When the Forbes list of Billionaire was out, I was not surprised to see that the 500 richest individuals in the world are responsible for 64% of all 1,810 billionaires’ wealth, but only 5 of them were able to retain that wealth in past four decades. These wealthy people make their fortune either getting inherited or through there hard work. It’s easier to lose these fortune, but it’s very tough to gain it back unless you understand the principle behind making that money. There are plenty of examples and stories of rags to riches and vice verse.
Walt Disney went bankrupt when his animation and film studio in Kansas City that went belly up in 1922. He went to California and started fresh and gained back his success through Disney Bros. Studio and Mickey Mouse in 1928.
I wished to understand what made them different from common people like us. I didn’t have access to any Billionaire, I spoke to few of my Millionaire acquaintance and concluded to 5 financial habits which helped them to keep afloat. These habits are mostly unseen in common people as they look at their money differently and mostly relate it to destiny.
1.Time is Money
Wealthy people consider there Times as an important asset and hence they take extreme caution in spending it. They involve themselves in learning new skills and open up themselves to new opportunities. Most of them won’t be spending endless hours watching TV shows, reality programs or sports games. They know that winning or losing a game by someone won’t affect their bank accounts unless they own the team. They also don’t stick themselves to one news channel or newspaper but rather go through every valid information around and make decisions.
In his five-year study of 177 self-made millionaires, author Thomas C. Corley found that nearly 50% of them woke up at least three hours before their workday began.Take Richard Branson, self-made billionaire and founder of the Virgin Group, who wakes up at 5:45 a.m. to exercise before starting his workday. Or Square CEO Jack Dorsey, who wakes up at 5:30 a.m. to meditate and go for a six-mile jog.
2. Take Loan for making Money
Most of us are fond of spending future money today. I must agree on the bug of EMI had hit me earlier. The magic of affording things 10 times the money in your account is amazing and lending companies take advantage of it. There is certainly a way in which you can take advantage of these Credits Cards while using loyalty points, getting Zero Cost EMIs and also taking advantage of Credit Card Bills. But, most of the time, many of us get trapped in the cycle and take a lot of time to get out of it. Successful and Wealthy People don’t spend their future money today. They borrow money from Banks or leverage the margin available on exchange to make more money. Only when the profit surpasses the interest rates, they found the loan taken to be useful.
3. Take Financial Risks but do not Gamble
People confuse between taking a financial risk and gambling. While gambling is an unplanned way of risking your money in a game which has a very high reward, a financial risk is calculated method of putting your money in a situation where it has a lower probability of losing it or have a strategy of minimizing the losses. Wealthy people look at any opportunity and takes a calculated financial risk. There is a probability that they may lose there fortune but they take that financial risk to reach a higher level. They understand the risk and methods of controlling their losses.
There are situations when gambling becomes a kind of financial risk, but not always. The famous story of Smith, the founder of FedEx. When FedEx’s funds diminished to just $5,000, Smith realized he didn’t have enough to run the operations. The company had already gone to many extremes, from pilots using their personal credit cards to fuel planes to uncashed paychecks. Smith impulsively flew to Las Vegas and played blackjack with the last of the company money. Amazingly, when he came back the next week, he had turned the remaining $5,000 into $27,000 – just enough for the company to stay in operation for another week. Later he raised funds and you know where FedEx is today.
Every risk factor is defined by the personal appetite of handling loses.
4. Diversify there Business and Investments
A successful person never puts all eggs in one basket. Depending on a single source of income or investment is suicidal. Things can turn against you and one can lose money in such cases. It’s best advisable to diversify the investment. Taking an example of popular businessman Late Dhirubhai Ambani, who started his business with polyesters clothes and today Reliance empire is into Retail, Energy, Telecom, and several others sectors. Today they had to shut down a telecom business due to losses and surpassing debts, but they have profits coming from different companies to cover up the cost. We can learn similarly by diversifying our investment portfolio in
5. Save to Invest
We have been taught to start saving from the day we start handling money. Average people do their savings so that it can help them in there rainy day. A wealthy successful person also keeps aside some of its fortunes as a liquid cash which is accessible instantly and they do so to use an opportunity which appears in a tiny time frame. Having quickly accessible savings can help you catch those opportunities. Let’s say you have been researching about Infosys for few months and you find the company to be promising and gives out a good return if invested in stocks. One fine day the CEO resigns and the market reacts to it while getting bearish towards the stock. You find a good opportunity to enter the trade and make a profit but it will only be possible if you had savings to invest in it.
I hope you will also learn from these habits and make necessary changes in your lifestyle. Do share with me your idea of financial habits in comments.