8 Habits of the Wealthy
Hey folks, thank you for being here.
Here are a few of my key learnings on how to manage and grow your money:
Habit #1: Automate Your Investments
Automating your investing is one of the key steps to becoming financially free.
In investing and building wealth, consistency is key, and automation ensures that you stay on track even when life gets busy. I plan and automate everything and I learned this from some of the wealthiest investors I know.
- Every single month, money goes from my earnings directly to my investments.
- Only after that do my expenses get covered.
- There’s no room for decision-making or delaying my investments.
When you have to manually move money every month, you might at times lack the willpower to be consistent. I try to leave no room for inconsistency when it comes to investing.
Habit #2: It’s Not About How Much You Earn, But How Much You Save
This is such an important hack to achieve escape velocity when it comes to wealth creation.
All of us obsess about how much money we earn. But the important part is: how much do you end up saving?
Ask yourself:
- Do you spend money on unnecessary things?
- Do you splurge on things you don’t need just because someone else has them?
People who create real wealth focus on internal growth:
- Reading
- Learning
- Upskilling
- Networking
- Building assets
- Creating side hustles
They do not care about external appearances or looking rich.
Habit #3: Spend Less Than You Earn
This is about keeping your lifestyle in check.
As I said, most really wealthy people — those with quiet wealth — don’t care about:
- The latest bags
- Trendy shoes
- Fancy cars
In fact, a lot of stock market investors who’ve built generational wealth are the simplest people in real life, whose lifestyle has not grown disproportionate to their income.
Veteran investor Romesh Damani once told me that despite having a net worth of a few hundred crores, he:
- Drives the same car
- Lives in the same house
- Interacts with the same set of friends over the years
Wealthy people like good experiences and spend on things that money can buy, but they always prefer value over price.
Everything you buy must have value whether it’s a stock or the latest car.
This is a big life hack. It will help you save more and hence invest more in building assets for yourself.
Habit #4: Shift from Scarcity to Abundance Mindset
Most successful people I’ve met:
- Overestimate the upside
- Underestimate the downside
- Take calculated risks
- Ride the wave instead of sitting on the shore
They also:
- Invest in themselves
- Upskill
- Learn new things
- Invest in businesses
- Pivot to new careers
- Allow themselves to fail multiple times
Shifting from a scarcity to an abundance mindset is a journey. It takes time and inner work. But once you unlock it, there’s no looking back.
Habit #5: Think Long-Term
I remember my first SIP was just 20$ per month way back in 2014.
- I stayed put in that fund for 10 years.
- Today, the value of that 20$ monthly investment is upwards of 90,000$.
In the first few years of your investing journey, you are only buying into the volatility. The real power of compounding kicks in after five years.
But most people lose faith in the first few years when they:
- See no returns, or
- See losses in their portfolio
I’ve interviewed legendary market investors who’ve held stocks even after they fell 40%, while others sold. Thinking long-term is a great habit to build.
Wealthy people often plan with:
- A 5-year timeframe
- A 10-year plan
- A 20-year vision
Compound interest is magical but only if you give it time.
Habit #6: Start Early
Most wealthy people start investing early.
If you want your 40s to be smooth, your 25 to 35 years are golden. These are the years to be aggressive because:
- You have fewer responsibilities
- Healthier parents
- No children yet
- Time to build and stack up on skills
So, in this phase, double down on your investing journey.
Focus on:
- Building assets
- Reducing expenses
- Building businesses
- Making your money work hard for you
Yes, it’s a tough ask. The cost of living is high and inflation is brutal. But if you miss this window, your 40s and 50s become a catch-up phase where bills mount but income doesn’t keep up.
Habit #7: System 2 Thinking
This is a common habit of wealthy people, even discussed in the book Thinking, Fast and Slow.
- System 1 thinking is instinctive and reactive like selling a stock the moment it drops 20%.
- System 2 thinking is:
- Analytical
- Deliberate
- Rational
It’s about logical judgment and mentally searching for more information before making a decision. Wealthy people lean toward System 2 thinking and so should you.
Habit #8: Work on Your Relationship with Money
Most wealthy people I know don’t chase money.
They:
- Find their purpose
- Pursue it with passion
- Let money follow
Romesh Damani once told me:
“It’s glorious to earn money, but always remember, you are trustees of that money, not the owner.”
Trusteeship brings detachment. Knowing that money is only a means to an end helps you stay focused on your true purpose.
But that doesn’t mean money isn’t important. They do understand:
- Money brings freedom
- It allows you choices
- It helps you take tough decisions
In that context yes, money matters.
Finally
These are just a few of my learnings. I’ll continue blogs like these, so stay tuned!
If you have feedback or a topic you’d like me to cover, let me know in the comments.
Have a great day!
