Editor’s note: This article was first published in March 2018, but habits 1 to 8 come from a June 2013 article: the crisis described as current, Buffett’s derivatives gain, the 14-year-old millionaire, Mark Zuckerberg’s car and Mariano Rajoy as prime minister reflect that time; Rajoy left office in June 2018.
Financial education isn’t what many people think. Learning about finance and investing is only the set of floors we build on top of a foundation. Millionaire habits start from that foundation, and they aren’t always related to managing money or knowing about money or business.
When we teach this subject, the first thing we insist on is that everything starts with a change of mindset. If we don’t change the way we think, every effort will take us to the same place: back to where we started, or maybe even further back.
Everyone would like to have healthy finances, financial freedom, to be filthy rich, but very few are really willing to pay the price that costs. We should look at the people around us: who don’t you want to end up like? Then don’t do what they do and, above all, don’t think the way they think. Who do you admire and want to be like? Do what they did, do what they do and think the way they think.
To use an analogy: lots of people want to belong to the exclusive club of “swimmers”, but very few are willing to learn to swim and train to become good swimmers. And what’s even worse is that very few people actually like the water, and that’s the real problem, because if you don’t like the water, swimming isn’t for you.
(Read: Why do the poor keep getting poorer and the rich keep getting richer?)
Some time ago, an acquaintance told me he wanted to learn everything about money, finance and investing.
He also wanted to start following a financial plan, and he asked me for advice. I told him he’d have to read a lot and make an effort in his day-to-day life at first.
I don’t know any other way of gaining knowledge than through learning. Some people want you to hand them the fish already caught, but as we all know, it’s a better idea to teach people to fish, so they’ll never go without.
Three years later, this person still hasn’t done anything. His life is the same (a little worse). Laziness is the enemy of success in any field. In fact, there’s a saying: “Laziness travels so slowly that poverty soon overtakes him”.
I don’t know a single millionaire who hasn’t worked hard
You don’t need to look at the Forbes list; just talk to a business owner in your town and you’ll understand why he is an entrepreneur while others are employees. “So you have to work hard? Then I don’t like this millionaire thing anymore.” Unconsciously, that’s what most people think.
(Read: The secret of millionaires, told by millionaires)
If you don’t change the way you think, your habits and your routines, and you’re not willing to work harder than everyone else (though more intelligently), you’ll belong to that great mass of people who criticize the rich but play the lottery. Because the truth is that everyone would like to live without money problems, and anyone who says otherwise is just consoling themselves.
Let’s look at some habits that most millionaires have (or had), traits that set them apart from everyone else. Only then will you know what you need to work on to achieve something similar to what they achieved.
The first 8 millionaire habits
1. A modest life and modest spending (no keeping up appearances)
Only a fool buys a car he can’t really afford to keep. We’re used to seeing millionaires in movies driving flashy luxury cars. It’s easy to be tempted to try to look wealthy or important to impress people, and that’s where a lot of problems come from.
Do you really want to impress people with your car, or with who you are? Mark Zuckerberg (Facebook) drives a $30,000 car, while Warren Buffett still lives in the same house he bought in 1958 for about $35,000.
I know, there are millionaires who drive a Ferrari and own apartments and mansions worth millions of euros, but they did it once those millions were small change compared with their fortune.
(Read: The first tip for becoming a millionaire: don’t live like a millionaire)
Always live below your means. Even millionaires who spend 10 million on a house are living below their means at that point.
2. They are people of action, one of the most notable habits of the rich
Less talk, more action. Some people have spent ten years thinking about starting a business, shaping an idea. If Michelangelo had had that mindset, we wouldn’t have the Sistine Chapel. In their day, these millionaires didn’t sit on the couch complaining and crying about their problems while waiting to win the lottery. They learned, studied what they needed and took risks.
(Read: The best time to start on your business idea is today)
3. An entrepreneurial mindset
If what you want is a stable job, ideally as a civil servant (in Spain, a job for life) so you have few headaches, fine, that’s respectable, and clearly this isn’t for you.
If, on the other hand, you feel your life doesn’t satisfy you because you have to go to work at the same time every day, you’re consumed by the worry of being fired and you have to put up with a boss who probably became boss by mastering the art of brown-nosing, your way out is to change jobs or start your own business. Some big companies began as a small idea to earn some extra money, as with our current 14-year-old millionaire.
4. They have financial knowledge, without doubt the most common habit among millionaires
They’ve built great fortunes because, obviously, they also knew how to make the most of the money they were generating. A personal fortune of 30 billion is impossible if you’ve never invested, even if only by buying shares in your own company.
Fortunes like that come only from shares or real estate. Either way, learning to manage money is a must. There isn’t a single millionaire who is financially illiterate. Amancio Ortega (Inditex) may have been criticized for having no idea about finance, but there he is: he’s among the richest people in the world thanks to the rise in Inditex’s share price.
5. Optimism and opportunity
Millionaires have made money in bubbles and in crises alike. That’s what having the necessary knowledge does for you. Let’s copy that from them. Today it’s easier than ever to make money during a crisis: while the population was gradually losing their jobs and many small investors were losing their money on the stock market, millionaires were striking gold with the fall of the financial markets.
The further the stock market fell, the more money they pocketed, and now they’ve bought cheap and are riding the crest of the wave again. Warren Buffett has made 1.2 billion with the derivatives he once called weapons of mass destruction. In other words, he saw the crisis coming, bet against the main markets and won.
And he did it with just four clicks on his computer screen, while everyone else goes from one job interview to the next. There are always reasons for optimism and always opportunities, but you need the right knowledge to take advantage of them.
6. Discipline and focus
If you want something, go for it. Without doubt, this is the millionaire habit repeated most often in every book by great entrepreneurs. If you set yourself a goal, do whatever it takes to reach it, with the effort and sacrifice that involves. Millionaires are extremely disciplined people, not only in business but also in their personal lives. They aren’t easily distracted from their objectives, and they never lose sight of the goal, whatever happens and whatever difficulties arise.
Most people fail because the difficulty overwhelms them. Say we’re walking along our path when suddenly we find a wall in the middle of it, and it makes us give up. Many millionaires knock the wall down, and others, if the wall is too thick, look for a way to climb over it. They may succeed or they may fail, but they always face the wall because, cliché as it sounds, for them the wall isn’t an obstacle but an opportunity: the goal lies behind it.
(Read: 7 psychological traps that hold back your success)
7. They choose their surroundings carefully
The best are the best because they work with the best. It doesn’t matter what we’re talking about; it has always been that way and always will be. Few great entrepreneurs have made it without help, just as few millionaires don’t owe some kind of thanks to someone: a mentor, a team or a manager. As Donald Trump advises, always work with the best, and never hesitate to fire someone incompetent.
That applies once you’re running a business, but if you’re young, look at your friends. If you surround yourself with potheads, you’ll end up a pothead or something like them. If you surround yourself with electricians, you’ll learn something about electricity; if you surround yourself with people who have ambitions and want to better themselves, some of it will rub off on you.
Even so, always learn from everyone. There are three kinds of people you meet in life: those who bring you something positive, those who bring you nothing and those who only bring you negative things. Millionaires chose, above all, people from the first group.
8. Their perspective on failure
For most people, failure is something they fear deeply, and it holds them back from fighting for what they want. For millionaires, failure is just a possibility that’s there, and they always come out ahead: if you try something and succeed, congratulations, but if you fail, congratulations too, because you’ve learned a very valuable lesson for next time.
Some people, once they fail, crawl into bed and sink into a kind of depression. Others have five failures in a row behind them and are still excited. Even Mariano Rajoy (Spain’s prime minister at the time) said in a speech that he trusts an entrepreneur who has failed more, because there’s a greater chance they’ll succeed next time. Of everything he has said in public to date, it’s the only thing I agree with him on.
As we can see, there are quite a few things we need to change in our minds. But hold on to the part about knowledge of both business and finance, because without those subjects you’ll be lost on the path of financial education. The rest is a change of attitude and mindset, which is probably the hardest part.
Other millionaire habits you can copy starting tomorrow
Although we’ve already covered the 25 habits of successful people in a full article, this time we’ll go for the simplest ones: the foundations of change, habits you can start adopting tomorrow, day after day, adding new ones each week.
9. They get up earlier
This is one of the most common millionaire habits. In fact, they agree that getting up early, even three hours before going to work, is what got them where they are.
They use that time to relax, exercise, read the news and have a leisurely breakfast, and they go to work feeling calm rather than flustered because they’re racing against the clock.
We’ve already covered 5 good reasons to get up earlier, along with some tips to help you become a natural early riser.
10. They make a to-do list and stick to it
I don’t know if you’ve noticed how many people have so much to do that they end up doing nothing. From Richard Branson to Warren Buffett, they agree that having a list of priorities to tackle first means you won’t waste time thinking about what you should be doing.
See also: What is the best financial advice we could give anyone?
That to-do list should be our work bible for the day, so it has to be completed, no matter what, before the day is over.
11. They stay away from the phone and email
Sending WhatsApp messages and answering email first thing in the morning may seem simple, but the vast majority of successful entrepreneurs agree that it isn’t the smartest move: if we spend our time on these tasks when our energy is at 100%, the more productive tasks that really matter will wear us out much sooner when we get to them. This is, without doubt, one of the habits of the rich.
Tim Ferriss (author of The 4-Hour Workweek) didn’t check his email until late in the morning, and Arianna Huffington wants no technology early in the morning, except to catch up on her reading.
All of this brings us to one of the most important points…
12. Managing time is without doubt the most important habit of the rich
A day has the same number of hours for everyone, but the rich use those hours much better than everyone else. They don’t want to waste a single minute of the day, because they know time management is one of the biggest competitive advantages they can have, especially in business.
If something that takes our time is productive, we do it. When it isn’t productive, we don’t. And if it absolutely has to be done by us, we do it, but if even a monkey could do it, we delegate that task while we do something more productive.
In other words, if we need to call a client to invite them to a party, our secretary or assistant can do it, while we focus on calling another client to close an important sale.
And remember that, whenever possible, the hard part should be the first thing we do, when our energy is at its peak.
(Read: The world’s most successful people have these 7 habits in common)
More habits of the rich
13. We should learn something every day
Jim Rohn used to say that a person can skip a meal but should never skip a minimum of 30 minutes of reading a day.
Daily reading and learning is one of the 3 habits behind Warren Buffett’s success, in his own words.
14. Looking after your health
Our mind is our best asset, but our body is the vehicle that carries our mind, so we have to look after it properly.
Start a daily exercise routine and a healthy diet. But take Tony Robbins‘ advice and don’t set yourself the goal of losing weight or improving your figure if you lack willpower. Your goal should be to eat more healthily (for your health, not your looks). If you look after your health and eat a healthy diet, you won’t need to focus on losing weight. The weight will come off by itself. And if you exercise to improve your health, your figure will improve on its own.
(Read: Ray Dalio: how I went from poor to rich thanks to these 4 habits)
15. When the day is over…
For the first few weeks and months, before you go to sleep at the end of each day, ask yourself these 3 questions:
- What have I learned today?
- Have I added any value to the people around me?
- Have I done everything I could today, as well as I could?
Every day, these questions should have an answer that helps us do better the next day. Start here, and we’ll see how the year goes.
As we always say: start applying these habits, and if they don’t work for you, you can always go back to doing what you were doing before.
If you want something more complete: 20 daily habits that will improve your life in general and your success in particular
Featured image: Mark Taylor from Rockville, USA, CC BY 2.0, via Wikimedia Commons.
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