In 2004, Tom Corley decided to conduct a five-year study called The Habits of the Rich to identify the 4 types of wealthy people and their top habits, according to CNBC.
Each of the 225 millionaires he interviewed fell into one of four categories:
Saversity investors: regardless of whether What they do, they make savings and investments part of their daily lives. They are constantly thinking of smart ways to increase their wealth.
Careerists:work in a large company and devote all their time and energy to climbing the corporate ladder until they get a very high salary management position.
Virtuosi: they are among the best in the business and they are paid a high rate for their knowledge and experience. Formal education, such as a degree (for example, in law or medicine), is usually a requirement.
Dreamers: The people in this group are all pursuing a dream, such as starting their own business, becoming a successful actor, musician, or best-selling author. Dreamers love what they do for a living, and their passion shows up in their bank accounts.
The path of the saver investor requires the least amount of risk—at least compared to pursuing an entrepreneurial dream or a creative passion. But 88% of the millionaires I interviewed said that savings is especially important to their long-term financial success.
It took the average millionaire in the study 12 to 32 years to accumulate a net worth of $3 to $7 million.
Below are their three most common habits that anyone can adopt:
one. They automated and saved 20% of net pay.
Each contributor-investor in the study consistently set aside 20% or more of their net pay, every paycheck.
Many have achieved this by automating the withdrawal of a fixed percentage of their net salary. Typically, 10% went into employer-sponsored retirement accounts, with the remaining 10% automatically sent to a separate savings account.
Once a month, savings investors would then transfer their accumulated 10% monthly savings to an investment account, for example, to a brokerage account.
Even if 20% is too much for you right now, consistently saving a smaller percentage can help you achieve your financial goals in the future.
2. They regularly invested part of their savings.
Because they constantly invested their savings, their money increased over time. When they started, this compound interest was not very significant. But after 10 years they began to accumulate significant fortunes. By the last years of his working life, the wealth of hoarding investors had grown to an average of $3.3 million.
Millionaires who chased a dream and started their own business (also known as entrepreneurial dreamers) were unable to invest their savings, especially in the early stages of pursuing their dreams. Whatever savings they had was used as working capital to fund their dream.
Interestingly, however, once most of these entrepreneurial dreamers were successful in the form of affordable cash flow, they immediately turned around. and started investing their earnings.
3. They were extremely frugal.
One of the common denominators for thrifty investors, big-company careerists, and self-made millionaire virtuosos was frugality in the study.
For these millionaires, thrift began the moment they got their first paycheck. For entrepreneurial dreamers, it started the moment their dream generated enough cash flow for them to save and invest.
It takes three things to be lean:
- Awareness: being aware of how you spend your money.
- Focus on quality: spend your money on quality products and services.
- Great shopping: spend the least amount possible by shopping for the best low price.
Thrift alone will not make you rich. This is just one piece of the Rich Habits puzzle, and there are many. But it will save you a lot of money. And the more savings you have, the more money you can invest.