Psychology is the scientific study of the mind and behavior, according to the American Psychological Association. It includes topics such as development, personality, thoughts, feelings, emotions, motivations, social behaviors, and much more. With university degrees in both finance and psychology, it was only a matter of time until I started researching and integrating the two subjects. I was curious to understand if there was a positive correlation between the specific habits and traits of a person and their wealth. Turns out there is many. Here is what I found in my research.
Wealthy People Read Every Day
Warren Buffett was once asked about the key to success and he pointed to a stack of books. He said, “Read 500 pages like this every day. That is how knowledge works. It builds up, like compound interest. All of you can do it, but I guarantee not many of you will do it.” Not all of us have the time to read 500 pages in a day like Warren. But getting into the habit of reading just 30 minutes each day will go a long way in building up your knowledge. Take advantage of audiobooks while you are on-the-go too. Start learning while you are commuting to and from places, making dinner, or working out. You can use an app on your phone like Audible or check them out for FREE through your local library’s app. I used Libby and Hoopla.
Wealthy People Take Care of Their Health
76% of wealthy people exercise 4 days a week. There are a plethora of benefits to working out regularly including but not limited to: improved mood, boost in energy, better sleep, and combat health conditions and diseases. Wealthy people make exercise a priority and schedule it into their regular routine. The Department of Health and Human Services recommends at least 150 minutes a week of moderate aerobic activity or 75 minutes a week of vigorous aerobic activity.
Wealthy People Have Multiple Streams of Income
Millionaires have multiple streams of income. Most are not dependent on only one source, like employment income. Income can come in the form of:
- Dividend income from investment portfolios
- Earned income from paychecks
- Rent from real estate rental homes
- Royalties from selling rights to use something written or invented
- Capital gains from selling appreciated assets
- Profits from businesses or side-hustles
- Interest from savings, CDs, and bonds
Think of some ways you can start generating additional income for yourself. Maybe start that online business you’ve been thinking about for years. Don’t let the fear of failure stop you. A little extra income here and there can make a big difference in your wealth over time.
Wealthy People are Intrinsically Motivated
Locus of control is a fancy term in psychology. It is defined as the extent to which someone sees his or her life being controlled by themselves or being at the mercy of external factors outside of their control. Internal locus of control has been found to be associated with higher income and wealth (Zagorsky, 2007) and better spending control (Perry & Morris, 2005). Having a strong sense of control over one’s life is also linked to greater life satisfaction (Johnson & Krueger, 2006). Good self-esteem is also associated with higher levels of wealth and income (Zagorsky, 2007). So, let’s let go of that “victim mentality” mode that is all too easy to slip into from time to time. Remind yourself that you are responsible for your life and you are strong enough to overcome any external roadblocks that may be in your way. Surround yourself with positive, uplifting people who regularly remind you of your resilience and worth.
Habits to Change
You have the power to choose your daily thoughts and habits. You can decide to make a change for the better at any time. Give yourself grace if you slip up and remind yourself that it takes 60 days to form a new habit. As always, we are here to support a wealthier you at Kaydan.