5 Secret Habits of Self-Made Millionaires
5 Secret Habits of Self-Made Millionaires
When I finished my five-year study on the habits of 233 self-made millionaires, I made a breakthrough discovery. Nearly every one of the millionaires attributed their success in life to habits they learned primarily from their parents or some mentor in life. The secret to success is our daily habits. I thought this was a secret that needed to be shared with everyone so I began writing books about these habits. To date, I’ve identified more than 300 of what I call Rich Habits — and here are a few of them.
1. They Create Multiple Streams of Income
Self-made millionaires do not rely on only a single source of income. They develop multiple streams. Three seemed to be the magic number in my study. Sixty-five percent had three or more streams of income that they created over time. Diversifying your sources of income allows you to weather the economic downturns that always occur in life. These downturns are not as severe to the rich as they are to the poor. The poor put “one pole in one pond” and when their single income stream is negatively impacted in some way, they suffer financially. Conversely, the rich have “several poles in several ponds” and are able to draw income from other sources when one source is temporarily impaired. Some of the additional streams might include: real estate rentals (each rental unit = a stream of income), REITs (each one = a stream of income), tenants-in common real estate investments (each one = a stream of income), triple net leases, stock market investments, annuities (each one = a stream of income), seasonal real estate rentals (beach rentals, ski rentals, lakefront rentals), private equity investments, part ownership in side businesses (each one = a stream of income), financing investments, ancillary products or services and royalties (patents, books, oil, timber etc.).
2. They Dream-Set Before They Goal-Set
Dream-Setting is the act of clearly defining a dream. Sixty-four percent of the millionaires in my study were pursuing one single dream. Here’s the two-step process to Dream-Setting: Step One – In 500 words or less, write down what you’d like your ideal life to be 10, 15 or 20 years out. Include specific details of your ideal future life: the income you earn, the house you live in, the boat you own, the car you drive, the money you’ve accumulated, etc. Step Two – Using this script of your ideal future life, make a bullet-point list of each one of those details that represent your ideal life. These would be the income you earn, the house you live in, the boat your own, etc. These details represent your wishes or dreams. Only after you’ve defined your wishes or dreams does the Goal-Setting process begin. Fifty-five percent of the millionaires in my study set goals around their dreams. This Goal-Setting process requires you to build goals around each one of your wishes or dreams. In order to build goals around each wish or dream, you need to ask yourself two questions: Question #1: What would I need to do, what activities would I need to engage in, in order for each wish or dream to come true? Question #2: Am I capable of performing those activities? Do I have the necessary skills and knowledge?
If the answer to Question #2 is yes, then those activities represent your goals. Goals are only goals when they involve physical action and you have the capability to perform the action required. Let’s summarize this process:
1. Paint a picture with 500 words or less of your ideal life.
2. Define each wish or dream that must be realized in order to have that ideal life.
3. Establish specific goals around each one of your wishes or dreams.
4. Take action. Pursue and achieve each of the specific goals that will make each wish or dream come true. You then repeat this process for every other wish or dream. When you realize each one of your wishes or dreams, your ideal future life will then become your actual life.
3. They Avoid Time-Wasters
When most people think of risk, they think of it in terms of some financial investment they make: investing money in a new business; investing money in stocks, mutual funds, bonds etc.; playing the lottery, gambling or lending money to someone. But financial risk is not the greatest risk most take. You can always earn more money. Money can be recouped. But there is another risk almost everyone takes for granted. This is a risk that, when made, can never be recouped. It’s gone forever. What is it? The greatest risk we all take is time. When we invest our time in anything, it’s lost forever. It never gets renewed or returned to us. Yet, because we are all given what seems to be an abundance of time, it has very little value to us. So we spend an enormous amount of our time engaged in wasteful activities such as sitting in front of a TV, on Facebook, watching YouTube videos, sitting at a bar, lying in bed or engaged in some other time-wasting, non-productive activity. And when we waste time, it’s gone. It will never return. We don’t consider how precious time is until we are older and we realize our time is running out. Time needs to be invested wisely in pursuing goals, dreams or some major purpose in life. Any investment we make of our time should pay dividends down the road in the form of happiness events, financial security, creating a legacy or in helping improve the lives of others. When you see time as the greatest risk of all, it forces you to become more aware of exactly how you invest your time. Invest it wisely, because you will never get it back. Sixty-seven percent of the self-made millionaires in my study watched less than one hour of TV each day and 63% spent less than one hour a day on the Internet (recreation-related). This freed up time for them to pursue their dreams, goals, read, learn, exercise, volunteer and network.
4. They Found at Least One Success Mentor in Life
The average net liquid wealth of the 233 rich people in my research was $4.3 million. If you do the math, finding the right mentor in life is like someone depositing $4.3 million into your bank account. Ninety-three percent of the self-made millionaires in my study who had a mentor in life attributed their wealth to their mentors. Sixty-eight percent said that the mentoring they received from others was the critical factor in achieving success. Success Mentors do more than simply influence your life in some positive way. They regularly and actively contribute to your success by teaching you what to do and what not to do. They share with you their mistakes and valuable life lessons that they learned either from their own mentors or from the school of hard knocks. Finding a success mentor in life is one of the least painful ways to become rich. It can put you on the fast track to success.
In my research, I discovered five types of Success Mentors:
1. Parents – Parents are often the only shot any of us have at having a mentor in life. This is why parenting is so important. Parents need to be success mentors to their children. They need to teach their children good daily success habits. If they don’t, it is likely their children will struggle in life.
2. Teachers – Good teachers = good mentors. Teachers can reinforce the mentoring children receive at home from their parents, or step in to provide the success mentoring absent at home.
3. Career Mentors – For those not fortunate enough to have had parents or teachers who provided success mentoring, finding a mentor at work can lead to success in life. Find someone at work who you admire, trust and respect and ask them to be your mentor. This person will be at least two or three levels above you in the pecking order at work.
4. Book Mentors – Books can take the place of actual mentors. Sometimes the best source for mentors are found in books, particularly books about successful people. Fifty-eight percent of the self-made millionaires in my study read biographies of other successful people.
5. The School of Hard Knocks – When you learn success habits through the school of hard knocks, you essentially become your own mentor. You teach yourself what works and what doesn’t work. You learn from your mistakes and failures. This is the hard path to success because those mistakes and failures carry significant costs in both time and money. But this is also the most powerful type of mentoring you can get because the lessons you learn are infused with intense emotion, and thus never forgotten.
5. They Never Quit on a Dream Self-made millionaires are persistent.
They never quit on their dream. They would rather go down with the ship than quit. Twenty-seven percent of the self-made millionaires in my study failed at least once in business. And then they picked themselves up and went on to try again. They persisted. Persistence requires doing certain things every day that move you forward in achieving your goals or life dream. Persistence makes you unstoppable. No obstacle, mistake or momentary failure can stop you from moving forward if you keep at it. These millionaires learned to pivot and change course, growing in the process. Persistence allowed them to learn what didn’t work and continuously experiment until they found what did work. Persistence is the single greatest contributor to manifesting good luck. Those who persist eventually get lucky. Some unintended consequence emerges, something unexpected and unanticipated happens to those who persist. Sometimes, those closest to you will urge you on and encourage you. But more often, those closest to you — those directly impacted by the obstacles, mistakes and failures that are part of the success journey — will try to stop you from persisting. It takes superhuman effort to continue to pursue success when there are so many forces fighting you. That’s what makes successful people so special — and also so rare. If you want to be successful in life, you must persist in the face of unrelenting adversity. Successful people are successful because they never quit on their dream. There are many other Rich Habits, but I think these are some of the most powerful. Habits, I learned from my research, dictate your circumstances in life. They unconsciously program us for success, failure or mediocrity in life. They can determine our social status – rich, poor or middle-class. Habits, I also learned, can be changed. The key to habit change is awareness and tracking. You need to become aware of the habits you currently have and would like to change and then you must track your new habits until they take hold. It takes an average of 66 days to replace an old habit with a new one. When you eliminate old bad habits and adopt new good habits, your life will begin to change for the better. It takes time, but it’s worth the effort.
This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.
This article originally appeared on Credit.com. This article by Tom Corley was distributed by the Personal Finance Syndication Network.