Secrets of the Wealthy: Five Lessons from the Rich

I'm a big believer in learning from people who've actually done what you want to do -- versus from people who talk a good story but are making no progress whatsoever (unfortunately, many "financial advisors" fall into this latter category). That's not to say I don't listen to people who are "not yet there," but I do require some sort of forward progress towards their goal before I seriously consider what they have to say.

When I apply this philosophy, I think of the rich, wealthy people out there and what I can learn from them (especially the ones who have earned their wealth themselves). Lucky for me, I found this article from Money Central that lists five lessons from the rich. Their list:

1. They give away more.

2. They are much more likely to own businesses.

3. They borrow strategically.

4. They don't blow a lot of money on cars.

5. They're almost always homeowners, and many own investment property, too.

My thoughts on these:

1. Many of the rich seem to be regular givers and I've noted how it seems that there is a power in giving. If you want to give but can't afford cash, there are many other ways to give to charities.

2. While owning a business isn't for everyone, there are ways that anyone can earn some extra money.

3. Translation: they don't have nearly as much credit card debt. Smart move.

4. Cars are depreciating assets. These people borrow for homes and businesses -- things that gain in value or spit out cash.

5. As David Bach says, homeowners get rich and renters stay poor.

6. I'm surprised there's not more here on spending less than you earn. It is implied throughout this piece though -- as it should be. Why? Because it's the one path to wealth that anyone can use -- no matter their income level. In fact, it's the first step in becoming a millionaire.

Money Central ends the piece with a nice wrap-up that I just had to include here:

The lessons here aren't revolutionary, but they're well worth learning: Don't be a miser, take strategic risks, live within your means, diversify. You may never make the Forbes 400 list of the wealthiest people, but you can create a richer life.

Yep. These are the same thoughts I noted in the Free Money Finance Guide to Getting Rich.

Want some more posts that show how simple it is? Check these out:

• How to Become a Millionaire (How to Become Rich)

• Getting Rich is Simpler than You Think

• U.S. Millionaire Count Hits Record -- You Could be Next

• How Average Joes Can Retire Rich

Comments

[Nikita]

Regarding point #3, it seems to suggest that there *is* such a thing as good debt, as long as it's leverage for you to come out richer in the end (e.g. mortgages, business loans), rather than a means of supporting a lifestyle you can't afford (credit cards & possibly car loans).

[Anonymous]

Most of the principles of wealth are remarkably simple. You've stated a number of them quite well. Another way of looking at spending less than you earn is, "Don't spend your principle." When you are still working for money, that means that savings is something you should be contributing to, not taking from. Obviously, the point of saving money is to use it for a particular purpose. Money saved for your next car can be spent to buy it, of course. Once you've retired, if you can live off of the income stream that your investments throw off, your principle should outlive you. I want to be there.

[dave]

I have been to some places that teach you the secrets of the rich like bill gates and others ...YES TAX's are the big one and what they do is not illegal, But putting there money in vegas is one good way to do it or offshore tax havens ...bill gates has 117 tax haven off shore accounts ...this can't be touched by any one...
It's smart and the government does it as well, the bush's the friends and the rest of them do it ...

so get in formed get with the program , Don't belive that your government is there to help you ...

you can give 25k to a small country and life tax free ...the rich have been doing this along time, this is were you see there cabins..

[DR. ARTFREDO C. ABELLA , Ph.D. (Management), - Balanga, Bataan, Philippines UB]

My thoughts on the Secrets of the wealthy: Five Lessons from the Rich:
1. THEY GIVE AWAY MORE: Giving is congruent to receiving, what you give it will return back to you. In India they call this as "Karma." Whatever you do to the least of your brother it will go back to you. They always say the more you give the more you receive. Rich persons are philantropist, they always support noteworthy cause and endeavor. St. Francis of Assisi would also tell us: " It is in giving that we receive and it is dying that one awakens to eternal life." Rich people that could be attributed to giving more is no less than the richest man in this earth - Bill Gates.
2.THEY ARE MUCH MORE LIKELY TO OWN A BUSINESS. This is akin to what Paul Getty once said: " Majority of people who really made a difference when it comes to wealth and getting rich are those who own their own business." Being an employee seldom makes a person rich unless you belong to the upper echelon in business empire holding CEO,AVP or VP postions. The reasoning for this is practical, owning a business would provide variable income that means it could be by the millions defending on the initiative and management skills of the individual concerned while being an employee would only afford an individual fixed or salary income, hence the chance of becoming rich is nil.
3. THEY BORROW STRATEGICALLY. Borrowing is not that bad at all for as long as there is a business plan where the borrowed money will go. There are C's which one must remember before borrowing, your capacity to pay, the capital to serve as collateral and the character, your good record in complying with previous debt's commitment. No less than our saviour, Christ once said: " There is only one way to become rich that is - borrow to those who have."
4. THEY DON'T BLOW A LOT OF MONEY ON CARS. Rich people are comfortable with second hand cars rather than displaying lucrative cars which is more satisfying their whims and wants. Rich people are down to earth individuals they know the repercussions of buying extravagant cars at the point of sacrificing capital gains. Rich people would prefer a poor man's car while adding more value and currencies in their bank accounts.
5. THEY'RE ALMOST ALWAYS HOMEOWNERS, AND MANY OWN INVESTMENT PROPERTY, TOO. Investment in properties is one of the surest way to become rich. Remember richness is connotated not only in terms of cash alone but those properties that could be converted to cash. This means even if you only have $ 1,000.00 but your invested property is worth $ 3,000,000.00 you are still a millionaire. Most rich people understand this philosophy that being rich having so much liquid and current assets like cash is risky. However, in times of economic crisis, the preservation and holding of liquid assets most specially cash is favorably recommended.Idle cash must be invested is the yardstick of business success. Investment in terms of property is more favorable specially real estate like land because it does not depreciate instead its value appreciates every day and year that is why rich people usually engage in buying and selling of lands.