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In my Five-Year Rich Habits Study I made eight profound discoveries. Over the past ten years I’ve written about many of these proprietary discoveries in my Rich Habits books/articles and also did hundreds of media interviews sharing these eight discoveries.
These proprietary discoveries have made their way to Main Street USA – all of these proprietary discoveries have been, and continue to be, reported by various media outlets and media contributors around the world, which makes me happy. My mother always used to say, “Imitation is the sincerest form of flattery” and I agree wholeheartedly. So, thank you contributors.
Eight proprietary discoveries about how the rich become rich, from my Rich Habits study:
- Rich Habits vs. Poor Habits – The rich and the poor have different daily habits. The difference between the habits of the rich and poor are vastly different. There is a gap, the size of the Grand Canyon in the habits of the rich and the poor. In our book, Rich Habits Poor Habits, Michael Yardney (Australia’s Top Wealth Expert) and I share, in great detail, these Rich Habits and Poor Habits.
- Multiple Streams of Income – Self-Made millionaires had multiple sources of income that were responsible for creating the income that allowed them to accumulate their wealth:
- 84% had three streams of income
- 39% had four streams of income
- 27% had five or more streams of income
- Four Paths To Wealth – I discovered four paths to wealth that enabled ordinary individuals to become self-made millionaires:
- #1 Saver-Investor Path – Ordinary individuals with middle-class wages, who saved and prudently invested 20% or more of their wages. This path required some level of frugality. These self-made millionaires managed their standard of living, through frugal spending, that enabled them to live off of 80% or less of their wages. This path took about thirty-two years for the self-made millionaires to accumulate an average of $3,260,000 in wealth.
- #2 Big Company Climbers – These self-made millionaires devoted their lives to climbing the company ladder until they reached the C-Suite (CEOs & Senior Executives). This path took about twenty years for the self-made millionaires to accumulate an average of $3,375,000 in wealth.
- #3 Virtuosos – These self-made millionaires invested in themselves in order to become Virtuosos within their industry. This investment often required advanced degrees for the knowledge-based virtuosos or many years of practice, for the skill-based virtuosos. This path took an average of twenty-one years to accumulate an average of $3,678,000 in wealth.
- #4 Dreamer-Entrepreneurs – This was the hardest path, due to all of the sacrifices, risks and stress that Dreamer-Entrepreneurs had to deal with. While this path was by far the hardest path, it was also the shortest and most lucrative path. This path took an average of just twelve years to accumulate an average of $7,450,000 in wealth.
- Dream-Setting – I learned from my Rich Habits Study that all self-made millionaires pursued some dream, which crystal-clear clarity. These self-made’s knew exactly what their destination was. They used goals as their transportation system on their journey to their destination. Multiple goals were required to be achieved for each one of their dreams. Like rungs on a ladder, once they realized all of the dreams, once they climbed their dream ladder, they found themselves living the life of their dreams.
- There is Good Debt and There is Bad Debt – Not all debt is bad, and that is the big discovery. Some debt is good debt. Good debt is debt that creates some cash flow-generating asset. That cash flow-generating asset, financed by debt, might by your knowledge or skills that make you a Virtuoso. It might also be a business that you build, that creates significant cash flow. It might be something your create, like a book, music, art, a computer/phone app or some other intangible thing that generates significant cash flow.
- Frugal vs. Cheap Spending – The Saver-Investors in my Rich Habits Study were frugal spenders. This meant that they focused first on the quality of the product or service they desired to purchase and only then shifted their focus to negotiating the lowest price they could for that high-quality product of service.
- Self-Made Millionaires Were Early Risers – Most of the self-made millionaires in my study, other than the saver-investors, were early risers. They typically woke up three or more hours before they actually began their “official” work day. During those three hours they pursued their dreams and goals, exercised, studied, did homework for formal education degrees they were pursuing, wrote books, prepared for speaking engagements, did work related to their board of director activities and many other things that helped them grow and improve in some way.
- Poor Spending Habits – In my Study, I identified four poor spending habits that those who became wealthy avoided like the plague:
- #1 Lifestyle Creep – When your income increases, so too does your spending
- #2 Supersizing Your Life – When your income increases and you decide to purchase a bigger, more expensive home. Or, you decide to buy an expensive automobile. Or, you decide to buy a boat, yacht or RV, or etc.
- Emotional Spending – You see something you absolutely must have and buy it, irrespective of the cost. Think fur coat, luxury automobile, huge flat screen T.V., etc.
- Keeping Up With The Jones’s Spending – Your neighbor installs an in-ground pool or an amazing deck and you get excited so you do the same.
- Impulse Spending – In today’s context, this is the equivalent of seeing some “amazing product” on TikTok and immediately buying it, even though you don’t need it or didn’t previously want it.
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