I have read many books and articles on wealthy people.
I’m interested in how they built their wealth – and, more importantly, how I can apply it to my own life.
As it turns out, adopting a “get wealthy” mindset is something you don’t have to be born with.
Take this statistic: only 1/3 of your wealth is a factor of your income. The other 2/3 is a product of money management.
Hence, there are no shortage of seven-figure households with a negative net worth.
Without further ado, here are three key traits commonly found in wealthy individuals:
1. Wealthy people have the ability to remain unusually calm while those around them panic. I’m not saying they don’t feel emotion, because they do. It tends to run counter to what most people experience, however.
For example, a severe market selloff might spook most investors, but people who possess this trait look at the selloff as a buying opportunity. They become greedy when others are fearful, and fearful when others become greedy.
2. They live below their means. Contrary to what the media wants you to think, the majority of people in America who are wealthy live very normal lives. That’s how they got rich, and it’s also how they stay rich.
They don’t suffer a great deal from income creep. Income creep is when your spending increases as your income increases.
A great example is Warren Buffett. The man is worth close to $90 billion and still lives in the house he bought for $31,500 in 1958, which is about $250,000 in today’s dollars.
The key is to save and invest the majority of your additional income over time. That’s how you build wealth.
3. They don’t care what other people think of them. Depending on your age you may be familiar with the term “keeping up with the Joneses”. Meaning that if your neighbor buys a new car, you feel as though you need to as well. The wealthy don’t care about keeping up with the Joneses.
The wealthy will live in the same house and drive the same car until they run it into the ground. They understand that debt is the enemy of wealth, so they avoid it like the plague. Although it may not look like it, these people are sitting on a net worth of $10,000,000.
This is how you build wealth.
Until next time, my wealthy Joes and Janes!