While it’s easy to assume that many rich people came from money, the National Study of Millionaires, conducted by Ramsey Solutions, discovered that 79% of millionaires in America didn’t receive any inheritance from their families. This means that most rich people have to rely on financial habits that will help them build wealth and keep it, instead of receiving it for free.
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GOBankingRates contacted two financial advisors to find out what money habits their wealthiest clients live by. Also, find out how a financial can help you, even if you’re not wealthy.
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Rich People Think About More Than Just Saving Money
“The wealthy that remain wealthy don’t just save — they save wisely, invest with discipline and keep their costs low,” said Andrew Latham, a CFP and managing editor at SuperMoney. “They play the long game, focus on minimizing taxes and know the value of diversification.”
Rich clients are known for being diligent about their investments. Since there are only so many hours in a day, you have to ensure that your money is working for you when you’re unable to do so.
Latham added, “It’s not just about earning more, but about holding onto it and letting it grow steadily over time.”
Learn More: How I Went From Middle Class to Upper Middle Class
They Live Below Their Means
“Many wealthy people live frugally — driving older cars and living in reasonably priced homes,” said Latham. “Nearly 90% of millionaires are self-made, often living in homes under $500,000.”
Many financial experts recommend that you try to save 20% of your pay so that you can plan for the future. Ramsey Personality Jade Warshaw is a proponent of setting aside 15% of your take-home pay for retirement so that you can have your money work for you. Either way, the richest clients are usually those who have embraced some sort of frugality, so they don’t live above their means, ensuring that they can focus on building wealth.
They Track Their Finances
“The richest clients really pay attention to their expenses and track their cash flow closely,” said Taylor Kovar, CFP and CEO of 11 Financial. “This habit helps them make smart financial decisions and spot areas that might need to be improved.”
Rich clients know where their funds are going, so they can stay on top of their finances. If you don’t track your spending, you’ll never know your problem areas. If you want to build wealth, you have to track your spending and savings to create a game plan instead of simply hoping for the best.
They Invest Wisely Instead of Chasing Trends
“They build diversified portfolios and resist the temptation to chase after quick gains, understanding that patience pays off,” Kovar said.
The wealthy understand that it’s often about time in the market — not timing the market. Warren Buffett is known for stating that his favorite holding period is forever, because many investors will try to chase fads in hopes of making a quick profit. But successful investors don’t get caught up in the hype of speculative assets; they’re focused on reliable long-term returns.
Rich People Invest In Financial Education
“They value financial education and often turn to their trusted team of advisors for guidance,” said Kovar. “This collaborative approach helps them refine their strategies and stay on top of investments.”
Latham also noted that many rich clients strongly emphasize continuous learning, with some spending at least 30 minutes per day on self-education.
Sometimes, the best investment you can make is in your knowledge and skill set. By learning about financial education and investing, you give yourself a better chance of building wealth. Since there’s so much that goes into investing and retirement planning, any amount of understanding you can gain on the subject can help.
Rich Clients Value Their Networks
“Another interesting trend is their approach to networking — they focus on building a few deep, meaningful relationships instead of having a vast network,” explained Latham.
Many wealthy people have pointed out the significance of being careful of who you allow into your social circle. Your network can determine your net worth, as you can easily adopt the habits of those you surround yourself with.
They Tend To Be More Generous
Kovar pointed out that his rich clients are also known for being incredibly generous with their time and finances. “They prioritize giving back to their communities by helping others, making donations, serving on nonprofit boards and making small impacts every single day.”
It takes a team to build results, which may be part of the reason the wealthy tend to give back more to the community and those around them. It’s also important to remember that someone may have helped you along your journey, so paying it forward is the right thing to do.
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This article originally appeared on GOBankingRates.com: I’m a Financial Advisor: 7 Money Habits My Richest Clients Live By
