What makes some people rich while others are poor? Is it being born into wealth? Business smarts? Knowing the right people? Luck?
While all of these things can play a role, when financial planner Tom Corley began studying hundreds of his wealthiest clients, he discovered that certain “rich habits” are the crucial factor distinguishing financially successful individuals from others. Corley identified a set of core habits that separate individuals who earn at least $160,000 a year and have liquid assets of $3.2 million or more from those who earn $35,000 or less and have assets of no more than $5,000.
Practicing these habits won’t automatically make you a millionaire, but it will give you a skill set that can set you on a path to potentially improving your financial status. Here’s a look at three of the biggest self-improvement secrets wealthy people keep:
Set Smart Goals
One core habit of financially successful people is that they take control of their destiny by pursuing deliberate goals rather than letting chance dictate their fate. Corley found that 70 percent of wealthy people pursue at least one major goal a year, compared to 3 percent of those struggling to pay their bills.
Bestselling author Jack Canfield recommends a goal-setting system summarized by the acronym SMART. SMART goals are specific, measurable, attainable, realistic, and time-bounded. Pursuing a goal with a specific number and deadline attached to it helps focus your thinking and activity more than dreaming about a vague goal.
For instance, if you set a specific retirement savings goal and plan to retire at a certain age, you can estimate how much you need to save annually to reach your goal and adjust your budget accordingly. Merrill Edge provides a retirement savings calculator you can use to estimate how much you’ll need to live comfortably after you retire. You can also apply the SMART goal system to other goals, such as weight loss, exercise, or business goals.
Pursue Continuing Education
In order to achieve your goals, you will need effective strategies. The best way to develop effective strategies is by educating yourself on topics related to your goals.
One easy way to educate yourself is by reading. Corley found that 88 percent of wealthy people read 30 minutes or more a day, including 79 percent who read education-related career material. Audiobooks are a popular way for successful people to read, favored by 63 percent of wealthy individuals.
Another way to continue your education is by taking online courses. Massive open education courses (MOOCs) in business topics are available through providers such as Coursera. Direct selling giant Amway offers an in-depth 80-lesson virtual course in business ownership. The U.S. Small Business Administration provides online resources to teach entrepreneurs how to start a business.
Take Consistent Action
Another characteristic of wealthy individuals is that they take prompt action to implement their plans instead of procrastinating. Corley recommends creating daily to-do lists and getting in the habit of completing at least 70 percent of the items on your list each day.
A useful tool for ensuring that you complete your to-do lists is to schedule them by creating a time budget. Similar to a financial budget, a time budget breaks down how you plan to use the 168 hours available each week and allocate them to specific tasks. Using a time management app can help you automate the process of planning your schedule and staying on track.
Planning goals, pursuing continuing education, and taking consistent action are three key habits that characterize wealthy individuals. Adopting these strategies can help you become more successful both with your finances and in other areas of your life.