Investing

11 Smart things to learn from Wealthy People and become one yourself

“It’s not your salary that makes you rich, it’s your spending habits”

And rightly so. There are a lot of things that wealthy people can teach us about how they get rich and stay rich. Here are eleven of the easy ones, that’ll quickly put you on the path to becoming wealthy:

1. Don’t spend your money before you have got it

Are you looking forward for your next promotion, bonus or a tax rebate? And in anticipation have you already booked a holiday, or bought the new phone that you have been desiring for?
Now consider the situation when promotion is postponed, bonus targets are missed, the tax rebate is a disappointing Rs 100. What’s more, someone in the family falls ill that will require a fat outflow. Wouldn’t that put you in a difficult situation? It’s therefore important that you don’t spend your money before you actually get it.

To get rich, it’s vital that you plan better and live within your means or else you’ll never be rich.

When you expect more money, don’t think first how to spend it. You need to keep the excitement of the gains aside and start saving money to build your wealth, or pay for more training to increase your income.

2. Save – Start small

Money begets money and one of the most important steps towards getting wealthy is inculcating the habit of saving and investing. You have to start somewhere and that’s with what you can afford now. Saving just Rs 5,000 per month will quickly be enough to cover small emergencies. As you can add more, it’ll grow ever more substantial.

Starting small will give you the financial discipline you need to be rich and stay rich. This doesn’t have to be saving. It could be with a cheap course to improve your job prospects, for example, with the idea of tackling a more expensive and impressive one when you can afford.Learning from Rich People and Becoming Rich

3. Don’t believe what you’re told – do your own research

Do your own research, before you make a pig purchase. Whether you hear it from an advisor, read it on the Web or in the papers, or get it from a bank or other company, you must search for other opinions before you commit yourself to a big purchase or start making regular purchases. You can’t trust anyone; media will sell something where they have vested interests, so goes with other intermediaries like banks. By doing a little bit of research, you’ll usually avoid relinquishing money on inappropriate or ineffective products.

The same goes for investing. Before you select a stock or a mutual fund scheme for investment, don’t hear what everyone is saying. Do your own homework and research and then invest your hard earned money. Your broker or advisor may have vested interest in selling you a mutual fund or a company’s stock.

4. Defend yourself

When you make a purchase and it goes wrong, put your case to the company. You should always lodge a complaint when you’ve been wronged – whether it’s your car, mobile phone or a simple cloth item. Sometimes the company would compensate me without a fuss and other times you might have to fight for it. But you could lose thousands of your hard earned money if you don’t fight.

Keep evidence of all communications and purchases, and politely complain. If that fails, look for an ombudsman, association or complaints body that can help you.

5. Control your impulses

You don’t need it. You don’t want it. But, you will still buy it. Remember, most of the times, no one is going to tell you that you can’t have it. So you are on your own to make the right choice and become rich.

Impulse buying is not good for anyone and can do real damage to your financial health. Disciplined spending is a must, otherwise you will be sensible with your money for four weeks only to blow it all and more in a storm of spontaneity, whilst making up an original excuse each time.

Try buying nothing but essentials for six weeks. Write down what essentials are beforehand so you don’t trick yourself. If you can’t do it, you need to research creative ways to enforce discipline on yourself and build new habits. Also, make sure you only buy items that you would use not buy it just because it is good. You can use that money in investing in some good stock instead and pave way for a wealthier life when you reap the returns on that investment.

6. Use Cash – avoid credit card

No matter what the credit card people tell you, most of the rich people don’t use their credit cards, and many of them don’t even have it.

Problem is You will spend more if you use credit cards. When you pay cash, you can “feel” the money leaving you. This is not true with credit cards. Flipping a credit card up on a counter registers nothing emotionally, and you don’t realise how much have you spent. A study of credit card use at McDonald’s found that people spent 47% more when using credit instead of cash. This is money you could have saved!

If you have to use plastic, like for booking air tickets or paying your taxes online, use a debit card instead. Other than that, use cash.

You do not build wealth with credit cards. Use common sense. When you play with a multi-billion dollar industry and you think you’re going to win at their game, you are naive. You cannot beat the credit card companies. So better way to outsmart them is, don’t use them.

7. Understand your temperament

Investing is another area where you really need to understand yourself. If you can’t limit checking your investments to once a week at most then you have the wrong temperament and are liable to sell when your investments and the market falls (i.e. when they’re cheaper and better investments) and to buy when they’ve risen (when they’ve become more expensive and riskier). If you can’t change, consider investing regularly in Exchange Traded Funds or in mutual funds through Systematic Investment Plans (SIP) instead, where you won’t be so tempted to keep checking prices, and can feel safe knowing you’ll do better than most of other investors!

8. Manage your time

There’s absolutely no substitute for hard work, and no legitimate get-rich-quick scheme that’ll save you from graft. That’s the most important point in this whole article. Don’t spend 15 hours a week attending to your investments if you’re barely outperforming simple index funds. Don’t spend years building a corporate website if you can afford a professional to do it quickly.

Also, focus your time. How good would the person do who frequently comes up with brilliant ideas and then tries to do all of them at once, resulting in nothing being completed.

9. Time matters

When it comes to building wealth, time is crucial. No matter how you choose to invest to create wealth, one thing is sure, the earlier you start the better off you will be. Therefore, start saving and then investing early. When you start early, your investment and returns start compounding year-by-year making your money work harder for you plus time will also decrease your risks.

Compounding is often called magic, but it’s real and essential if you want to be wealthy.

10. Buy your own home

There’s been a backlash against buying, because more of us think we’ve gone property crazy. I’m sure some people have, which is why they’ve been buying when they can’t afford to. However, if you can afford to (even if interest rates were to rise a lot), buying your own house makes a lot of financial sense. Indeed, it almost doesn’t matter when you buy: over the long term, it’ll almost certainly prove cheaper than if you’d stuck to renting, saving you many, many thousands of rupees over the rest of your life whilst increasing your wealth and financial security. Also, having your own home is every Indian’s Biggest Dream.

11. Only borrow to invest in yourself and property

The more you borrow, the more debt interest you will have to pay and hence the less amount you’ll have in your hands to spend on yourself. Hence, if you like buying stuff, it makes no sense whatsoever to borrow to do it. Get yourself some patience and save up instead, as that money would multiply in the long run if you invest it prudently.

Borrowing to invest in yourself and property, rather than to buy stuff, is different. Borrowing to buy a home makes sense, and extending your home will usually increase its worth beyond the debt and interest you’ve paid. Borrowing to buy a better car when that’ll greatly improve your job prospects also makes sense, as does borrowing when it’ll finance training or education to improve your earning potential as the returns would very well pay-off the debt and build a more comfortable life.

But many people fail to understand this logic and spend their lives Earning Money to pay-off the debt to the banks and are trapped in the debt cycle. Impulse buys and spending beyond your income can be tempting, but if you want to build wealth and live a happy life, avoid being the victim of the debt trap.

Becoming rich requires that you give to others, not borrow from them.

This article has been taken from lovemoney.com and edited in Indian context.

11 Smart things to learn from Wealthy People and become one yourself

    TAGS
Arihant Team
The Arihant Team believes everyone deserves access to sophisticated financial advice. From day one, our mission has been to help make investing easier and accessible to every Indian. Our team of experts are curating informative and research-based article on this blog, to help make investing and managing your money easier for you!

If you would like us to discuss a specific topic on our blog, please write to us at research@arihantcapital.com.
Arihant Team on FacebookArihant Team on InstagramArihant Team on LinkedinArihant Team on TwitterArihant Team on Youtube

Leave a Reply

Your email address will not be published. Required fields are marked *

*
*
Website