For most people, 2020 went down as the year that did not go quite as planned. Which reminds me of the saying, “Man makes plans, and God laughs.”
We have limited control our circumstances and our environment. Likewise, we have only partial control of our results. As James Clear points out, every athlete strives to win the race or the gold medal, but only one will.
What we CAN control is ourselves.
You determine your thinking and your behavior.
We’re not sure who said it first (it’s been attributed to Abraham Lincoln, Peter Drucker and others), but we love the saying: “The best way to predict the future is to create it.” And the best way to create that future is through focusing your thoughts and actions towards the future you want.
Resolving to create wealth.
This time of year, many people set goals and intentions—or perhaps declare “resolutions”—about their desired future. And regardless of what you label them, goals, intentions and resolutions all involve one thing: deciding what you want. Gain clarity and the rest will follow.
Often, these goals involve finances. You may want to save more, pay off debt, or increase your income or net worth. Whatever is on your list of intentions, the right thoughts and habits can move you towards what you desire.
“Success leaves clues,” observes Tony Robbins. Success is not an accident, and outcomes are at least somewhat predictable. If you want to build wealth, do what wealthy people do!
Today, we explore 7 habits for wealth modeled by those who have created financial success. To improve your financial results in 2021, follow the lead of multi-millionaires and billionaires.
As you read these 7 points, note which of these behaviors you are already practicing, and which you can improve upon. Even small changes in daily habits can add up to big results over time.
#1: Get up early.
Most millionaires, multi-millionaires, and CEO’s get up early… before 6 am. In a five-year study of 177 self-made millionaires, author Thomas C. Corley found that nearly 50% of them woke up at least three hours before their workday began. Across the board, Corley found waking up early to be “one of the most consistent habits of millionaires.”
Rafael Badziag spent years conducting face-to-face interviews with more than 20 billionaires for his book, The Billion Dollar Secret. Each and every billionaire interviewed said that waking up early was a big component of their success. Most reported waking up around 5:30 a.m. to prepare for the day, both mentally and physically. Morning routines often consisted of reading, exercise, and time for reflection, meditation and preparation.
#2: Exercise regularly.
According to Entrepreneur.com, Richard Branson says he can “achieve twice as much in a day by keeping fit.” When asked by a younger entrepreneur how to earn more money, Branson’s surprising reply was, “Work out.”
Exercise is almost always a part of the daily or weekly routines of the wealthy. In their research for The Millionaire Next Door, Stanley and Danko found that millionaires exercise about 3-1/2 hours per week.
All of the billionaires interviewed by Badziag exercised regularly. Many incorporated their favorite sports into their regimen. Those who did so found value in team sports dynamics—such as learning about both winning and losing—in addition to fitness benefits.
#3: Read non-fiction.
According to Corley’s research, successful people spend more time reading and listening to books on tape instead of watching TV, while those with low incomes and net worths watched lots of reality TV and read for pleasure, not to learn.
Warren Buffett famously reads for several hours each day. He reads corporate earnings reports, multiple newspapers, and non-fiction books that give him an excellent understanding of trends. When asked the key to success, Buffett pointed to his stack of books and said, “Read 500 pages every day. That’s how knowledge works. It builds up, like compound interest.”
#4: Create multiple streams of income.
Wealthy people rarely rely on income from one job or benefit only from one income source. It is said that the average multi-millionaire has about 7 sources of income. Often it is a blend of earned income and passive income.
Sources of income might include:
- Profits from one or more businesses.
- Income from real estate investments.
- Interest earned on savings.
- Capital gains from investments.
- Stock and/or life insurance dividends.
#5: Own at least one home.
Very few millionaires – less than 2% – rent their homes, according to multiple studies. As detailed in this excerpt from Busting the Interest Rate Lies, it’s difficult to build wealth while throwing money down the rent hole.
Already own your home? Now is a good time to start thinking about investment property. It is very likely that the current “Covid economy” will lead to an increase in foreclosures and an eventual drop in real estate prices.
If you have thought about purchasing a rental property or even a second home, now is a good time to get your ducks in order. There is a saying, “Fortune favors the prepared.” Finding an ideal property at an attractive price means that you first:
- Save cash for a down payment.
- Clean up any credit blemishes or shortcomings.
- Research desired markets and property types.
- Obtain a mortgage pre-approval.
- Enlist the support of other professionals to advice and assist with a property purchase.
#6: Save 20% or more of your income.
We recommend saving 20% of income if possible. Of course—start where you can, even if it is 5 or 10%, and work up from there. Some people save 30% or more!
Because of longevity, it is especially important that women save money consistently—especially single women responsible for their own financial support.
A bank savings account or credit union is a good place to start. Once you have savings for “everyday emergencies,” then a whole life policy is an excellent long-term savings vehicle that offers greater returns and benefits. Couples with permanent whole life insurance are the best protected, as the partner who lives the longest will receive a death benefit when their spouse passes.
#7: Nurture relationships.
Research shows a strong link between loving relationships and financial success. Some of this research comes from an 80-year (and still going) Harvard Study of Adult Development. Originally known as the Grant Study, after its original benefactor, it tracked Harvard sophomores from the classes of 1939-1944. The men (there were few women at Harvard in those days) were interviewed extensively and repeatedly throughout the years to document and measure nearly every aspect of their lives.
The conclusions? Whether the relationship is with a parent, a spouse, grandparents, children or friends, people who love well tend to build more wealth. An informative article titled “Love Is All You Need” lists the stunning findings, as outlined by Harvard research psychiatrist George Valliant:
- Men with one or more close relationships with a sibling made $51,000 more per year than men who had poor relationships with their siblings, or no siblings at all.
- Men who grew up in cohesive homes took home $66,000 more per year than men from unstable homes.
- Men whose mothers were warm earned $87,000 more than men whose mothers were uncaring. The men’s boyhood relationships with their mothers (but not with their fathers) were also associated with effectiveness at work.
- The 58 men with the best scores for warm relationships made almost $150,000 more per year than the 31 men with the worst scores!
According to Ohio State’s Jay Zagorsky who authored “Marriage and Divorce’s Impact on Wealth,” research on marriage and money shows that married people save more and build wealth faster than single people, unmarried couples, and those who divorce.
- People who get and stay married each have about double the wealth of single people who never married.
- Married people experience net worth increases of 77% over single people.
- A married couple increases their wealth an average of 16% each year of marriage.
- After ten years of marriage, couples report an average net worth of $43,000, compared with just $11,000 for people who stayed single
- Divorce wreaks economic hazard on individuals, often erasing the gains of marriage.
As you can see, the link between wealth and healthy relationships is undeniable!
Which strategies and habits for wealth can you employ?
Summarizing the list in this article, ask yourself:
Can you revise your daily routine for quality time in the morning, more exercise and regular reading?
Can you develop a new stream of income, save more of your income, or acquire a new property?
Are there areas in which you can nurture and improve your relationships?
All of these strategies and habits for wealth will pay rich dividends down the road.
And of course, we are here to support you! Don’t hesitate to contact Partners for Prosperity if we can help you save, invest, or evaluate your financial strategies. We look forward to serving you in the year ahead!
—By Kim Butler and Kate Phillips