25 Secrets Elon Musk and Every Other Rich Person Knows
25 Secrets Elon Musk and Every Other Rich Person Knows
Gabrielle Olya Sun, October 17,
If it seems like the rich know something about money that the rest of us don't, it's probably because they do. There must be some reason the richest 1% of people now hold more than 40% of the world's wealth, according to the Credit Suisse Global Wealth Report. Maybe the rich have certain secrets to accumulating wealth -- but that doesn't mean what they know has to remain a mystery. Learn about strategies that you can use so you can build your own wealth, too.
Spending Must Align With Goals
One of the keys to being rich is having goals, said Michael Kay, president of Financial Life Focus and author of "The Feel Rich Project."
"(The rich) know what they care about," he said. "Maybe it's passing wealth to another generation, maybe it's attaining a particular lifestyle. They are mindful of not wasting resources on things that have no value."
According to Kay, the wealthy tend to spend money only on things they care about. The rest of us can learn from this by setting our own goals and then monitoring our spending to see if it aligns with those goals.
Don’t Waste Money To Impress Others
Most rich people don't spend their time and money trying to impress others, Kay said. "They are not in a race. They know they have made it, so their attention is not on what others think." In fact, many wealthy individuals wouldn't have become rich if they had spent their hard-earned money buying things to keep up with others, he added.
Authors Thomas Stanley and William Danko said much the same thing in their 1996 best-seller, "The Millionaire Next Door: The Surprising Secrets of America's Wealthy," writing that a couple of key secrets of the country's richest people are living below their means and rejecting big-spending lifestyles.
Spending money to appear rich before you actually are rich is a surefire way to sabotage your wealth-building goals. So, forget about the Joneses and focus on what matters: accumulating wealth in the coming years.
Have Plenty of Liquidity
The rich make sure they have sufficient liquidity, or cash, to cover their short-term needs. They maintain an emergency fund so "they don't have to disrupt their life for an unexpected occurrence," Kay said.
The fact that rich people have money set aside for a rainy day isn't solely a function of their wealth. They have cash reserves because they are disciplined enough to save.
Everyone should aim to build an emergency fund with enough cash to cover six to nine months worth of expenses, Kay said. However, you don't have to set that much aside all at once. You just need to be working toward that goal with every paycheck. With that in mind, arrange to have a set amount automatically transferred from your checking account to savings each month.
"Like anything else, it's a goal," Kay said. "It only makes you a failure if you're not working on it."
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