Develop the Habits to Create Opportunity Luck, Achieve Consistent Success, and Build Wealth
Spending money on things does not create long-term happiness. Accumulating money does. It gives you peace of mind and a feeling that you are on the right path in life. Try one or more of these strategies to create a new financial you:
You might like it enough to turn it into a habit that will transform your life.
What secrets about managing money do the rich know that the average person doesn’t? I spent five years trying to answer that question. I asked 233 millionaires 144 questions and discovered the rich have certain spending habits that helped them get rich:
1. Track Spending – Know where your money is going. Look at your bank statement and credit card statement every month. You’ll uncover certain expenses for things you are not even using, such as club memberships, subscriptions, automatic charges for services you’ve never used. Oftentimes these automated charges occur after you enroll in some “free” promotion, where the free part expires after a promotional period.
2. Periodically Audit Expenses – Many expenses can change over time. Insurance costs often change. They can go up or down over time. Make sure you are paying the lowest insurance rates for homeowners, auto and life insurance. Check your health insurance. You could be paying for dependents who left the nest, are on their own, and have coverage through their employer. Cable and Internet costs can increase without you being aware of it. Calling your cable or Internet provider to secure the lowest fees available should be an annual process. Periodically shop cell phone plans. Increased competition in the cell phone industry is driving down monthly rates. Make sure you are not paying more than you have to.
3. Purchase Good Quality Used Cars – New cars lose value as soon as they come off the lot. Buying good quality used cars allows you to take advantage of this loss in value anomaly prevalent in the auto industry. 44% of the rich in my study purchased good quality used cars. Typically these are cars coming off a lease. They may be two or three years old. At 125,000 miles most cars will require some annual repairs. Expect to incur about $1,500 a year in repair costs when you hold on to cars beyond this 125,000 mileage mark. That is still significantly less than you would spend on a loan or lease for a new car.
4. Use Coupons – Even the wealthy in my study engaged in this money savings habit. 30% of the rich used coupons to buy food. Why pay more than you have to on groceries or other expenses?
5. Shop at Goodwill Stores – Many goodwill stores carry high quality clothing. You may have to spend a few extra bucks on tailoring, but it is well worth the additional cost. Don’t let your ego get in the way.
6. Keep your housing costs below 30% of your monthly net pay. Contrary to what you’ve been led to believe, most of the rich do not live in mcmansions. Sixty-four percent of the rich in my study live in modest homes.
7. Bargain Shop – Far too many make spontaneous purchases, paying much more than they otherwise would. That’s a Poverty Habit. Shopping for bargains and taking advantage of sales events is a Rich Habit.
8. Stick to BYOBs – There are many restaurants that do not sell alcohol, beer or wine and allow you to bring your own spirit of choice into their restaurant. Restaurants markup liquor sales by as much as 100%.
9. Take Advantage of Credit Card Reward Dollars – Many credit cards have attached to them Rewards Programs. Typically, these Rewards Programs generate Reward Dollars that you can use at participating vendors. For example, the American Express Reward Program gives you about .88% back on every dollar you spend using an American Express credit card. One of the participating vendors with American Express is Barnes and Nobles. 50,000 American Express Rewards Dollars translates into $500 in Barnes and Noble gift cards. You can buy 25, $25 Barnes and Noble gift cards and give them out as gifts for birthdays, holidays, etc., and it will cost you nothing.
10. Interest-Free Financing – Sears, Home Depot, Lowes and many other retailers offer up to 24 months of interest free financing if you become a credit card customer. You must ensure that you pay off the interest free purchase within the free interest period and you must make your monthly payments on time. If you don’t you risk being back charged for ALL of the interest you were saving on the purchase.
Genes are chunks of software that can be clicked on or off. The mind drives the body, which drives the genome. Whenever you are stressed by life you become more vulnerable to infections, cancer and heart disease. Your thinking, therefore, can turn on certain genes. This can be good or bad, depending on your thinking. If you are mired in negative thinking in the form of worry and doubts you are manufacturing stress. Stress turns on the gene CYP17, which converts cholesterol to cortisol. Cordisol is also known as the stress hormone and one of its side effects is a weakening of the immune system. Other habits that can turn on bad genes are:
Adversity and success are lovers. They are bedmates. They rely and depend on each other. Adversity pushes you, challenges you, tests you. It makes you better. Adversity is the progenitor of growth. Without adversity you would never grow into the person you need to be in order to be a success.
But adversity often stops people in their tracks. It tests their commitment to their goals and dreams. If your reason for pursuing success is not powerful enough, adversity will derail your pursuit of success. You must have a WHY that drives you every day in the pursuit of your dream. That WHY creates the passion that will carry you through adversity. Your WHY must be very personal and omnipresent. Adversity reveals if your WHY is powerful enough. Adversity is a test.
Random luck, good or bad, is fairly democratic. It visits rich and poor alike. But did you know you can create your own good luck and bad luck? The creation of good luck requires the consistent application of good habits over a long period of time.
Successful people consistently do what needs to be done every day. Once a good behavior becomes a habit, it no longer requires willpower. Willpower fades over time, even for the most disciplined. This is why developing good habits is so crucial to success. Good habits put you on autopilot for success. Good habits automate persistence, a crucial trait of every self-made millionaire. Eventually, those good habits create results. Many like to call those results good luck.
Goals are the action steps that turn dreams into reality. Sometimes goals take you down a path that often leads to alternative opportunities, which ultimately nudge you in the direction towards realizing your dreams. It is important to understand that most successful people get to where they are in life by adopting the habit of pivoting. Pivoting is the process of taking an alternate path, one you did not expect to take. Fear holds most back from pivoting, which is why most are not successful. Self-made millionaires embrace pivoting. They don’t let their fears prevent them from exploring unfamiliar paths. Make pivoting a daily habit on your journey to success.
What secrets about managing money do the rich know that the average person doesn’t? I spent five years trying to answer that question. I asked 233 millionaires 144 questions and discovered the rich have certain very specific money habits we all should adopt immediately. What are they? [Read more…]
Too many believe life is out to get them. They imagine there are forces at work conspiring to take them down. This is victim thinking. When you get stuck in victim thinking it becomes a limiting belief which will prevent you from realizing success.
Life is not a conspiracy unless you make it so.
Jack Canfield and Mark Victor Hansen were struggling to get exposure for their book Chicken Soup of the Soul. Jack tells the story about how each rejection would weigh him down emotionally. In an effort to help Jack overcome the negative emotional side effect of rejection, Mark told Jack to say “Next” every time they got rejected. This strategy shifts your thinking. Instead of focusing on the rejection it shifts your thinking to the next opportunity.
The pursuit of success is mostly about persistence. You can’t let rejection drag you down. You will face an enormous amount of rejection. This “Next” strategy helps you to minimize the emotional effects of rejection and keep you focused on moving forward.
It took the average self-made millionaire in my study 32 years to become “rich”. That’s a long time, don’t you think? I asked many of the millionaires if they ever got so disheartened that they wanted to quit. Most responded by saying that I was looking at it all wrong. They said, they never felt like they were pushing a ball up a hill, hoping for some reward at some point. They were all on autopilot in a sense. Working hard every day, not to ring the bell, but because they liked what they were doing and believed one day all their hard work would pay off. I consolidated this lesson into the following quote:
You can only control your efforts in life, you cannot control the outcomes.
They weren’t saying don’t believe in yourself. What they were actually saying is don’t lose faith in yourself. Just do your best every day. That’s all you need to worry about. Don’t set expectations so high that when you fail to realize them you become depressed. They even suggested not to have any expectations for outcomes.
That really confused me because I was always taught by all of the self-help experts out there to set very specific goals with very specific time tables for achievement. But thanks to my research, I learned for the first time in my adult life what a goal really was. I’ve since written about the real definition of a goal. Here’s one of those posts: The Self-Made Millionaire Goal-Setting Process http://richhabits.net/how-millionaire-achieve-their-goals/.
When you set expectations too high and fail to achieve them it will take you down emotionally. Do that too often and you might just quit pursuing your dream. For this reason, self-made millionaires don’t focus on the outcomes. That just messes up your mind. They understand that there are many moving parts to realizing a dream and not all of those variables fall into place just because you will them to. The only thing to focus on is your efforts. Taking specific action is the real definition of a goal, not some number. All you can control is how hard you work in the pursuit of your dream. That’s all you need to focus on. When you persist and never give up, life eventually rewards you with success. Success is the realization of each one of your dreams by taking action. Actions = goals, not outcomes.
