Wealthy people know that there’s a difference between having a lot of money and being truly well off.
Paul Sullivan, author of The Thin Green Line: The Money Secrets of the Super Wealthy, puts it concisely: wealthy people don’t just have money, they know how to protect and grow their wealth as well.
This security requires having a full understanding and appreciation of their finances, not just a knack for lavish spending.
The good news is the rest of us can learn from the money habits of these super wealthy people. Incorporating them into our own lives means we’ll hopefully get there ourselves a little faster.
Here are eight money lessons we can learn from the wealthy.
1. They create wealth
Maybe they started their own business, had an amazing idea or are at the pinnacle of their field.
The lesson here is that these people have given it a go and as a result are able to generate their own income and assets to grow their overall wealth.
2. They take smart risks
Wealthy people understand that there is no reward without risk.
Of course, you could always win the lottery, but you could also get struck by lightning. It’s not something you want to rely on.
So whether it’s borrowing money to grow a business or investing in income generating assets over the long-term, rich people are comfortable with taking on a reasonable level of risk to generate an above average return.
3. … But they do their homework
While the wealthy are happy to take a risk, they do their homework carefully before making a move.
They put in the time and effort to ensure they have every base covered, and they’re not emotional about it. If the deal doesn’t stack up, they’ll just walk away.
4. They’re not afraid of failure
Gerry Harvey once said to me, “you’ve never been in business until you’ve been to the brink, looked over the cliff, learnt the lesson and then stepped back.”
Great advice. We thought he was just being grumpy until it happened to us and realised how insightful he is.
5. They’re frugal
This one always stumps people. Aren’t rich people constantly splurging on designer watches, eating out and first class flights? Nope.
According to research Paul Sullivan completed with financial psychologist Brad Klontz, the richest one per cent eats out 30 per cent less than an average wealthy person, and also saves 30 per cent more for retirement.
Frugal and conservative decisions like these are a way of life for wealthy people and extend into all aspects of their finances.
6. They work hard (really hard)
Self-made people know from experience that one of the surest ways of rising above the rest is working harder than everyone else.
There’s no way around it. In almost any field, if you’re looking for work life balance and reasonable hours then chances are you’re not going to be striking it rich.
So if you’re looking to earn lots of money, get ready to make some sacrifices.
7. … And drive a hard bargain
Most wealthy people are born negotiators who want the very best deal in every situation, and are prepared to haggle to get it.
They don’t get embarrassed about pushing too hard on a purchase and are relentless in getting the best deal on everything they can.
8. Finally, they keep their feet on the ground
We’re big believers that the richest people are those with a great family around them, not just a lot of money in the bank. In our experience the “wannabe’s” are usually the pains in the backside while those who have made it are terrific people.
After all, you can always earn more money, but family, friends and values you just can’t buy.
This article contains general information only. It should not be relied on as finance or tax advice. You should obtain specific, independent professional advice from a registered tax agent or financial adviser in relation to your particular circumstances and issues.