According to the Internal Revenue Service, only 5% of all individuals who file an income tax return make $150,000 or more per year. That works out to approximately 7.5 million individual tax filers. This 5% group is responsible for paying the majority of the personal income tax the IRS receives each year. This is also the group that has adequate retirement savings, six months worth of monthly income savings for emergencies, little to no debt, college costs funded for their children and/or grandchildren, take nice vacations, have significant home equity in their modest to above average homes, good health insurance coverage and adequate life insurance in the event of death. It is this 5% that many in America call the rich.
To most Americans, rich people keep getting richer. That is a factual truth. But put your petty emotions aside for a moment (jealousy/ envy) and ask yourself this question: What is it that these rich families are doing that sets them apart from the rest of America? There is a reason why wealthy families beget wealthy children and a reason why this cycle of wealth continues from one generation to the next. And it's not just about inheritance, although that admittedly does help. Wealthy families live and pass along to their children something that I call Rich Habits. Rich Habits are the daily good habits of wealthy people. These Rich Habits are used to accumulate wealth and are taught to their children at a very young age fostering a pattern of daily living that they in turn pass along to the next generation.
Conversely, the reason 95% of Americans cannot break out of their cycle of failure is that this group of Americans also pass along generational habits to their children. The difference is that these habits are bad habits. Bad habits that perpetuate from one generation to the next thus, breeding into every subsequent generation a cycle of financial failure. Unfortunately, there is no course taught in our schools on How To Be Financially Successful in Life. Why? Because financial success has always been a secret. That is why they refer to it as the secret to financial success. How can we break this cycle of failure for our children?
I have spent five years researching the daily habits of wealthy people and I have uncovered the secret to financial success. The purpose of this article is to share with you some of the discoveries I have made in my research, in the hope that you will pass these secrets along to your children and break the cycle of financial failure that grips nearly 150 million Americans. So lets begin.
What is it that wealthy people do every day that sets them apart from everyone else? Wealthy people have good daily habits. Some of these good daily habits include:
Wealthy People Set Goals
Wealthy people set five types of goals. These goals are in writing, are reviewed frequently and are modified as needed. They are always action-based goals, meaning they are not just wishes. Each goal is a physical or mental activity that the goal-setter seeks to accomplish. The goals that wealthy people set represent a pyramid of goal setting:
1. Five-Year Goals - These are broad-based initiatives to be accomplished within a five year period. Think of five-year goals as the tip of the goal pyramid. This is where you want to be in five years.
2. Next-Year Goals - These are goals you set for next year. This set of goals gets you closer to the top of the pyramid. They represent lesser, broad-based goals or objectives that you need to accomplish in order to reach your five-year goals.
3. Current-Year Goals - These are goals you set at the beginning of the current year. They help move you closer to reaching your goals for next year and, thus, your five-year goals.
4. Monthly Goals -These are specific initiatives backed by action steps required in order to help you reach your annual goals.
5. Daily Goals - These are sometimes referred to as daily "to-do" lists or daily tasks. Daily goals represent the daily achievements wealthy people seek to attain every day in order to accomplish their broader monthly goals. They are daily activity goals. Wealthy people seek to reach 80% or more of their daily goals;
2. Next-Year Goals - These are goals you set for next year. This set of goals gets you closer to the top of the pyramid. They represent lesser, broad-based goals or objectives that you need to accomplish in order to reach your five-year goals.
3. Current-Year Goals - These are goals you set at the beginning of the current year. They help move you closer to reaching your goals for next year and, thus, your five-year goals.
4. Monthly Goals -These are specific initiatives backed by action steps required in order to help you reach your annual goals.
5. Daily Goals - These are sometimes referred to as daily "to-do" lists or daily tasks. Daily goals represent the daily achievements wealthy people seek to attain every day in order to accomplish their broader monthly goals. They are daily activity goals. Wealthy people seek to reach 80% or more of their daily goals;
Example of the Goal Pyramid:
A wealthy small business insurance client provided me with an example of his pyramid-goal system. It looked something like this:
A wealthy small business insurance client provided me with an example of his pyramid-goal system. It looked something like this:
Five-Year Goals: 1. Vacation home in Long Beach Island 2. $100,000 saved in 529 Plans (college savings accounts) for his kids 3. Mercedes SL 500 for his wife.
Next-Year Goals: 1. 200 life insurance cases written for each year by his company. 2. $20,000 saved in 529 Plans for his kids 3. $100,000 in savings set aside each year for his vacation home and SL 500 for his wife.
Current-Year Goals: 1. 150 life insurance cases written for the current year by his company 2. $20,000 saved in 529 Plans for his kids 3. $75,000 in savings set aside for his vacation home and SL 500 for his wife.
Monthly Goal: Writing twelve life insurance policies for the month. In order to accomplish this feat he created the following sub-goals: Secure 12 meetings per week. In order to obtain these 12 meetings he set a goal of reaching out to 250 prospects during each week.
Daily Goals: In order to reach his monthly goal of twelve life insurance cases he needed to reach out to 50 prospects per day, through cold calling, referral requests, networking, mining existing clients for needs for them or for their extended families.
Wealthy People Engage in Daily Career-Related Self-Improvement
Wealthy people understand that knowledge creates opportunities. Being the best they can be in their career requires that they do certain things every day in order for opportunity luck to manifest itself in their lives. What do they do every day to improve their skills? Wealthy people read their industry periodicals every month. This allows them to stay current with trends and new competitive strategies. Wealthy people read industry-specific books and news articles. Wealthy people visit on-line web sites for industry-specific news and to gain real-time insight into changes within their industry. Wealthy people take on projects that will help maintain or improve their skills.
Wealthy People Live Healthy Lives
Wealthy people take care of their health. They engage in daily aerobic exercise. Aerobic exercise increases blood circulation, oxygen to the brain, increases their energy, improves their immune system and helps them manage their weight. Wealthy people moderate their consumption of food. Many count calories. They understand their bodies and try to stay below their caloric threshold every day. The caloric threshold represents the number of calories they can consume in a given day without gaining weight. If they desire to lose a few pounds they intentionally stay below their caloric threshold for a period of time, until the weight comes off. Because wealthy people live healthy lives they have more energy and fewer sick days. This translates into more productivity and more money.
Relationships Are the Currency of the Wealthy
Wealthy people treat their relationships like gold. They understand that their success in life is directly tied to the quality as well as the quantity of their relationships. Wealthy people seek out excuses to reach out to their contacts. Some of the techniques I've identified are the following:
Hello Call - Wealthy people call their contacts at least once every few months just to say hello. These hello calls are not intended to procure anything from their contacts. They are intended to simply grow and foster the relationship. An unintended by-product of these hello calls is the manifestation of opportunities that result from the hello call. These opportunities often result in providing additional products or services to the contact.
Birthday Call - Wealthy people call their contacts on their birthdays. This ensures that they reach out to each contact at least once a year. Birthday calls tell the contact that they are important. It helps personalize the relationship and after a few years the contact will be guilted into reciprocating with their own birthday call. This doubles the minimum contact wealthy people have with their relationships, further depending the roots.
Life Event Call - Wealthy people reach out to their contacts upon life events. Life events are things such as a death in the family, illness, weddings, graduations, news items mentioning a contact or a contacts family member, achievements and so on.
Wealthy People Live Moderate Lifestyles
Contrary to what many believe, wealthy people live moderate lifestyles. They have moderate homes, cars, vacations and personal property. They live well within their means and as a consequence of this they have very little, if any, debt. Warren Buffet lives in the same home he moved in to when he was married. Buffet lives this Rich Habit every day.
Wealthy People Have a "Do It Now" Mindset
The voice of procrastination speaks to everyone, even wealthy people. The difference is that wealthy people have come up with certain strategies that silence that voice. The Do It Now technique is an example of a procrastination-busting process used by wealthy people. When the voice of procrastination begins bellowing, the wealthy person silences this voice by saying over and over again "Do It Now". This technique helps wealthy people nag themselves into getting a daily goal accomplished rather the putting it off.
Wealthy People Engage in Rich Thinking Every Day
Negativity is everywhere. It's unavoidable. You can't pick up a newspaper or turn on your T.V. without being bombarded by negative and distracting messages. But wealthy people overcome this through Rich Thinking. Wealthy people stay upbeat, positive and focused by feeding themselves with positive daily affirmations and reviewing their goals every day. These affirmations are always in the present tense and always the future person they want to become. They are tied to their written goals. For example, if a wealthy person sets a goal of owning a vacation home in five years their daily affirmation will look something like this: "I enjoy thinking about my vacation home in Long Beach Island". This affirmation is linked to their long-term goal of owning a vacation home.
Wealthy People Pay Themselves 10% of Their Gross Income First
Most unsuccessful individuals pay themselves last. When their pay goes into their bank account they write out checks and whatever is left they put into their savings. This is the way they function, month in and month out. The problem is there is usually nothing left after they pay their bills and, thus, they have nothing to show for their hard work. Wealthy people, on the other hand, pay themselves first by setting aside ten percent of their gross income before paying one bill. The strategy is clear. By paying themselves first this ten percent, they are forced to survive on what's left. By default they are forcing themselves to live within a certain lifestyle, to live within their means. Consequently, wealthy people have the ability to adequately fund their retirement, save for college for their children and have a financial safety net in the event something goes wrong, such as a job loss or an illness. They are not living paycheck to paycheck.
Wealthy People Control Their Thoughts and Emotions
Wealthy people moderate their thoughts and emotions. As a result people enjoy associating with them. This association often translates into business dealings. Their even temperament draws more and more people into their personal and business lives. This translates into more business dealings and more wealth. Those who cannot control their thoughts and emotions push people away eventually and this results in a loss of business and income. You owe it to yourself and your children to help break the cycle of failure. Walk in the footsteps of the wealthy and begin living the Rich Habits today. Welcome to your new life.
