💰 Rich Habits - Tom Corley

Tom Corley studied millionaires for five years: https://richhabits.net/wealthy-actually-living/

The data speaks volumes.

Note: @Viktor and @adam are probably on the Dreamer-Entrepreneur Path :+1:

The top 5% of households in America reported $197,651 or more in income in 2016, according to the Tax Foundation. This same top 5% controlled 60% of the nation’s wealth, according to the Federal Reserve Survey of Consumer Finance.

This 5% run big companies, run small companies, employ millions, hire and fire employees, invest in new companies, liquidate old companies, increase or decrease wages, and essentially control the lives of the other 95%.

This 5% can, and do, alter our lives, for better or for worse.

So, what do these individuals actually do for a living?

I devoted five years of my life in an effort to answer that question. I then wrote a series of Rich Habits books sharing the data I had gathered.

Here’s a snapshot of that data:

  • 18% were Big Company Senior Executives
  • 51% were Dreamer-Entrepreneurs
    • 27% of these Dreamer-Entrepreneurs failed at least once in business
  • 13% were salesmen/saleswomen
  • 28% had some professional designation. Some worked for big companies, others in a small business
  • 7% were Virtuosos, or top experts, in their field
  • 49% were Saver-Investors – Average individuals with modest incomes, who consistently saved 20% or more of their income and prudently invested their savings over a period of 32 years
  • 63% took a personal financial risk in search of wealth
  • 41% were “B” students
  • 29% were “C” students
  • 68% had a college degree
  • 25% had a post graduate degree
  • 86% worked more than 50 hours per week

If you were to boil it down, the rich become rich by pursuing wealth in one of four ways:

Path #1 – Saver-Investor Path

The Saver-Investor Path is one almost any individual can take. It has only two rules that you must follow:

  1. Save 20% or more of your income by living off of 80% or less of your income and
  2. Consistently and prudently invest your savings.

According to my Rich Habits Study, this chosen path took 32 years to accumulate an average of $3.3 million.

This path is not for everyone. It requires enormous financial discipline and a long-term commitment.

Path #2 – Big Company Senior Executive Path

Working for a big company and rising up the ladder into senior management is another path to riches. In most cases, the wealth these self-made millionaires accumulate comes from either stock compensation or a partnership share of profits.

This path is also not for everyone. You must devote yourself to one company for a long period of time. And there are risks. The biggest risk is you could be fired.

A secondary risk is profitability. If the company struggles financially, for whatever reason, your time investment in the company may not be rewarded, to the extent you expected.

Path #3 – Virtuoso Path

Virtuosos are individuals who are the best at what they do or possess knowledge which sets them apart from all of the competition.

Becoming a Virtuoso requires an enormous investment in time, and often money.

Skill-based Virtuosos devote themselves to many years of Deliberate Practice and Analytical Practice.

Analytical Practice often requires the services of a coach, mentor or expert who can provide immediate feedback. This feedback, in most cases, costs money.

Knowledge-based Virtuosos must spend many years in continuous study. Oftentimes, this requires formal education, such as advanced degrees (PhD, Medical Degrees, Law Degrees, etc.).

Again, this path is not for everyone. Not everyone has the ability to devote significant hours every day practicing their skill, or the financial resources to pursue advanced degrees.

Path #4 – Dreamer-Entrepreneur Path

The Dreamer-Entrepreneur Path requires the pursuit of a dream. This might be starting a business. It might involve becoming a successful author, musician, actor or artist. It might be the creation of an app, product or some unique service, which provides added value to a significant number of people.

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Couldn’t you have done this all as one post?

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No worries. And you’re welcome, by the way :yum:. Thought each of Tom’s articles deserved a separate thread, as it looked like the stuff we should have been taught at school as investing it’s at the heart of it all. Maybe @Vlad or someone else with enough permissions can merge the three under one topic :call_me_hand:

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Tom Corley studied millionaires for five years and wrote Rich Habits. This is his blog which is underrated: https://richhabits.net/want-rich-need-stop-thinking-like-poor-person/.

A path to wealth (income > expenses) is a marathon, not a sprint.

Habits are stored throughout the brain and controlled by a section of the limbic system called the Basal Ganglia.

This golf ball size mass of tissue smack in the center of the brain, saves the brain work. There is very little processing power involved with respect to habits. When a habit is formed, those habit brain cells kick in without any need for motivation, discipline, enthusiasm, or prodding.

Here’s the shocking statistic – 40 – 45% of all of our daily activities are habits. This means that 40 – 45% of the time we are all on auto pilot. We are thinking and doing things without the rest of the brain even being aware of the activity. We don’t truly understand how significant habits are in our daily lives.

Any mental thought, often repeated, becomes a habit. Poor people are poor and rich people are rich because of the way they habitually think. Habitual thinking comes first and habitual activities follow.

If you habitually think in a certain way, you will habitually act in a certain way.

Greatness requires great thoughts – to become rich, you have to think great thoughts.

To avoid poverty, you have to avoid Poverty Thinking.

How Poor People Think:

  • 87% of poor people think you must be intellectually gifted in order to become wealthy
  • 90% of poor people think fate determines your wealth or poverty in life
  • 87% of poor people do not believe they will be anything but poor
  • 80% of the poor believe the rich have superior genes, or DNA
  • 82% of the poor think they are not the cause of their poverty – someone else is to blame
  • 77% of the poor believe the rich lie in order to become wealthy
  • 90% of the poor think rich people are rich because their parents were rich and they inherited most of their money
  • 78% of poor people are not optimistic
  • 95% of poor people believe rich people are bad, greedy, lazy and dishonest
  • 52% of poor people believe wealth is accidental – a matter of dumb luck

How Rich People Think:

  • 90% of rich people believe IQ has little to do with success
  • 90% of rich people do not believe in fate
  • 43% of rich people believed they were going to be rich
  • 94% of the rich believe genes are irrelevant to success
  • 79% of the rich believe they are the cause of their financial success
  • 85% of the rich believe honesty is a prerequisite to success
  • 95% of the rich believe most millionaires are self-made
  • 54% of rich people think optimism is important to success
  • 78% of rich people think that rich people are good, hardworking and honest
  • Only 4% of rich people believe wealth is accidental – a matter of dumb luck

If you want to become wealthy you need to stop thinking like a poor person and start thinking like a rich person.

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Tom Corley, who studied millionaires for five years and wrote Rich Habits, has an amazing free blog: https://richhabits.net/9-facts-wealth/. It’s like having a digital mentor who doesn’t charge you anything.

The devil is in the data.

Most importantly, “You’re wealthy when passive income equals or exceeds living expenses.”

Who says you need to be an actor, musician, professional athlete, or high-powered executive to be rich?

The truth is you don’t need a fancy title, special talent, or face for TV to become wealthy. It’s ultimately about cultivating and maintaining good habits.

Thomas C. Corley, a certified public accountant and certified financial planner, spent five years studying millionaires and gathered his insights in “Rich Habits: The Daily Success Habits of Wealthy Individuals.”

Corley interviewed 233 people with at least $160,000 in annual gross income and $3.2 million in net assets, 177 of whom were self-made. He uncovered dozens of facts about rich people and their daily habits.

Here are some of the most interesting facts from Corley’s research that will help you think differently about building wealth.

You’re wealthy when passive income equals or exceeds living expenses.

Corley said he believes that the benchmark for being considered “wealthy” is when a person generates enough passive income to cover their expenses.

In other words, they don’t need to earn a consistent paycheck from a job to live comfortably.

Someone whose lifestyle costs $150,000 to $160,000 a year would need investments totaling about $3.2 million, he said. Those who live on much less — say, $50,000 to $60,000 a year — would need $1.2 million invested to generate their annual income.

“The key to being wealthy, therefore, is standard-of-living costs that are less than your passive income,” he said. “Your standard of living can make you wealthy — or not.”

Self-made millionaires live relatively modest lives.

Self-made wealthy people don’t always have the fanciest car, house, or jewelry. In fact, it’s rare, Corley said.

Eighty-three percent of the self-made millionaires in his study lived in a modest house, purchased good used cars, ate most meals at home, and bought cheap clothes. They also overwhelmingly avoided spontaneous and emotional purchases.

“Never buy anything on impulse. It is almost always the wrong thing to do,” Corley said. “That spontaneous or emotional purchase will lose its luster after only a few weeks. Then you’re stuck with something you don’t need and that does not generate any income.”

Financially successful people know when to say no.

Millionaires are selective about the tasks they take on and the opportunities they accept, Corley said.

Importantly, they’ve grown comfortable saying no to things that don’t support their progress, and yes only to things that align with their dreams and goals.

The easiest way to wealth is saving and investing.

Corley found that one of the most common paths to wealth was also the most widely available to people. Almost half of the millionaires he studied took “the saver-investor path.”

These people didn’t grow up rich, have high salaries, graduate from elite universities, inherit money, or possess unique skills — they saved diligently, invested prudently, and waited.

“You would never know they were rich by looking at them,” Corley said. “They are your neighbors, family, friends, colleagues at work, assistant coaches, teachers, union workers, plumbers, electricians, construction workers, accountants, government workers … the list goes on.”

Scheduling time to think is a top habit of rich people.

Self-made millionaires are dedicated thinkers, Corley found. In most cases, he said, “it’s the key to their success.”

The rich tend to think in isolation, in the mornings, and for at least 15 minutes every day.

Corley said they ask 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?”

Rich people seek out friends who are encouraging, optimistic, and constructive.

Interpersonal relationships have an outsize effect on our ability to achieve success.

Corley said the millionaires he studied tended to seek out and surround themselves with people who possess qualities like optimism, confidence, humility, emotional stability, patience, authenticity, and mindfulness.

They also provide constructive criticism and focus on adding value to the lives of those around them, not just themselves.

On the other hand, people who become rich avoid “poverty by association.”

As humans, we tend to behave like the people we surround ourselves with. Whether it’s neighbors, family, coaches, or friends, Corley said, we often adopt their money habits, regardless of whether we intend to or not.

“One of the hallmarks of the self-made millionaires in my study was the conscious effort they made to associate with like-minded individuals,” Corley said. “If a close relationship was a spendthrift, they limited how much time they spent with those individuals.”

Only 1% of self-made millionaires got rich before age 40.

Wealth doesn’t materialize overnight for most financially successful people.

Corley said that only 1% of the self-made millionaires he studied got rich before 40. For the other 99%, it took at least 18 years of practicing good habits to get there.

“Success, for the vast majority of the self-made millionaires in my study, was about doing the little things every day that helped build momentum in their lives,” Corley said. “This momentum kept them moving forward, growing in knowledge and skill.”

The vast majority of millionaires inherited crucial habits from their parents.

Many millionaires learned their most fundamental rich habits from their parents, Corley found, giving them an advantage on their path to wealth.

For example, over 95% said they were taught to take responsibility for their actions, respect the law and other people’s property, work hard for what they want, and improve themselves daily. Importantly, their parents taught them that acquiring wealth is a good thing, not evil or greedy.

@shane-aurora will probably buy it:

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Merged the threads, some very interesting stuff in there! :bulb:

Not 100% which path I’m on, mind you :sweat_smile:

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“Success and happiness belong to people who can control their attention”

So it appears that beingBusy != beingProductive.

Time management and multi-tasking are myths. Attention management is everything.

One word that accounted for Warren Buffett’s success is focus:

If you’ve watched Inside Bill Gates’ Brain on Netflix, you may have noticed how easily he was able to channel his focus to certain books and projects. He wouldn’t have been able to run Microsoft if he wasn’t able to focus.

Stanford psychologist on the most important skill on 21st century in the age of distracting tech (from https://www.cnbc.com/2019/10/09/stanford-psychology-expert-most-important-work-skill-of-the-future.html):

…In 1971, the psychologist Herbert A. Simon emphasized that a wealth of information means a dearth of something else: attention.

Researchers have been telling us that attention and focus are the raw materials of human creativity and flourishing. And in the age of increased automation, the most sought-after jobs are those that require creative problem-solving, novel solutions and the kind of human ingenuity that comes from focusing deeply on the task at hand.

That said, being indistractable is the single most important skill for the 21st century. Many experts, including Adam Grant, who saidthat “success and happiness belong to people who can control their attention,” have addressed the importance of focus.

Slack :speech_balloon::face_with_symbols_over_mouth: - use it like a (small) sauna

Jason Fried, co-founder of the popular group-chat app Basecamp, acknowledged that being in a group chat can be similar to “being in an all-day meeting with random participants and no agenda.”

He recommends enforcing three rules when it comes to group chats:

  1. Use it like a sauna : Get in, get out.
  2. Schedule it : Set a time for group chat on your calendar.
  3. Be picky : The smaller the group, the better. The key is to make sure everyone present is able to add and extract value from being part of the conversation.
  4. Use it selectively : Group chats are good for some topics and groups, but not for others — so be mindful about how you use it.

Email :e-mail:

Email is the curse of the modern worker. A study published in the International Journal of Information Management found office workers take an average of 64 seconds after checking email to reorient themselves to get back to work.

  1. Reducing the total number of messages received : To receive fewer emails, you must send fewer emails. It sounds obvious, but most emails we send and receive aren’t very urgent, yet our brain’s weakness for variable rewards makes us treat every message, regardless of form, as if it’s time-sensitive. That tendency conditions us to check our inbox constantly, reply and bark out requests instantaneously. All of that is a huge mistake.
  2. Reducing the time spent emailing : The most important aspect of an email is how urgently it needs a reply. Because we forget when the sender needs a reply, we waste time rereading the message. The solution? Only touch each email twice. When you first open an email, answer this question before closing it: When does this require a response? Then, tag it as either “Today” or “This Week.”

Apps :iphone: :face_with_symbols_over_mouth: :slot_machine: and variable reinforcement schedules—key to users checking social media and thus boosting metrics

Is Jack Dorsey or Mark Zuckerberg always checking their social media feeds? The latter reportedly has a team looking after his feed.

Read Irresistible: The Rise of Addictive Technology and the Business of Keeping Us Hooked - then look at the Facebook feed and swipe through Insta pics:

“Phantom calls and notifications are linked to our psychological craving for such signals”—Professor Daniel Kruger

…The good news is, being dependent isn’t the same as being addicted.

  1. Get rid of apps you rarely or no longer use. It helps to ask yourself which apps were serving you in a positive way, and which ones were not. …
  2. Get rid of apps you love. This may mean getting rid of apps like YouTube, Facebook or Twitter. If abandoning these services aren’t entirely an option for you, replace when and where you use these potentially distracting services on your phone. One solution is to only put them on your desktop computer.
  3. Rearrange your apps. Tony Stubblebine, editor-in-chief of the popular Medium publication Better Humans, recommends sorting your apps into three categories: “Primary Tools” (apps that help you accomplish defined tasks you frequently rely on: getting a ride, finding a location, adding an appointment), “Aspirations” (apps that encourage you to do things you want to spend on: meditation, yoga, exercise, reading books, listening to podcasts) and “Slot Machines” (apps you open and get lost in: email, Twitter, Facebook, Instagram).
  4. Change your app notification settings so you receive fewer, only essential, notifications.

Co-workers :raised_hands: :massage_woman::speech_balloon:

While open-office floor plans offices were designed to foster idea-sharing and collaboration, they often lead to more distraction. Interruptions tend to decrease overall employee satisfaction and increase mistakes.

A multi-hospital study coordinated by the University of California, San Francisco, for example, found an 88% drop in the number of errors nurses made when they wore bright orange vests that told colleagues to not interrupt them.

Meetings :sleeping: :coffee: :speech_balloon:

The primary objective of most meetings should be to gain consensus around a decision, not to create an echo chamber for the meeting organizer’s own thoughts.

One of the easiest ways to prevent superfluous meetings is to require two things of anyone who calls one:

  1. Circulate an agenda of what problem(s) will be discussed. No agenda, no meeting.
  2. Give their best shot at a solution in the form of a brief, written digest. It need not be more than a page or two discussing the problem, their reasoning and their recommendation.

Being present is also important. Once the meeting is held, everyone’s laptops and devices should be shut off or left at their desk so that they can be there in both body and mind.

More - https://www.cnbc.com/2019/10/09/stanford-psychology-expert-most-important-work-skill-of-the-future.html

One more time :clap: one word that accounted for Warren Buffett’s success—focus:

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