Brian Tracey, further emphasizes the importance of reading. According to Tracy, “If you read only one book per month, that will put you into the top 1% of income earners in our society. But if you read one book per week, 50 books per year, that will make you one of the best educated, smartest, most capable and highest paid people in your field. Regular reading will transform your life completely.
Simply put, if you want to go far in life, turn off the television and pick up a book.
5. Surround yourself with like minded people.
“Try to never be the smartest person in the room. And if you are, I suggest you invite smarter people, or find a different room.” – Michael Dell, Entrepreneur and founder of Dell Computers
It is often said that you are the average of the five people you hang around the most. Spend the majority of your time around people with little drive and ambition, and you too will tend to become lazy and uninspired.
That is why it is crucial to spend time with those who want more out of life. Surround yourself with people that encourage you instead of criticize your every idea or disparage your every dream. Find those that inspire you to become a smarter and more successful version of yourself.
BMWK, how many of these habits are you doing right now?