How Do Rich People Live – The rich can afford to spend money on anything they want for themselves. These things are not just the normal conveniences that the rest of us get used to day by day, but also luxury goods that can give them great comfort and satisfaction. How do rich people live?
Have you ever wondered how the richest people live? Do they have mansions with private tennis courts? Maybe their hobbies are meeting famous people or cruising around islands. We often wonder how our idols live, so I put together an infographic for you showing you how rich people live.
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Things millionaires do differently from everyone else
They’re frugal.
Frugality — a commitment to saving, spending less, and sticking to a budget — is one of the wealth factors that help millionaires build wealth, according to Sarah Stanley Fallaw, the director of research for the Affluent Market Institute and an author of “The Next Millionaire Next Door: Enduring Strategies for Building Wealth,” for which she surveyed more than 600 millionaires in America.
Many of the millionaires Stanley Fallaw interviewed stressed the freedom that comes with spending below their means.
“Spending above your means, spending instead of saving for retirement, spending in anticipation of becoming wealthy makes you a slave to the paycheck, even with a stellar level of income,” she wrote.
They save a lot of their income.
Being frugal and living in an affordable home enables millionaires to save. They recognize that income isn’t enough — they have to save what they’re making.
John, who runs the personal-finance blog ESI Money and retired at 52 with a $3 million net worth, has interviewed 100 millionaires over the past few years and found that the median millionaire spent $90,000 a year while earning $250,000 in income — a 64% savings rate. Saving it, he said, allows for investment.
While this savings rate might be slightly off because of things like not counting taxes as spending, the main takeaway, he said, is that millionaires “save a large portion of their income.”
If you make $250,000 and spend $250,000, “you are no better off at the end of the year,” he wrote.
They take on a side hustle.
Many millionaires favor moonlighting, or taking on a side hustle, according to Stanley Fallaw, who said it’s a good way to explore options while remaining employed full time.
“Those who are able to create multiple opportunities to generate revenue, who can translate hobbies into income-producing activities, will be successful at becoming millionaires next door in the future,” she added.
John also found that millionaires develop multiple streams of income, enabling them to grow their net worth exponentially, he said.
They invest in low-cost index funds.
According to John, millionaires also tend to use the same simple investing strategy: investing in low-cost index funds.
“The high returns and low costs of stock index funds (I personally prefer Vanguard as do many millionaires) are the foundation that many a millionaire’s wealth is built upon,” he wrote.ALSO READ: How Do Millionaires Make Their Money
Experts agree that investing in index funds is a winning strategy when playing the stock market for two reasons: They’re broadly diversified, eliminating the risk of picking individual stocks, and they’re low-cost. Even Warren Buffett champions the strategy.
They put more energy toward personal-growth activities.
Millionaires also spend more time focusing on personal growth. They spend roughly 5 1/2 hours a week reading for pleasure and nearly six hours a week exercising, while the average American spends two hours and 2 1/2 hours on those activities, according to Stanley Fallaw’s research.
“Successful individuals are keenly aware of how they spend their resources, including their emotional and cognitive resources,” Stanley Fallaw wrote.
Similarly, Thomas C. Corley, the author of “Change Your Habits, Change Your Life,” spent five years researching the daily habits of 177 self-made millionaires and found they devoted at least 30 minutes every day each to exercising and reading. Millionaires tend to read three types of books, he said: biographies of successful people, self-help or personal development, and history.
They think more.
Corley also found that self-made millionaires are thinkers. The rich tend to think in isolation, in the mornings, and for at least 15 minutes every day, he said.
“Thinking is key to their success,” he wrote. “They spent time every day brainstorming with themselves about numerous things.”
He said they asked questions such as “What can I do to make more money?” “Does my job make me happy?” “Am I exercising enough?” and “What other charities can I get involved in?”
They ask for feedback.
Millionaires seek feedback to help improve themselves, according to Corley.
“Fear of criticism is the reason we do not seek feedback from others,” he wrote. “But feedback is essential to learning what is working and what isn’t working. Feedback helps you understand if you are on the right track. Feedback criticism, good or bad, is a crucial element for learning and growth.”
It allows millionaires to change course and experiment with a new career or business, Corley said. “Feedback provides you with the information you will need in order to succeed in any venture.
They prioritize four relationships.
But millionaires can’t build wealth without the help of others.
Chris Hogan, the author of “Everyday Millionaires: How Ordinary People Built Extraordinary Wealth — and How You Can Too,” studied 10,000 American millionaires — defined as those with a net worth of at least $1 million — for seven months and found they achieved their seven-figure status with four key relationships: a coach, a mentor, a cheerleader, and a friend.
Corley emphasized the importance of having a mentor in particular.
“Finding a mentor puts you on the fast track to wealth accumulation,” he wrote.
They’re more conscientious.
Most millionaires’ traits and habits tie into conscientiousness, which has a strong correlation to net worth, according to Stanley Fallaw.
“Many of the behavioral components that impact net worth, regardless of how old we are or our income levels, including frugality, planning, and responsibility, tie into this personality characteristic, and help us understand why it is so critical in the creation and maintenance of wealth over time,” she wrote.
Similarly, Jude Miller Burke studied 200 self-made millionaires for three years and found that they tended to be conscientious and displayed the trait at a higher level than less successful people.
What does it mean to be rich?
Being rich is simply having a lot of money or income. It comes down to how much cash you have in your bank account. But just because you’re rich, doesn’t mean you are wealthy.
In fact, being rich can often mean that you are spending a lot of money. It can also mean that you have a lot of debt. It doesn’t matter how much money you have if your expenses are higher than your income. Being in debt is definitely not something to aspire to!
People who are rich might drive a fancy car or live in an amazing house in the best part of town, but it comes at a cost. If you make $200,000 a year, but spend $225,000 a year in expenses, you might seem rich, but you’re on your way to going broke.
As a matter of fact, plenty of celebrities have gone broke because of their rich lifestyles.
MC Hammer at one point had $30 million in the bank, a $1 million house with 200 staff members, and a horse stable with 19 racehorses. But all those expenses took a toll and all that spending (along with a number of lawsuits), resulted in Hammer declaring bankruptcy in 1996. He ended up in $13 million in debt.
What does it mean to be wealthy?
Being wealthy is not only having enough money to meet your needs but being able to afford not to work if you don’t have to. It’s about amassing assets and making your money work for you. In other words, it’s having a significant net worth.
Wealthy people don’t necessarily own the latest gadgets or cars or throw lavish parties. What they do have, is a lot of assets, such as real estate, investments, and cash.
For example, if your monthly expenses are $5,000 per month, and you have $30,000 in savings, then you have about six months worth of wealth. If you invest that $30,000 and you end up with $5,000 a month in investment revenue, you are wealthy.
Rules of Life That Rich People Follow While Poor People Consider Them Stupid
They keep their mouth shut.
Wealthy people do many things differently. They don’t talk too much about their money and they don’t try to show the whole world how rich they are.
- The wealthiest people I know either dress exceptionally cheap or wear things that are expensive, but you wouldn’t know it just from looking at them. On the contrary, those who are trying to make an impression and demonstrate how rich they are love showing off their designer clothes. © Bran_Solo / reddit
- Wealthy people often understate all that they do and keep “quiet” about their financial status. Their clothes are good quality and tasteful, but nothing draws undue attention to itself. Whereas flashy types who are literally covered in brands, crave your attention and want you to think they are rich. © Back2Bach / reddit
Obnoxious and ridiculous excessiveness reveals the truth about people who went from poor to rich very quickly or who just want to feel like they belong to the group of more well-off people.
If money itself turns into the final goal, a person loses their connection with reality. That’s why well-off people spend money on charity and establish charitable organizations that have an opportunity to quickly help people in need.
- Really wealthy people understand that great wealth comes with great responsibility. And those who don’t understand this idea aren’t happy with their lives. They just live in golden cages, instead of iron ones. While people who belong to the middle-class may enjoy the illusion that money can buy you happiness, for very wealthy people, this illusion is already gone. So the most important thing to them may be to figure out how to give their money meaning and value, rather than using their status to attach meaning to their lives. © David Frank Gomes / quora
- My brother-in-law is a gazillionaire who has his own business. But he wears baggy pants and a polyester down jacket. Once, my brother asked to borrow some money and he just gave him a pile of money without a second thought and said that it was a gift, not a loan. He’s always just been very modest. Apart from buying a nice house and sending his 3 kids to good schools, he has just been just saving and investing his money. © catsasss / reddit
Well, you might ask, “Why wouldn’t rich people help other people out if they have the money to do it?” But help shouldn’t be measured in money and the most important thing is to take part in the life of another person and do it without pursuing your own interests.
They understand the value of education.
There’s a famous saying that states: “If you give a hungry man a fish, you feed him for a day. But if you give him a fishing rod and teach him how to fish, you feed him for a lifetime.” A good education is this “rod.”
- A member of my family is a private wealth manager for rich people, so I know what I’m talking about. Rich people invest in their education like crazy. Do their kids want a Maserati? Nope, it’s not going to happen! Do their kids want to learn how to play the piano? Of course, they’ll have as many lessons on the piano as they want. They invest in the best teachers and the best universities and want to give their children the best education possible. © Priamosish / reddit
- My aunt and uncle are rich. They have never owned a new car in their lives or spoiled their 2 kids. I couldn’t believe my eyes when I found out how much they had paid for the art school for their son. They spent $100k! But this investment has paid off, because their son works at some big NYC ad agency. © kieffa / reddit
New knowledge and skills mean new opportunities for development, personal growth, and increasing your wealth. That’s why education is an investment that lasts a lifetime.
Conclusion
This is a simple article about how rich people live their lives. I’ve included high-quality images for each topic. Take a look at these short descriptions, browse through the images, then come back to this article to read the rest of the article.