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of the rich

Most of the things we do everyday are just habits. First we make them
then they make us. Habits are very powerful because they almost
determine 90% of our daily activities and those activities determine the
result and outcome in our lives. All of us have money habits. For example,
saving money is a habit just as money spending habits. Surprisingly our
money habits will eventually determine whether we are going to end up
poor or rich. I know it a profound statement,but that is just the way it is.
The sad fact is that we do not pay attention to our habits.
Let us look at the money habits of the rich. Rich people have different
money habits that are completely a contrast to that of poor people. There
are few exceptional habits; usually the rich practice them as their way of
life. The Rich has seven powerful financial habits. These habits not only
make them acquire wealth,but also help them manage and keep their

The first habit is the practice of 'Paying yourself first'

In the best-selling book 'the richest man of Babylon' author George

Clawson explains the first princi ple to wealth as an advice to Arkad from
the money lender is “A part of all you earn,must be yours to keep “In
other words the formula is- Pay Yourself First. This is better known as the
Babylonian law of financial success.
One rule is this; a part of all you earn is yours to keep! More specifically,
what you earn on Monday morning is yours to keep,so it should go
directly into a special account that you do not have easy access to,not
even an ATM card account. This money should go straight to your
Financial Freedom Account (FFA).

Some people have fixed income as salaried people and some will have
variable income like business people. Whatever may be the income,a
part of your earning is put aside every month to make a fortune matured
enough to make an investment in passive income opportunities.
Now pause for a moment and ask this question to yourself.

How often do you pay yourself?

Less than 5 people in every 100 pay themselves first. And,if you were to
ask the other 95 why they don't,they would probably tell you that by the
time they pay everyone else,there is nothing left for them! What a typical
story of the poor. “There was nothing left for me. There is scarcity”. This
will be the biggest lie you can tell it yourself. On the other side,the rich
people have a habit of taking care of themselves first. They know that
they are the leading person in their movie. The poor people play the role
of an extra in their own movie. That is why they get nothing at the end. In
order to become rich you must pay yourself first. Write a check to
yourself. Pay your taxes second,your lifestyle budget third and your bills

The Second habit is saving and investing.

Why do some people earn 10 times more money in their lifetime than the
rest of us? Do they work 10 times harder? Are they ten times smarter? Of
course not.

Wealthy people love to save money by spending it wisely. And they invest
10% of what they earn in to their Financial Freedom Account. The
importance of this account is that,this will help you to later invest your
money on passive income streaming businesses like rental properties,
mutual funds or stocks.

It is not about how much you make,it is how much you keep that matters.
Many people say 'I don't have enough money to save on the first place.'
Well then the question is 'How much is enough?. Saving is not about the
money. It is about the habit of saving money. Even if you can save one
rupee,it is a saving habit. If you have debts,then borrow an extra rupee to
save. Even if it is little start saving today. May be with a piggy bank. Take a
baby step. If you think when you have plenty of money,you can manage it.
You are wrong. It is when you begin to manage what you have now; you
will have plenty of it. Those people,who get to manage plenty of money
today,were good at managing small amounts of money earlier. You can
ask any wealthy person and they will agree on this.

The wealthy people see every penny and money as a seed,capable of

becoming a money tree. They are successful in every penny they invest,
because they know the energy money has for expansion and
multi plication. Money attracts more money. They keep a part of money
for breeding purposes. They don't eat the seeds kept for sawing purpose.
Poor people on the other hand use them for immediate gratification. No
wonder when the rich reap the rewards the poor will be just wondering
what's going on.
All rich people look at money differently than the average person would.
The rich person treats money as an investment tool and not as something
to merely save and spend. They invest their money prudently and wisely
with the position of growing wealth as their primary goal.

Rich and poor have different investment models. For most people their
investment model is you earn 100 percent and your expenses and
liabilities are 100 percent and your saving and assets are 0 percent. It is a
paycheck to pay check adjustment,which means this month's paycheck
clears last month's bills. I know that many people are caught up in this
vicious circle. For some people there is no investment model because,
money is never enough to think about investments. But Wealthy people
approach their investments in a different manner. They take the money
they earn and invest a large portion of it in income producing assets such
as real estate,small businesses,stocks,and bonds,gold and so on. If you
want to become wealthy,follow their lead.

But there is a Parkinson's Law,which says “expenses will always rise in

direct proportion to income”. The more you earn the more you likely to
spend. How do you handle this? Now you need the third habit

The Third habit is Practicing FRUGALITY or

becoming frugal
Being frugal means being very wise with your money. In order to save
money first of all you must learn the art of spending. Several millionaires
have adapted frugality as their major habit and the very reason they
became some of the top most richest people in the world is also because
of this habit.
For example Ikea founder Ingvar Kamprad drives a 15-year-old Volvo,
flies in economy class,avoids expensive suits and eat simply at lower-tier
restaurants. The world's richest man(2007) and investor Warren Buffet
lives in the same house he bought for just US$31,000 nearly 50 years ago
instead of building a grandiose mansion with sprawling grounds. IT
Billionaires like Azim Premji and Narayana Murthy is known for the
frugal life style habits.

Will Rogers an American humorist and actor said once” Too many
people spend money they haven't earned,to buy things they don't want,to
impress people they don't like” Trust me people do these.

Spending too much can wreck havoc with your financial goals. It keeps
you in debt,prevents you from saving as much as could,and turn your
focus to more consumption, rather than to wealth creation and
accumulation. It will be surprising to check on everything you bought in a
year and seldom used and the price you paid for all that actually equals to
your credit card debts or even more.

This is how you develop the frugal habit. First prioritize your expenses,
follow the First thing first policy to spending. That which gratifies the most
should be bought first. That which gratifies least,try not to even buy it if
you can.
There is an Old Russian saying 'spending is quick and earning is long'.
Therefore be very prudent and wise when it comes to spending.

Stop paying by credit card and start paying in cash for virtually
everything. When you buy in cash you tend to think what you are buying
and why you are buying. Today's plastic currency has no intrinsic value
of money. Remember this, whatever you buy today with tomorrow's
income will incur interest; it costs you more. Using credit card is
borrowing and using debit card is still spending.

Stop compulsive borrowing and avoid the vicious circles of debts. Lots of
individuals who have debts are having the tendency to try harder to be in
more 'comfortable debts”. Debts arise from the habit of overspending on
too many desires and having no self-control. Beware of small expenses; a
small leak can sink a shi p. If you can master the spending game you can
get out of debts very easily.

The best thing you can do if you find yourself in a hole is to stop digging
further. If you have debts,clear the small ones first because it's easy and it
will give you a sense of achievement. When you are in debts,go on a
money diet, which means you will run your expenses with minimum
amount of money and you will save enough to pay back. As you commit
enough to being debt free and saving more,you will encounter an almost
miraculous force working in your life. You can measure your success in
terms of debts paid than goods purchased. If you want to get out of debt
stop borrowing money from institutions that charge you big interests.
And remember one thing 'Forgetting a debt does not pay it'.

Being frugal also means having a financial plan. Have a retirement

program. Put something aside for emergencies,your contingency fund.
Rich people have a habit of keeping money in a safety deposit box with
cash for emergencies.

If you want to be rich,focus on making,keeping and investing your

money. It is about being FRUGAL. If you want to be poor focus on
spending your money; the opposite of frugal is wastefulness.

Fourth habit is looking after your business and not

minding other people's business.
Your business or the job you are holding is your number one priority in
the financial matters. Your business or the job you are holding is like a
goose that lays the golden egg everyday. Just like in the ESOPs fable you
need to look after the duck,you need to feed the duck to lay the golden
egg; you must look after your career or business on a day-to-day basis.
Protect your assets. Feed your business. Pay attention. And don't kill the

Taking care of your business also means having a vision and making
progress everyday.

Vision is having a strong belief in the unseen side of your business.

Having a vision is a the spiritual processes of creation. Rich people have a
habit of dreaming big. They get inspired by their goals and vision
everyday and they develop a laser focus attention to achieve their
projected outcome.

Financially successful people constantly upgrade their standards. People

with high standards achieve more. Always make room for improvements.
You begin with an end in mind because you can't aim without a target.
Have your eye on the pie; the rest will naturally follow in acquiring it.
Another princi ple attached to it is to never give up therefore practice the
habit of persistence.

Also be Disci plined and organized. Wealthy people organize time,energy,

contacts and finances to attain their goals. They have a proper financial
plan. Wealthy individuals follow the advice of financial experts. Know
your priorities; prioritize your daily activities, just like the way you
prioritize your goals.

The Fifth habit is about 'Taking educated risk, or

calculative risks'.
Financially rich people and especially self-made millionaires have the
tolerance to take some managed risk. When they see opportunities that
have an upside potential that far outweighs the potential loss,they jump
on those opportunities. However,they learned to become a millionaire by
limiting their risk in order to reduce the chance potential losses and
accelerate their wealth creation.

Knowledgeable people,who study situations carefully,have confidence in

their own abilities and have a very healthy self-image. They discuss,share
information,research and study markets,think deeply about the subject of
investment and they plunge in with eyes open. Not eyes closed. They
take educated or calculated risks. It is entirely up to you what level of risk
you feel happy with. I can give you few ti ps for risk management. It's
commonsense. Commonsense is having awareness to what you already
know. There are few common sense ti ps to risk management.

Gather as much as intelligent reliable information possible before you

make a decision.
Don't put all your eggs in one basket.
Don't swallow more than you can chew.
If it waddles like a duck and quacks like a duck,chances are it is a duck.
If you don't trust someone don’t do business with him or her.
If you don't trust your boss don't work for him or her.
If you don't trust your product or service don't sell them.
If you don't know the business don't do it.
If some one offers you a quick get rich scheme,there is a coning side it.
Remember common sense is bigger than your Harvard MBA degree.
Trust your guts.

Believe in your intuition and what conscience is trying to tell you every
time. Listen to your inner voice. Your inner voice is wiser than your
rational self. Pay attention to every detail. Plan the worst-case scenario.
Have a Plan B. The American CIA has a princi ple 'Hope for the best and
prepare for the worst'. That is being optimistic and practical at the same

Sixth habit is tithing.

Tithing means giving away one tenth of your income for a cause or

Money can be earned,grown,guarded,fought over,used well,used badly,

won,lost,buried,invested,given away,bought back,exchanged and divided
up. But the nicest thing to do with it is surely to share it. When I say share,I
don't encourage you to give it to the lazy or less focused liberty takers. I
mean it to the unfortunate,the weak and the deserving ones,always for a
good cause.

Giving has it's own rewards. Giving and receiving is the two sides of the
same coin. It is sowing and reaping and that is good karma. TITHING
follows the princi ple that THE MORE YOU GIVE THE MORE YOU
RECEIVE. You may wonder now,How does this happen?

Most of us believe that the more we give the more we lose or deducted
from our wealth quotient. But that's not true. Let me explain this. Giving
actually expands money. When you give money from an attitude of
gratitude,it thrusts you from the material state into the ethereal or spiritual
dimension. Many people in poverty consciousness think that money
shrinks when you give it away. Their math's is that 100 minus 10 is 90.A
rich person knows that giving money actually expands,10 times in to 100
that is 1000.This is the spiritual math and the spiritual dimension to
wealth. Sharing money is multi plied not money subtracted.
Money like harvest is created to multi ply. As Junior Murchison once puts
it” Money is like manure. If you spread it around it does a lot of good. But
if you pile it up in one place it stinks like hell” You can have everything
you want if you help others get what they want. Practice the power of

Now many people will say how I can give away when I don't have enough
money for myself. We believe that money is a scarce commodity,which is
not true. There are trillions and trillions of cash printed everyday joining
the pool of abundance. Think of this one. There are 600 billion people in
this planet and there are so many people lonely out here feeling left alone
and friendless even if there are so many people around us.

Poverty is a symptom of what is going around in our mind. Giving away

small portion of money will eliminate your money worries and also
communicates a message to your subconscious mind that there is enough.
You can also add value by time tithing, that is volunteering your time for a
charitable cause or for community help. There is an Arab saying” If you
have much,give off your wealth,if you have little,give off your heart’

Seventh habit is the habit of investing on oneself.

Millionaires make their biggest investment on oneself. A strong
characteristic of the ultra rich is the fact that they spend time and money
educating themselves. They have a voracious appetite to learning and
curiousness to know more about adding value to their products and
services. They invest their time and money attending business seminars
and personal growth workshops conducted by experts. They read
financial magazines that give rich information. You go to a wealthy
person's house you won't be surprised to find a library.

One of the biggest challenges to big success is the small success of people
that put them on a complacent stage. When you are open to learning new
information in this rapidly changing economy you get to learn the fact that
there is some one doing it better than you. Learning puts you on your toes.
When you are complacent about your business,you tend to relax and
that's when your competitors will overtake you. When you are
complacent about your health,you tend to neglect it and t hat's when
illnesses will attack you. Therefore,no matter how successful or wealthy
you might think you are,always ask yourself how can be the best.

Another way of investing on your growth is the habit of learning from

other people through building your networks. You can network with
other individuals in high circles of influence. Rich people habitually
interact with other rich and successful people. Their intention of joining
social clubs is not to just make merry but to build solid contacts that will
build them referrals to boost their income.
Another great way of investing on oneself is spending time with yourself.
Our body needs food and exercise,the mind needs mental feeding and
mental exercise and the spirit needs the joy of good karma or spiritual
exercises. If you can satisfy your body,mind and soul,you have done your
part to be happy in life. But most often we don't pay attention to our
mind. What is usually done is feeding the mind with mindless television.
What is strongly recommended is a habit of an hour of power for your
mind. You can do this by reading a good book,an hour of visualization or
meditation,yoga,goal setting exercise,or listening to a motivational audio
from Positive Revolution.

Feed your mind,with inputs that will empower you. An hour of power can
give you stimulations for success; inspirations to take action,and focus on
completing things you have been procrastinating for a while. Bottom line
of this daily habit is to stay motivated and inspired.

These are the major 7 habits of the rich. There can be more habits but
these 7 habits are the strong foundation for our financial success. As you
develop these 7 basic financial habits you will surely build a momentum
with more richer habits.

Remember most of the results we have in our life is an outcome of several

actions and the absence of actions we take. We are all habituated to do or
not to do something. Now interestingly both are habits. Doing something
about what you learn is a wonderful habit. Now you have learned
something, go on and apply them in your life. That is your eighth
successful habit ie applying knowledge and information in life.
This selection of article is from author's best selling audio book titled Money Magnetism. You can
download the full audio from

Paul Robinson is the best selling author of several hit motivational audio books and an
internationally sought after motivational teacher who conducts seminars and workshops for
personal and business growth.
You can write to him at or visit him at