Ever wondered how the wealthy approach their day to day personal finances? Although the rich are a varied bunch, there are in fact a few money habits that can be considered fairly common amongst those fortunate souls who have attained financial Nirvana. Some of them might surprise you.
They understand risks, invest more, and speculate less
The Wealthy are not necessarily risk-averse; they are, however, “risk conscious”. They understand and appreciate the concept of risk and reward, and research their investment options thoroughly before committing funds into them.
Wealthy people are also careful when it comes to speculation. Unless many of us who tend to remain blindsided to the possibility of losing capital in the pursuit of risk laden riches, the wealthy usually only speculate with what they can afford to lose in entirety.
They are thrifty
If you thought that the rich got rich by being flashy, over the top, flamboyant free spenders, think again! Quite on the contrary, most members of the Wealthy community are thrifty and maintain tight controls over money leaks. They cut corners wherever possible, drive hard bargains and economize their resources.
Wealthy people generally seem to understand that it is the small leaks that can sink a big ship, and therefore remain cautious on that front. This doesn’t mean that they do not enjoy their lives or spend on material acquisitions or experiences that bring them joy – it only means that they understand the difference between ‘wasting money’ and ‘spending money’.
They usually create multiple income streams
Wealthy people tend to create multiple sources of income. Examples of this include: saving up over the years to purchase a commercial property and then letting it out, investing in a hybrid mutual fund and selecting the dividend option, financially backing a promising startup venture as an angel investor, or even starting a small business (that doesn’t require their focused attention) alongside their main area of work.
They don’t buy things they can’t afford
The Wealthy usually do not spend money that they don’t have, and neither do they lose sleep over “keeping up with the Joneses”. They almost never stretch their financial position by over-borrowing, and they limit monthly EMI’s to a bare minimum.
In fact, most Wealthy people worry more about being overleveraged than anything else. Many of them would rather delay their gratification than buy lifestyle goods on borrowed money. Although this often means having to make short term sacrifices, it does pay off richly in the long run.
They think long term
Much like long range shooters, Wealthy people have the foresight to predict goals that are many years away and attach high levels of relevance to them. They put numbers and milestones against these goals and implement a highly feasible plan of action to meet them.
Not just that, wealthy people usually tend to think long term with their investments. They understand that ‘Rome wasn’t built in a day’, and are therefore willing to wait longer than the rest for the results of their investments to come through!