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Aristotle said, “We are what we repeatedly do. Excellence, then, is not an act, but a habit.”
If you want to be excellent at anything, the key is to adopt the habits of those who have achieved excellence. Likewise, if you want to be a millionaire, the key is to adopt the habits of those who have achieved this status.
In the last twenty-five years, there has been an enormous amount of research done to uncover the habits of the wealthy. Below, you will find five habits I have discovered as I’ve mined through that research.
Adopting these habits is the best method you and I possess for also attaining millionaire status.
Regular Reading
In his book, Rich Habits – The Daily Success Habits of Wealthy Individuals, author Tom Corley reveals the results of his research which shows that 88% of wealthy people read at least thirty minutes per day.
This should come as no shock. Reading is the primary source humans have for gaining knowledge. The benefits of reading go far beyond knowledge collection, though.
Reading forces one to take time, shut off the mind to the busyness of the day, and think strategically rather than tactically. It’s easy to get bogged down in the weeds of life, but wealthy people understand that they must take time regularly to set the vision for their life and career and course-correct their current path. Reading helps them do that.
Reading stimulates thought and creativity. Businesses and profitable deals are born through ideas. Ideas are the result of reading.
Warren Buffet, the most successful investor in world history, claims to read five to six hours each and every day. It keeps him up to date and mentally sharp. If you want to be successful, reading is not a luxury, it’s a necessity.
Systematic Saving
Saving is a required habit for anyone who wants to build wealth. But merely socking money away every now and then is not enough. The pros know that this action must be automated.
Saving must happen every single month whether you remember to do it or not.
This concept was popularized by David Bach in his book, The Automatic Millionaire. Bach says, “Becoming rich requires nothing more than committing and sticking to a systematic savings and investment plan.” He elaborates, “You need the decision out of your hands. You arrange to have the thing you should do happen automatically . . . when it comes to money, all you have to do is automate your system and you’re done.”
Today, this is simpler and easier to do than ever. In ten minutes, you can visit your bank or brokerage website and have an automatic savings program set up. Do it once and you’re done. Millionaires understand that simplicity is the key to success.
They set it and forget it.
Conservative Consumption
Millionaires also understand that you can’t save money if you spend more than you make. They understand that the size of your income doesn’t really matter – its the difference between your income and your expenses that decides your true wealth-building potential.
Whatever their incomes, millionaires seek to maximize this gap so that they can save and invest the most money possible. The majority spend significantly less than others with similarly sized incomes.
Dr. Thomas Stanley, author of the mega-bestseller, The Millionaire Next Door, calls this “playing great defense.” Millionaires are adept at withstanding the daily barrage of marketing and advertisements we all experience. They remain immune to overspending.
They do this by living in neighborhoods far below their home-purchasing potential, driving quality used cars, and wearing the same well-made clothing for years or even decades. They don’t drink expensive drinks either. As one millionaire in Stanley’s book put it, “I drink two kinds of beer: free and Budweiser.”
Millionaires understand that the less money they spend, the more money they can save. And savings is the bedrock for the most important wealth-building habit.
Intelligent Investing
Saving is the first step. You can’t invest if you don’t have savings. But how you invest and what you invest in are critical factors to your long-term wealth building success.
For millionaires with a net worth of $1-2 million, the top two categories in which they invest are real estate and the stock market.
In his book, Everyday Millionaires, author Chris Hogan unveils the results of the largest study of millionaires ever conducted in North America. That study found that 79% of millionaire respondents reported that they reached millionaire status through their employer-sponsored retirement plans such as their 401(k).
Their investments are not mystical or super sophisticated.
Millionaires understand that the stock market and real estate have been tremendous long-term investments for essentially all of American history. They invest in them consistently and let time work its beautiful magic.
Entrepreneurial Action
Spending wisely is important, but making money is vital as well. Frugality can only take you so far. Millionaires prefer to control their careers and to be in a position to influence their incomes. Therefore, a disproportionate number of America’s millionaires own their own businesses.
Dr. Stanley’s research uncovered the illuminating fact that two-thirds of millionaires who are currently working are self-employed. Further, he found that self-employed people are four times more likely to be millionaires than those who work for others.
The stats are clear: Most millionaires are entrepreneurs.
Working for someone else means that you are at their mercy. But owning your own business gives you power over your future.
Millionaires are willing to take the calculated risks inherent in business ownership and trade the so-called security of traditional employment for the unlimited potential of entrepreneurship.
Building wealth in America is not easy. And it takes time. But millions of people have proven and are continuing to prove every day that focused energy over time yields tremendous results.
If we wish to follow in their footsteps, we need only to adopt their habits and stick with them over time.
