The Psychology of the Rich

OK, so I'm not a rich guy but I find it fascinating to study the psychology of the rich. What do they do differently than poor people? You might say, that's easy, they make more money. Not necessarily true. It's not about how much you make, it's all about how you handle it. This blog entry is based on an article from Entrepreneur magazine. It listed the 9 habits of rich people. But get this, none of the 9 factors have to do with money. They are all about attitude, priorities and how the rich spend their time. If one wants to be rich, study rich people. It's just like weight loss. Want to be in good shape? Study those who eat right and exercise. Here are the habits of the rich.

1. They are goal oriented, and they write down their goals.

2. They have a to-do list that prioritizes tasks that need to be done.

3. They watch very little TV, especially staying away from reality shows. They use their time wisely, and often watching TV is a waste of time.

4. They read a lot, especially self-improvement books. They always want to get better and push themselves to succeed.

5. They enjoy audiobooks, often listening to them in the car while commuting.

6. At work, they go above and beyond what is required.

7. They seldom play the lottery. The rich know that the lottery is a foolish way to spend money.

8. They take care of their health by watching their diet and exercising. An unhealthy body can stand in the way of being financially successful.

9. They take care of their teeth, often flossing every day. Dental problems can be painful and expensive.

What do these have in common? They all boil down to properly managing finite resources, such as time, money and health.

Information from this article.

"The Millionaire Next Door"

What does a rich person look like? What is their lifestyle? From what we see on TV on shows like MTV's "Cribs", they drive outrageous luxury cars by Rolls Royce or Lamborghini, wear expensive Italian suits and live in over-the-top multi-million dollar mansions. That is true for some people, but assuming that all wealthy people live that way is incorrect. They often don't drive luxury cars, they don't always buy $25,000 fancy Rolex watches or have closets full of Armani suits. They have basic credit cards like Visa, Master Card, Sears and JC Penney. They are rich because they are frugal. They stay rich because they are smart with money.

These topics are covered in a book called "The Millionaire Next Door: The Surprising Secrets of America's Wealthy" by Thomas Stanley and William Danko.

There is a phrase that says "The rich get richer and the poor get poorer." This happens since the rich know how to put their money to work for them. They spend time studying personal finance and accounting. They read publications like Forbes magazine and The Wall Street Journal. They know to avoid the pitfalls that lead to financial ruin such as accumulating too much debt. They stay away from wasteful spending like rent-to-own stores, playing the lottery and falling for fraudulent investing schemes. Are there exceptions to the rule? Yes, there are many. Often the rich get greedy and take foolish risks in order to multiply their wealth. Look no further than the likes of Bernie Madoff or the crooked bankers behind the 2008 housing crisis.

Those who have inherited money tend to be show-offs more often, buying expensive possessions, when compared with those who have earned their wealth. Earning something makes you enjoy it rather than having it handed to you with no work involved.

You can't judge a book by its cover. Spotting a truly wealthy person is not as easy as you might think.