7 Most Important Habits That Rich People Use to Build Wealth

by Guest on October 7, 2010


Aristotle said that “We are what we repeatedly do. Excellence, then, is not an act, but a habit.”

Being rich (having wealth, anyway) is not about having a lot of money or making a lot of money.

It’s about building wealth, keeping your money, and spending it wisely.

Here are the 7 best ways that rich people build wealth and keep it.

1. Learn the difference between an asset and a liability.

This is the most fundamental aspect to build wealth, yet most people have no idea what the real difference is.

A car, unless it’s a real collector’s item, is not an asset. It costs you money no matter how you look at it – it’s maintenance, upkeep, depreciation, etc. all mean you’re losing money.

A house can be either an asset or a liability, depending on its potential. The home you live in is probably not an asset, though you may have heard otherwise.

Most homes are no longer gaining value, so they are no longer assets. A home that you rent out for more than you pay in upkeep and mortgage, however, is an asset.

Learn the difference between the two fundamentals of wealth and you’ll understand that most Americans either purchase junk, spend their money on liabilities they mistakenly think of as assets, or they get wealthy by putting their money to work in things that make more money. To start making your money work for you save your money with the best bank rates.

2. Work hard and be diligent about your finances.

Don’t splurge on something you don’t need just because after months of saving you “deserve it.”

Nothing destroys good habits faster than going off the wagon. Why spend six months working hard to save up $1,500 if you’re just going to spend $800 of it on a “weekend getaway” to reward yourself?

Why not, instead, spend the money and that weekend working to improve your home’s front yard and thus raise its value? Or simply save the money and keep up the good work?

3. Live beneath your means and look poorer than you are.

If your income is $100,000 a year, live like you make $60,000 and save the rest or invest in things that will raise your income to $150,000 a year.

Living well beneath your means doesn’t mean living “poorly,” it just means you’re always prepared for when your $100,000 income suddenly drops to $65,000 because the market changed or your employer goes belly up.

Think of what that two years of $40,000 in savings would mean when your income disappears for a few months..

4. Have patience with your growth.

Most people do not make a fortune overnight and those that do often squander it the next day.

Building a fortune slowly, however, usually means that the person doing it has patience and perseverance and is willing to work hard and knows the difference between spending and investing.

5. Keep on learning and never get comfortable with your income.

In number 3, you were told to live beneath your means. Doing so gives you a feeling of comfort and stability, but also puts you in the habit of being frugal and aware of your spending.

Continue your education, whether it’s formal or informal, and keep building valuable skills you can use to build wealth. Learn to do your own auto mechanics, clean your own pool, wash your own cars, do your own handyman work, garden, or whatever else you might have an interest in learning.

Build skills and learn to whittle away at your expenses. The fewer expenses you have, the more money you’ll have to invest to make even more money. This is building wealth.

[Side Note from Jason: We need to be careful of the delicate balance that exists with being content with what God provides and also looking to steward our time, money and talents to the best of our abilities to make additional income.]

6. Live a balanced life and realize that gadgets and trinkets do not make you happy.

Truly wealthy people rarely have all of the latest gadgets and the gaudiest trinkets. In fact, the poorer a person is, the more likely they are to have a house full of dime store trinkets and baubles.

If you were to survey people who have built their own wealth and are truly balanced, happy, and wealthy, you’ll see that these rich people are rich because their lives are rich, not because they have a lot of shiny things to show off their wealth. The millionaire next door is never ostentatious.

7. Become happy and learn to only worry about what’s truly important.

Sure, getting bilked for $1,000 on a car purchase is not good. But can you do anything about it, and is it really worth the headache to?

If you need the car and it’s a good purchase regardless of the padded price tag, maybe the headache isn’t worth the trouble of making a scene. Perhaps a calm letter to the business owner explaining that you won’t be back there again and your friends won’t shop there either will be enough to both vent your frustration and get results in your favor. But obsessing over the lost thousand does no one any good. Least of all yourself.

These simple habits, which are more a lifestyle change than they are habits, are what set apart those who build wealth and those who just appear wealthy.

Paris Hilton is wealthy because of her father, not herself, and she shows off her riches because she truly doesn’t understand them. Her father, however, is not so flashy because he knows where the money comes from and how to keep it in his own hands.

Onlinebanksblog.com provides the latest bank rates news to help you find the best banking accounts to help you earn higher interest, pay lower fees, and get the most out of your bank accounts.

Related Posts

{ 18 comments… read them below or add one }

Money Beagle October 7, 2010 at 12:17 pm

The fourth item (being patient) is the one I struggle most with. Watching progress, esepcially with all the ups and downs of the last few years, has been painfully slow. Still, I focus on our debt number which goes down and down, and this keeps me satisfied that we’re on the right path.

Anonymous October 7, 2010 at 8:08 pm

Yes, patience is difficult – especially in our “immediate gratification” culture!

Flexo October 8, 2010 at 2:19 am

We should stop the “house is not an asset” talk. An asset has a pretty specific meaning when you’re talking about finance, and a house is most definitely an asset. It may not be a good asset most of the time, but it is an asset. What you’re trying to say is that a house is a cash-flow-negative (expense-producing) asset.

Anonymous October 8, 2010 at 11:41 am

Flexo, Good clarification.

JoeTaxpayerBlog October 8, 2010 at 12:44 pm

Flexo – the pendulum is swinging the other way now. Houses were treated as ATMs for so long, we are now warned to not think of the house as an asset at all.
I live in an area where housing is expensive compared to rest of country. If anyone here moves to say, Austin Texas (where I’ve spent time, beautiful area) we can replace our home and bank as much as half the sale price. But if we stay local and move, it won’t quite work that way.
To your point, it’s not even negative (the value). While the cash flow does appear negative, the imputed rent should put your house in the black.

Barbara Friedberg October 8, 2010 at 10:30 pm

Yes-This article sounds like it came from my mind! Do you have esp? No, really, wealth is so much of an internal state. Live to the fullest with what you have. I pride myself in looking much poorer than I am!

Manugeraes October 8, 2010 at 11:37 pm

Tim Sales said that “average people buy stuff, the middle class buy liabilities, and the wealthy buy assets”. In other words, you should “acquire a business that buy you assets”.

Arohan October 9, 2010 at 3:47 am

To continue where Flexo left off, a car is also an asset. It is just a depreciating asset most of the time, and therefore a bad investment. When a used Prius sold at a premium to a brand new Prius (because the new Prius market was illiquid), that particular car was a great investment as it appreciated in value with age.

In regards to housing, unless you are pretty sure that home values have more room to fall for the next 5 years, I would think buying a house today could be a great investment. Maybe, even the investment of a lifetime. It is very rare that you will find yourself in a situation where there is a glut of supply, interest rates are at one of the lowest levels, and the country is poised to experience a period of rising inflation.

Just like at the top of the housing bubble every expert was advising everyone to buy a house, today the chorus is advising everyone to avoid buying a house.

Arohan October 9, 2010 at 3:47 am

To continue where Flexo left off, a car is also an asset. It is just a depreciating asset most of the time, and therefore a bad investment. When a used Prius sold at a premium to a brand new Prius (because the new Prius market was illiquid), that particular car was a great investment as it appreciated in value with age.

In regards to housing, unless you are pretty sure that home values have more room to fall for the next 5 years, I would think buying a house today could be a great investment. Maybe, even the investment of a lifetime. It is very rare that you will find yourself in a situation where there is a glut of supply, interest rates are at one of the lowest levels, and the country is poised to experience a period of rising inflation.

Just like at the top of the housing bubble every expert was advising everyone to buy a house, today the chorus is advising everyone to avoid buying a house.

Maliximarketingsub October 10, 2010 at 1:34 pm

i learned a lot, thank you and will read some other articles you had in there

Rich with SFP October 13, 2010 at 3:09 am

Great insight! These are good habits to have! Living poorer than you are has helped me in so many ways – both financially and spiritually!

Rich with SFP October 13, 2010 at 3:09 am

Great insight! These are good habits to have! Living poorer than you are has helped me in so many ways – both financially and spiritually!

Credit Cards October 18, 2010 at 7:39 pm

One more which is similar to having patience. Staying calm in all the situations, since this is a great quality and affects your decision making specifically in difficult situations.

bigchief40 September 25, 2011 at 5:08 pm

One thing on the housing note. If you were to buy a home at the current interest rate with the intent to move in a couple of years and the interest rate skyrockets between now and then purchasing power is then limited to a smaller amount of buyers due to higher monthly payments. Having the absolute lowest interest rates in years means one thing. They must come up. If you buy something at this low rate plan on being there for awhile to get the most out of your investment.

Vic @ Business Tips Blog October 15, 2011 at 4:10 am

Patience and diligence are two important habits people should have to build their wealth. Another very important quality to get real riches is self-control.

Gregory June 18, 2012 at 1:54 am

I really enjoyed this article. The point about a house not being an asset is really true. As a person I am more into learning new skills that make me money and living frugal to avoid expenses and for the few months this year, I have managed to save a lot that I am even surprised. Thank you.

Han Piseth July 25, 2012 at 3:23 am

This is a very good idea for those who want to be rich. If you haven’t applied to the real life, these ones are useful for all of you.

Jordan Bowser August 8, 2012 at 9:37 am

But but…
” woe to you who are rich,
for you have already received your comfort.
Woe to you who are well fed now,
for you will go hungry.”

Leave a Comment


five − 3 =

{ 4 trackbacks }