As some of you may know, this year my husband and I have been cutting a lot from our budget and doing our best to save money and be more financially smart. It’s one of those things you talk about doing forever, but it’s really a way of life. Until you truly adopt it as a lifestyle and practice, you can’t be successful with it. I’m still learning a lot in the journey but as part of it, I’ve been trying to educate myself as well. Part of that has to do with looking at what people who are smart and successful with their money do.
I think there’s a huge misconception when it comes to people who have done really well with their money. We tend to assume the “millionaire” lifestyle is what we see on TV. We also assume that most of them come up with some amazing business idea and they ride it all the way to millionaire status. The truth of the matter is that the majority of self-made millionaires (meaning they made it themselves and it wasn’t given or inherited) actually work extremely hard and are also quite frugal with their money. It’s the combo of these two things that bring most of them success.It's a big misconception that people who have a lot of money just stumbled upon it with dumb luck. Click To Tweet
So, today I wanted to break down some of the common habits I notice about a lot of self-made millionaires. Almost all of these are habits you can 100% adopt yourself. While you might never get to self-made millionaire status, these habits are sure to make you a lot more financially healthy and knowledgeable.
They Wake up early
The first habit of a self-made millionaire is that they are early risers. Author Thomas Corley wrote the book Change Your Habits, Change Your Life, where he studied wealthy individuals and compared their answers to those making less than $35,000 a year. In that book, his study showed that 50% or more of self-made millionaires wake up at least 3 hours before their workday begins. Waking up early not only allows you to be more prepared for the day but allows you to complete things on your to do list. Corley writes “Getting up at five in the morning to tackle the top three things you want to accomplish in your day allows you to regain control of your life and gives you a sense of confidence and control.”Most self-made millionaires wake up at least 3 hours before their workday begins. Click To Tweet
They Have a Budget
Next, self-made millionaires have a budget. And not just an “I’m only gonna spend $100 on stuff this week” kinda budget. They have a dynamic and details budget and they STICK TO IT.
A budget has to do with understanding how much money you have coming in each month, the money you have to dedicate to living expenses, and then what you’re willing to spend on things like entertainment and going. A good way to get started with budgeting is to use the 70/30 rule. This means you live off of 70% of your income AFTER taxes. Living off 70% of your after taxed income will give you a realistic idea of your standard of living and makes sure you’re not living above your means and likely accumulation debt. For the other 30%, first, if you have any debt then that 30% should go directly to that until it’s at 0. Then, the 30% should go to savings, capital investments, putting away for retirement, and so on.
If you’re currently living on 100% of your taxed income or more, this can be a hard adjustment but eventually, you’ll become accustomed to it. You might like my post 10 things I cut from my budget to get started. It looks at things you might be able to cut from your budget right now to save every month.
Pay Attention to Small Costs
Going off of the previous point, the next thing self-made millionaires do it pay attention to all costs, no matter how small. This is a financial mistake I used to make myself where you overlook little costs like a $3 coffee here and an extra $2 here for something name brand there. Self-made millionaires stay onto of all costs, even the small ones, because the can add up.
Understand their financial health
A lot of people avoid finances. It’s not really a fun topic and if you’re currently living above your means or struggling with credit card debt, it’s natural to want to avoid it. Unfortunately, avoiding your finances for a long time is like avoiding your own health, and eventually, it’s going to catch up to you. It’s better to buckle down and face the music so you can start making good choices going forward.
One good place to get started to is to start monitoring your credit. It’s important for people of all ages to start thinking about their credit score. Having a good credit score doesn’t just relate to your credit cards. Ideally, you shouldn’t be carrying over credit card debt month-to-month. Good credit will help you with interest rates and loans for big purchases like cars and homes. Landlords will check your credit before renting to you and some employers ahve even been known to run credit scores before hiring!
Drive modest cars
I think this is surprising to a lot of people because the media’s portrayal of “millionaires” for so long has been big houses and flashy cars. The truth is, a lot of self-made millionaires drive modest, reliable cars. Cars can be one of the biggest money sucks in your budget from monthly car payments to insurance to repairs. Most self-made millionaires don’t get to millionaire status by blowing their money on things like this. By avoiding the extra costs and driving a more modest car, it can save you hundreds in your monthly budget
Multiple Streams of Income
Another common thread of self-made millionaires is that they don’t rely on just one stream of income. Typically, they have multiple sources of income. In the same study I conducted by Thomas Corley, he found that 65% of self-made millionaires had at least 3 sources of income. This could be your job, real estate rentals, investments, a side hustle, and owning or partial ownership of a side business.More than 65% of self-made millionaires rely on multiple sources of income. #hustle Click To Tweet
If you’re interested, I actually made a video that talks about this a little bit more on one of my own person multiple streams of income, Caffeinate and Conquer. The video talks about the different sources of income you can have as a blogger or influencer.
Many studies have concluded that not just self-made millionaires but CEOs and other professionally successful individuals dedicate time to reading. Typically, this isn’t just pleasure reading but taking the time to read books for education or self-improvement. It might be a business or professional book, historical non-fiction, biographies, etc.
Ok, the last thing self-made millionaires tend to have in common is they are optimistic. Typically, getting to millionaire status is a lot more difficult for those who are pessimistic, negative, and unwilling to stay determined and focused. Self-made millionaires tend to be the opposite of that and are able to find positive solutions to hard problems and stay optimistic when things go wrong. Long term success, whether financially or otherwise, is really only truly possible when you have a positive mental outlook.Long term success is only truly possible when you have a positive mental outlook. Click To Tweet