5 Habits Of The Uber-Rich

Clue: their spending looks nothing like what you see on social media.

18/01/2017 10:13 GMT | Updated 18/01/2017 10:48 GMT
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While we often think of wealth as conspicuous consumption – flashy cars, fancy clothes, fast jets – the truly rich know that making money, and keeping it, has nothing to do with purchases.

In fact, it’s entirely the opposite. Whenever you read about how the rich made their millions, you realise that it’s not just about their investment-savvy or being at the right place at the right time: most of these mega-rich people have a lot in common, including being frugal and driven, even after they’ve made oodles of cash.

From getting into the habit of saving from early on to spending more like a cash-strapped person than a rich one, these five habits and behaviours can help you to take stock of your future finances – and act now to change them.

1. They don’t act rich

You’ve heard it before: live within your means. Be frugal. Save more than you spend.

There’s a reason we’ve been repeating these mantras from one generation to the next: living below your means is a simple way to hang onto your money for longer.

So, no matter how rich you get, keep up the habits you have today: take the bus (or walk!) instead of taking cabs, buy a car used instead of new, and stick to your usual at-home cooking instead of ordering in or splurging on that restaurant meal out.

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2. They’re OK with delaying gratification

Many of us have an emotional relationship with our finances, which means we can convince ourselves that just about anything we want to buy is essential for our wellbeing (and our children’s). Truth is, instant gratification – when we treat ourselves to whatever we want, whenever we want it – isn’t the key to financial prosperity. If anything, it’s a shortcut to debt.

If you make to-do lists and set firm and specific goals about your financial expectations, you’ll be able to measure your progress along the way. You’ll be able to stay focused on what you need to achieve, and you won’t get distracted by shiny new purchases or exciting sales offers.

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3. They don’t rely on salary alone

Rarely do the uber-rich make their money by relying on their wages alone. Aviva research from July 2016 found that almost 70% of over-45 homeowners said their home was worth more than their pensions, savings and investments combined. They also discovered that 46% of over-45 homeowners see their property wealth as key to their retirement income planning.(1)

But you don’t need to buy up real estate outside of the property you live in to help secure your financial future. Lining your pockets with a bit of extra cash is something anyone can do – even without a lump sum to start investing with.

Instead, look for opportunities to supplement your salary. Can you turn your baking skills into a side business? Offer up Spanish tuition to your son’s school friends a couple of afternoons a week? Or how about turning your penchant for fitness into a career?

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4. They pay themselves first

We are all so concerned and stressed about our bills, from covering gas and electricity to paying the rent or mortgage, that we often forget to pay ourselves.

Sounds silly, right? But it makes sense: once you’ve paid your monthly essentials like rent, mortgage and utilities, you could consider making an automatic contribution to your pension plan – think of it as a payment to yourself. You could start by deciding how much you can afford, whether that’s 1% or 5% or 10% of your earnings (just remember to increase this amount if you get a pay rise or add in a one-off bonus). Remember: you won’t miss any money you don’t see or have a chance to spend.

Remember that the value of a pension or investment is not guaranteed. You could get less than what is paid in.

5. They aren’t afraid of hard work

Aviva research from March 2016 found that a third of people interviewed over 50 who are employed in the private sector are now planning to retire later than they’d originally planned, with 15% of those thinking they’ll work longer because they have a lot to offer their employers.

A further 20% of those interviewed who will retire later said that job satisfaction was the reason they were putting off retiring sooner. (2)

So make sure that you love the job you’re in. And if you don’t, see if there’s anything you can do about changing it. If you’re going to be in it for a while, you’ll want to make sure it offers you a bright future.

Planning for your future now is the first step to creating a future that you can really look forward to. Find out how much you’ll need to save for your dream retirement using Aviva’s Shape my Future tool.

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 (1) Six million over-45 homeowners see property as key to their retirement income plans – but is there enough house to go around? Aviva Real Retirement Report, Summer 2016
(2) Retirement plans on hold - a third of workers over 50 to retire later and work 8 years longer than hoped, Aviva Working Lives Report, March 2016