Lots of articles are being written that clearly show the rich are getting richer. They also describe how the middle class (meaning the majority of us) are working harder and longer than we did a decade ago but, ironically, have less disposable monthly income. There is an ever-expanding gap between the wealthy and the middle class, and the increasing number of “have nots” is never a good sign for the economy.
I come from a blue-collar, middle-class family of six where my mother spent her time raising us four children and my father went to work each day. My parents raised four children in an ordinary home, with a modest car on a single income. They were able to send all of us to private school and also put us through university, but they still saved for their retirement and made sure they set aside extra money each month towards their pension plans. My father retired early aged 63, not because he had to, but because he was financially stable and was in a position to do so, I wouldn’t say he is wealthy in his retirement, but he is definitely doing well for himself.
It got me thinking: What are the wealthy doing that I should also be doing?
Eight Habits of a Wealthy Person:
1. Living below their means
My parents always spent less than they earn and were not tempted by the latest must-haves. They always owned a moderately priced car and drove it into the ground before replacing it. They lived in a modest home in an average, middle-class suburb. They shopped on discount days at the supermarket and, more importantly, my mother always cooked and we ate at home unless it was a birthday or other special occasion. Our clothes came from regular department stores and were always bought on sale; otherwise, we had hand-me-downs from older cousins. But most importantly, my parents did not spend more than my father earned – they lived well within their means and invested the surplus towards their financial goals.
2. Who cares about the Joneses?
My parents had a great group of friends and they didn’t care about impressing anyone; my father had a golf membership but it was for networking and career development. As my father’s career grew, so did the ability to start achieving some of their financial goals, none of which included getting a larger house or a nicer car. When all my friends were getting brand new bicycles for their birthdays, my parents would give me a second-hand bike which rode just as well but was not as flashy. Funny enough, last year was the first time in my entire life that I bought a brand new bike and, ironically, I have had problems with it ever since.
3. Set goals, not wishes
Hindsight is 20/20: you cannot control the outcome of a wish, but you can control the outcome of a goal. In its March 2016 edition, Forbes magazine wrote an article and stated around 70 per cent of the wealthy pursue at least one major goal, but only three per cent of those in the lower to middle class even bother to create a goal. Sadly, without goals, achievements are few and far between.
4. Ties are cut early and they don’t provide financial life support to others
The reality is, if you act like a bank, people will keep coming and asking for money. The wealthy “cut the cord” early with their offspring: they want their children to leave home and be independent. It’s a simple approach and one that would financially benefit the middle class far more, yet it appears to be the polar opposite. That raises the old question: Does the child need the parents or do the parents need the child?
5. The wealthy spend their private time increasing their knowledge
Successful people use their free time to engage in personal development, networking, volunteering, working side jobs or pursuing a goal that will reap rewards down the road. Two-thirds of wealthy people watch less than an hour of TV a day, and 63 per cent of those people spend less than an hour a day on the internet, unless it is job related.
6. Strategic planning
My parents saved religiously – they invested in their goals and in their retirement, and they definitely had an end-game approach. They educated themselves about their money by tracking how much they earned, how much they were paying out, and how to get the best return on their surplus. Ultimately, people who do well for themselves do it through their day-to-day habits and not through their earnings.
7. Never use the phrase “Not my job”
Unsuccessful people have “it’s not in my job description” syndrome, but they are the first to feel slighted when a job promotion goes to another person. Wealthy individuals, on the other hand, make themselves invaluable to their employers and their clients, but also make sure to work hard towards any business goals the company sets.
8. Never give up
The wealthy never throw in the towel and have three things in common: focus, persistence and patience. They simply do not quit chasing their big goals; instead, they will reorganize or re-strategize in order to get what they want. My parents figured out early on in their marriage that life wasn’t perfect and they were going to have to deal with the good times and manage the bad times. But they were determined they were not going to stop until they achieved the goals they had set.
The differences between the habits of the wealthy and the not so wealthy are very clear: it’s not about what you earn – it’s about creating a plan, putting it into action and not caring about what the rest of the world is doing.
Carla Seely is the Vice President of Pension and Investments at Freisenbruch. If you would like any further details, please contact her at cseely@fmgroup.bm or call +1 441 297 8686.