Thinking Like the Rich

There are some things that the rich do and the way they think that makes them different from you and me. These habits contribute to their ability to build and maintain long-lasting wealth and financial independence across several generations.

The first lesson is that they tend to live below their means in terms of their lifestyle regardless of their income. Warren Buffet refuses to spend more than about $15,000 on a car. His logic is that any more money spent on a car, which is just basic transportation to him, would cost him multiples of money more than that in the investment returns he can earn on that extra money.

He also bought and still lives in a modest house in Omaha, Nebraska, that he purchased in 1958 for $31,500. Instead of spending large sums of money on mortgage payments, Canadians should look at using the extra money to build their savings and investment assets.

The point is to not overspend on your lifestyle. Facebook founder Mark Zuckerberg has followed this advice and drives a modest $30,000 Acura TSX. They have no need or interest in trying to impress others with the type of car they drive.

Another thing is not to travel with large amounts of cash. The temptation is to overspend. According to Bankrate.com, 86% of people who spend cash on luxuries like expensive cars and jewelry and electronics are non-millionaires trying to act the part by purchasing luxury brands. Instead follow the example of oil mogul T. Boone Pickens who shops with a grocery list and only carries enough cash to cover his intended purchases.

The next lesson is to avoid paying the full price for consumer goods. Hilary Swank, with an estimated net worth of $40 million, is often seen using coupons at the grocery store. Michelle Obama often opts to shop at Target or H&M rather than high-end department stores. The lesson here is to adopt a frugal mindset as a way to build wealth over time.

Finally, all self-made millionaires are people of action! They don’t sit around feeling sorry for themselves or waiting for something good to happen to them. This is different from those reported 15% of Canadians whose financial planning strategy for retirement is to win the lottery!

The wealthy are people of action, who take appropriate risks, are constantly looking to improve themselves and are dedicated to acquiring and using knowledge as the best way to gain a competitive advantage in life’s financial endeavours.

Truly rich people are those who take their extra income and turn it into wealth by investing wisely, saving and living well below their financial means. Other people who take their income and use it to support an unsustainable lifestyle (living pay-cheque to pay-cheque) are those that often end up mired debt and unable to retire on their own terms. When it comes to money and finances it all boils down to choices and values. Which path are you taking?

Call us today to discuss your approach and how we may be of assistance in getting you where you want to go faster and more effectively than might otherwise be the case.

Do you have questions about money management? Contact our office today !

Copyright © 2015 AdvisorNet Communications Inc., under license from W.F.I. All rights reserved. This article is provided for informational purposes only and is not intended to provide specific financial advice. It is strongly recommended that the reader seek qualified professional advice before making any financial decisions based on anything discussed in this article. This article is not to be copied or republished in any format for any reason without the written permission of AdvisorNet Communications. The publisher does not guarantee the accuracy of the information and is not liable in any way for any error or omission.

What our clients are saying...

  • I appreciated feeling valued as a client. It was a pleasure to have uninterrupted meetings. The reports were very detailed and tailored to me and all the explanations were very clear. It was refreshing not to feel pressured into anything as I have felt in the past. My expectations are to have regular updates/check-ins to see how the market is doing and to discuss any strategies, opportunities that may be relevant to me. My experience with Anthony has been great. I would be happy to recommend him.

  • When working with a financial planner, my expectation is to work with someone who is responsive to changes and who can devise a path forward as we age for the benefit of ourselves and our children. I valued the depth of detail and explanation along with the disclosure of all the variables at play. I would certainly recommend Anthony to my family and friends!

  • I was looking for a financial planner who could provide clarity and show me the best possible way to structure and plan for my retirement. Anthony’s expertise was clearly evident. He is professional, punctual, and answered all my questions and concerns. I would definitely recommend Anthony to my family and friends.

  • We expect a Financial planner to be thorough, detailed and have a strong understanding of their clients' needs. It was a pleasure working with Anthony and his team. He delivered a tremendous package and reviewed his findings in great detail. Anthony's attention to detail, solutions, recommendations and in-depth reports provides a great deal of confidence in his recommendations. We would absolutely refer our family, friends and associates to Anthony.

  • I expect my financial planner to review and discuss my financial goals along with how my goals can be achieved. I valued Anthony reviewing my investments and the projections of what they will equate to when I reach my eventual retirement. Anthony has certainly met my expectations and I would be happy to refer my family and friends.

  • My expectation was to be provided with the best possible advice specific to my situation (as it evolves) and to be provided with objective, evidence-based solutions which will provide me with the maximum financial benefit (and peace of mind). I valued the very thorough process of gathering all pertinent information regarding my estate, pension, income and expenses in order to produce a very detailed and fulsome projection of my current and future financial situation. I really appreciate the time Anthony has taken to answer all of my questions and provide sound advice based on my goals and concerns. I am really looking forward to continuing my investment and financial planning journey with Anthony. I would certainly recommend Anthony to my family and friends!