Why some people become wildly successful and why others fall flat isn’t just because of luck, or the family they were born into or because they won a lottery. There’s more to their success story than just them waking up as millionaires. Let’s find out what sets the uber-rich apart from the rest.
When it comes down to it, the most important things that separates successful people from the rest, are smart decisions and daily habits, both of which play a significant role. Here are 5 powerful habits of the rich and the wealthy to take note of. Find out how many you already have in place, and which ones you need to pick up.
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- They Wake Up Early
While many of us are still in bed enjoying a good snooze, some people are already up and about trying to improve their health, careers, and personal lives. Productive mornings start with early wake-up calls. In fact, many successful people live by this mantra.
They tend to dedicate the first few hours of their day towards formulating action plans to meet their top priorities. This helps them plan their day better, instead of rushing about in frenzy, trying to get to work on time.
Take for example Twitter and Square CEO Jack Dorsey, who wakes up at 5.30 am to meditate and work out. Meanwhile, PepsiCo CEO Indra Nooyi wakes up at 4 am to exercise before starting her work day, while Indian Prime Minister Narendra Modi’s mornings start at 5 am to perform yoga and to knock out tasks before the rest of the world has rolled out of bed.
It’s important to use your mornings wisely to build habits that will allow you to lead a happier and more productive life. However, that doesn’t mean you need to wake up at the crack of dawn to follow this routine. Just set your alarm fifteen minutes prior to your regular wake-up call so you can have a few moments to focus on the tasks ahead before your day begins.
Similarly, you should do the same thing when it comes to money management. Never make any spur of the moment investment decisions. Always plan your investments in advance and align your needs with your financial goals. This will help you create a sizeable corpus and will protect you and your loved ones from any financial emergencies.
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- They Live Minimalistic Lives
The rich are often mistaken to be lavish spenders, but many choose to be modest and prove to the world that their success is not defined by their status. In fact, some of the world’s wealthiest people choose to live frugally. As Warren Buffet rightly said, “If you buy things you don’t need, you will soon sell things you need.” Despite his status as the second-richest person on earth, he still lives in the same modest home he bought in 1958.
Facebook CEO Mark Zuckerberg also leads a low-key lifestyle and proudly drives a manual-transmission Volkswagen hatchback. Then there is Ingvar Kamprad, founder of IKEA, who flies only economy class and chooses to drive a 1993 Volvo 240. Closer to home, Azim Premji, chairman of Wipro Ltd., is also known to drive second-hand cars.
In essence, they live below their means and save their money rather than flaunt it.
To start with, make a budget and try to stick to it. A good budget lets you focus your money on the things that are most important to you and thus prevents you from overspending on less important things.
So, write down the various sources of income that you have, including salary, rent, interest on deposits, dividends, etc. Then make a list of expenses you incur in a month and allocate money to each of these categories. Include everything from your grocery bills to fuel expenses to the EMI of your Home Loan.
Once you are done, follow the 50:30:20 rule of budgeting, which states that 50% of your income should be used for essential expenses like food, clothing etc, 30% for discretionary spending and the remaining 20% diverted towards savings. However, if you have big-ticket loans like a Home Loan or a Car Loan, feel free to adjust the 50:30:20 rule accordingly.
Once you stick to your budget, you will not have to worry about your various EMIs or monthly Credit Card payments. Budgeting will take a big load off your back and transform your financial future.
Additional Reading: How Budgeting Can Transform Your Financial Life
- They Read. A Lot!
One common trait amongst the rich is that they read a lot of books. However, they are highly selective about what they read, choosing to be educated over being entertained.
They prefer biographies, history, non-fiction and self-help books over fiction novels. For example, investment legend Warren Buffett reportedly spends about 80% of his day reading and continues to include book recommendations in his annual shareholder letters.
Bill Gates, the richest man in the world, is also known to read 50 books per year, which makes it one book per week. These examples clearly point out that in order to become successful it is important to develop new skills and acquire as much knowledge as possible in order to grow each day. If it works for them, it could work for you.
- They Set Attainable Goals
Many of us make resolutions and set goals, but we often fail to achieve them. The trouble with such goals is that they are usually not specific and often unrealistic. Successful people set daily achievable goals. They understand that it’s vital to consistently set specific, attainable goals rather than trying to achieve unrealistic targets.
The first step towards achieving financial freedom is to set realistic financial goals and go about achieving them. Setting financial goals puts you in charge of your money and can help you come up with strategies to attain these goals. For example, these goals could include paying off all of your debt, saving to buy a new house or car, or saving for your child’s education.
Split your goals into long-term, medium and short-term goals. Ascertain how much money you currently have and how much you need to meet your target. Investing in financial instruments like Fixed Deposits, Mutual Funds, Public Provident Fund (PPF) etc can go a long way towards helping you achieve your goals. But, remember to invest according to your risk appetite.
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- They Monitor Their Investments
Successful investors have a good idea of how well or how poorly their investments are performing. It’s extremely important to review your investments regularly in order to make the most out of your money.
Review your progress regularly and take curative measures to stay on course. For instance, if you have invested in a fund with a 3-5 year time frame, check the fund’s performance at least once a year to ascertain its progress. If you have invested in market-linked products like equities, don’t forget to shift your investments to less risky options once you near your ultimate goal. This will ensure that your efforts don’t go to waste in case of an adverse situation.
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Now that you know their secrets, don’t hesitate. Try to inculcate these every-day habits into your life. They are sure to get you on the road to better fortune and a secure financial future.