6 Ways the Rich Think Differently About Money and Life
When you think about rich people, ultra-wealthy business tycoons like Bezos, Musk, and Buffet probably come to mind. But you don’t have to be a multi-billionaire or even a multi-millionaire to be wealthy. “Average” people all around us are wealthy—you may just not realize it because they don’t live flashy lifestyles.
To understand what I mean by rich people, we’ll start with a quick definition. I define rich people as those who generate enough income to cover their expenses and make progress toward their goals. Additionally, wealthy people have enough resources to comfortably cover most emergencies or unexpected expenses.
Above all, rich people cultivate healthy mindsets about their finances. The ways in which the rich think differently about money help them set and meet goals, spend their money wisely, and achieve freedom. Below are six ways the rich think differently about money and life, which can help you reframe your own perspective about money and work toward building a life you love.
1. Money isn’t about status; it’s about financial freedom
Most rich people aren’t easily identifiable at first glance. That’s because wealthy people understand the value of money and tend to be averse to throwing it away on flashy status symbols. For instance, wealthy people understand that much of the value of a brand new car evaporates the second you drive it off the lot. To someone who’s grounded in building true wealth, this makes a used car a much smarter buy.
Fancy toys aren’t worth having when you have to go into debt to buy them. The goal of rich people isn’t to keep up with the Joneses, but to work towards financial freedom. Being able to weather dips in the economy, support loved ones going through difficult times, and spend time with family are often the top priorities of the wealthy. They know that money is simply a means to achieve their goals, rather than the goal itself.
2. Living modestly facilitates wealth-building
In Rich Habits: The Daily Success Habits of Wealthy Individuals, author Thomas Corley interviewed 233 people with an annual income of $160,000 or more and $3.2 million or more in net assets. Of these 233 wealthy individuals, 83% reported living in modest homes, driving used cars, and avoiding spontaneous purchases as a rule.
The rich know how to delay gratification because they know that every dollar spent is one less dollar invested. And they pay attention to lifestyle creep, which is a term that describes how discretionary spending increases as income increases if you’re not paying attention.
Moving into a bigger house, buying a nicer car, spending on more expensive clothes, and indulging in flashy entertainment can be tempting when you find yourself with a bigger bank balance. But it’s decisions like these that can prevent you from building wealth.
Rich people have value defining systems and rules laid out that help them say yes or no to these temptations as they arise. They know their wealth grows when they increase their income while keeping their expenses under control. Directing those funds towards savings and investments with controlled increase in lifestyle is what helps the non-Bezoses of the world become rich over time.
3. Multiple streams of income
In order to generate enough revenue to cover day-to-day expenses, the rich know that multiple streams of income are the gold standard. If you’re one of the majority of people who find themselves trading time for money at a job you don’t feel fulfilled by, start looking for ways to diversify your income.
Rich people often have multiple income streams that include any combination of stock dividends, rental property income, revenue from a side business, and other income-producing assets. The beauty of building multiple streams of income is that if one stream of income suffers or runs dry, you have several others to rely on.
For example, if your only source of income is a W-2 job and the company you work for has to make layoffs, this could mean financial devastation—at least for a time. The rich protect themselves from that possibility by diversifying their income streams.
4. The rich always keep learning
Rich people know that knowledge is power. With an ever-changing political, regulatory, and economic landscape, they’re quick to educate themselves when conditions shift.
Digital currencies are a great example. Since Bitcoin came on the investment scene in 2009, the global financial system continues to make adjustments and so do investors. Wealthy people know that to adapt to a new variable, you have to understand how it works.
Aside from educating themselves on factors that impact the markets and their financial knowledge, wealthy people also seek continued education to expand their opportunities. From learning how to build a brand to monetizing a blog, selling digital products, or buying rental properties, there are numerous ways to build new streams of income.
To do that successfully, rich people know that they have to do their homework before they start investing money into a new endeavor.
5. Health is a top priority
Wealthy people understand the correlation between health and wealth and therefore prioritize healthy living. Consistent exercise and a healthy diet have benefits far beyond longevity (although increased healthy longevity is certainly a plus). Taking care of your body allows for better focus, creativity, increased energy, and decreased stress levels, among other things.
You may see rich people in the media going to extremes to “biohack” their way to optimal health and assume it’s too expensive or inaccessible for you to do the same. But don’t fall into that trap. There are so many ways to improve your quality of life and productivity with small, simple changes. Walking, yoga, and clean eating are all things that can make a big impact with minimal added expense.
6. Rich people surround themselves with the right people
You may have heard the saying, “you’re the average of the five people you spend the most time with.” Whether consciously or unconsciously, you’re impacted by the attitudes, values, and world views of the people you interact and work with. Rich people take this concept to heart.
Wealthy people are very intentional about the friends they keep, the colleagues they work with, and the service providers they hire. Often when reading interviews of successful people, you’ll hear them reference their coaches and mentors. Even wealthy individuals need objective advisors to help them see what changes they can make to move to the next level in their lives and businesses.
By surrounding yourself with people you want to be like, you’ll naturally start to incorporate the same habits and actions into your life. So seek out mentors and friends who are a few steps ahead of where you’d like to be. Their positive influence will help you make progress toward your goals.
Develop a Wealthy Mindset With Financial Fitness Coaching
At Financial Fitness Coaching I meet my clients exactly where they’re at and help them identify the necessary steps to take in order to reach their financial goals. Small business owners are often strong, independent people. While these traits are important and admirable, they can also be very isolating if they prevent you from asking for help.
As a financial coach, it is my passion to guide and support you in getting to the next level in your business and finances. To see how we can help you and your business, email me at kristen@financialfitnesscoaching.com or simply schedule a free 20-minute Discovery Call on my calendar.