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Habits That Make You Rich & Habits That Make You Poor

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We are the sum of our habits, good or bad. There are habits that make you rich and habits that make you poor.

While there is no “one magic trick” that will make you rich or poor, there are everyday habits that have an enormous impact on our personal finances. We’ll start with the habits you should adopt and then show you the habits you need to break.

Habits That Make You Rich

Unless we count lottery winners, people seldom become rich overnight. Growing your wealth happens when a series of small decisions and habits accumulate.

Have a Budget

You might think having a budget is only for “poor” people, but a budget is something everyone needs. Without a budget, you can’t know exactly how much money you have coming in, how much is going out, and where it’s going.

We all have areas we overspend in, but we might not realize just how much we’re overspending. A budget will point out your trouble areas, and once you know what they are, you can take steps to cut back that spending.

Having a budget isn’t enough. You have to actually stick to your budget. Rich people make and follow a budget.

Have an Emergency Fund

An emergency fund is meant to protect you from a considerable unexpected expense like a medical bill or an extended period of unemployment. When you don’t have an emergency fund, you may turn to things like credit cards or payday loans to cover expenses and that can lead to a spiral of debt.

A good “starter” emergency fund is $1,000, doing great is three months of expenses, and the pinnacle is six months worth of expenses. And an emergency is not something like a vacation or the latest tablet. If you do need to tap your emergency fund for a legitimate reason, be sure to replenish it as soon as you can.

Rich people have a fully funded emergency fund to cushion their wealth from the kinds of things that happen to everyone from time to time.


Not everyone who becomes a millionaire has a job that earns them six figures a year so how are they becoming millionaires? It’s because they invest and began investing at a young age.

The most critical component of investing isn’t how much money you invest; it’s how long you invest it. The longer you’re invested, the more your money will grow with no effort from you.

Too many people wait to invest, until they have more money or until they understand the concepts of investing better. But lack of money or knowledge doesn’t have to be a barrier with the kind of investment platforms available today.

You can get started investing with Acorns for as little as $5 and just have to answer a few simple questions which the app will use to choose the right portfolio for your investing goals.

The longer you wait, the more money you are forfeiting. Rich people start investing early and continue to invest regularly.

Know The Difference Between Cheap and Frugal

There is a very significant difference between being cheap and being frugal. Being cheap means you want to pay the least amount of money possible for everything. Being frugal means you want to get the most out of each dollar you spend.

Being cheap often actually costs you more money in the long term while being frugal saves money in the long term. If you buy a cheap pair of shoes, for example, they wear out faster than a quality pair would, and you have to spend more money to replace them.

The better quality pair of shoes will last longer so have to be replaced less often.

Rich people get the most for the money they spend.

Not Keeping Up With the Neighbors

“We spend money we don’t have on things we don’t need to impress people we don’t like.” People often leave outside of their means in an effort to impress other people.

The phenomenon is nothing new but social media has made it worse. Every time we visit those sites we see people on vacation, showing off fancy meals out, wearing perfectly styled outfits. And we want those things too.

But what people don’t tell you and certainly don’t show on social media sites is that a lot of that stuff is paid for with credit cards.

Rich people don’t spend money they don’t have in order to show off and impress people.

Habits That Make You Poor

Being broke is not the same as being poor. Being broke is temporary, and most of us have probably been there at one time or another.

The next paycheck or the planned move to a better paying job and we’re no longer broke. But if you develop bad habits while you’re broke, it can lead to being poor which is harder to overcome than being broke.

If you’re broke and find yourself practicing any of these habits, start breaking them now. Not only do they mean you will never be rich, but they can also lead to a lifetime of being poor.

Spending Money, You Don’t Yet Have

You just had a great job interview, you really nailed it, and while the hiring manager told you the company has a few more people to interview, but they’ll be in touch, you know that job, and the big pay jump that comes with it is yours!

You celebrate by buying the new iPhone you’ve been coveting.

You’re a freelancer, and you just landed a new client, a big client! You have to work out the details, but this client is going to be worth more than your other three combined!

You haven’t been on vacation for years so now that you’ve got this client, you’re going to start making reservations right away.

But you didn’t get the job, and the client flaked. The credit card company doesn’t care about that though; they want their money. Never spend money that you might get, no matter how confident you are, you can never be sure that money is yours until it’s in your hand (or bank account).

Poor people spend “future” money.

Burying Your Head in the Sand

Cell phones and caller ID have made it easier to avoid calls from angry bill collectors, but the money is still owed.

If you ignore those calls and the envelopes with the words “Final Notice” stamped on the front in all caps, red letters, you’re only making a bad situation worse.

It might be terrifying to answer those calls and open those envelopes and to see just how much money you owe but not finding out is worse because you’re not in control of the situation.

I promise that adding up all those debts and devising a plan to deal with them will make you feel better because it will put you in control.

Ignoring your finances often means that things like late fees and penalties pile up too or that your account goes into default and tanks your credit score, it can even lead to legal consequences.

Nearly all creditors are willing to work with you. They would rather get some money than no money so you can often settle debts for less than what you actually owe. But you won’t know until you contact them.

Poor people ignore financial problems, making them worse.

An Unwillingness to Learn

If you’re reading Frugal For Less, you’ve likely learned at least one thing about personal finances that you didn’t already know.

The site was started as a fun, easy way to learn about all kinds of personal finance topics from saving money to investing. And it’s just one of the millions of ways to learn about money.

There are countless books, Youtube lectures, podcasts, radio shows, articles, and websites that can teach you anything about personal finance you could possibly want to know. And most of it is available right in your pocket if you have a smartphone.

There is nothing wrong with not knowing something, but there is something wrong with not finding out. The two worst things to let yourself remain ignorant about are health and personal finance because getting those things wrong can devastate your life.

If you don’t know how to make a budget or to start investing or to make some extra money on the side, you can learn.

Poor people don’t bother to learn new things that could improve their situations.

Wasting Time

How many hours of free time do you have a week? Don’t guess, write out your schedule and add it up.

People love to talk about how busy they are, too busy to cook, too busy to exercise, too busy to clean the house, too busy for a side job, but most people greatly underestimate how much free time they actually have.

Americans have on average, five hours and 13 minutes of leisure time per day, time used for things like watching TV, socializing, and exercising. The majority of that time is likely spent slumped in front of the TV.

Everyone needs a second income stream. We could lose our job, having a second source of income means there is still some money coming in. We could use that extra money to pay off debt, start or pad our emergency fund, or save for retirement.

There are dozens of ways to bring in a little (or a lot) of extra money each month and everyone no matter how busy can take advantage of at least one of them.

For many of them, you don’t even have to leave the house! Answer surveys, drive for Uber, teach English to Chinese children with QKids.

Poor people don’t make the most of their free time.

Emotional Spending

Think back to the last time you bought something you didn’t really need. Can you remember why you bought it? Were you bored, stressed, angry, happy, maybe celebrating something?

Emotional spending accounts for a lot of our purchases. We use the act of spending money as a way to deal with emotions.

But the little buzz you get from buying something doesn’t last very long, certainly not as long as the credit card bills last. Before you buy something you don’t need and can’t afford, ask yourself why you’re buying it.

Learn other ways to cope with your emotions. Call a friend or family member, go for a walk or a bike ride, cook something, take a long shower, anything to distract or soothe yourself that isn’t going to hurt you financially.

Poor people let emotions guide their spending.

Having Vague Goals

You want to pay off your credit card debt. Great! How are you going to do it? You don’t know, but you’re determined to do it.

Having goals is important, but you have to have clearly defined goals. When your goals are well defined, you can make a step by step plan to achieve them.

A vague plan to pay off credit card debt might mean that at the end of the month if you have any money left over, you throw a little at each of your credit card balances.

The problem is that if you don’t designate money for that purpose, you may not have any money left over at the end of the month.

The other problem is that spreading out money over each card means that you aren’t making any significant differences to the balances because every month the cards continue to accrue interest.

A well-defined plan to pay off your credit card debt is to use the snowball or stacking method and attack one card at a time with money that you budget for that purpose each month.

Poor people don’t define their goals and make a plan to achieve them.

Blaming Others

If your parents had helped you pay for college you wouldn’t be drowning in student loan debt. If the credit card companies weren’t so quick to approve people for credit, you wouldn’t be drowning in credit card debt.

If your boss weren’t such an idiot she would see that you should have had a promotion years ago.

Someone else may very well be responsible for your bad financial situation, but there isn’t much you can do about that. What you can do is take control of it and work towards fixing it.

It’s not your parents’ responsibility to pay for your education. If you have unmanageable student loan debt, find out if you’re eligible for any of the available forgiveness programs.

If you aren’t eligible, refinance with a company like LendKey. Doing so will reduce your interest rate and make the loan cheaper.

If you’re deeply in credit card debt, get a balance transfer card or a personal loan to consolidate the debt. Attack it with the snowball or stacking method.

If you feel like you were cheated out of a promotion, ask for a review with your boss so you can find out where he or she wants you to improve.

If you think you won’t ever go anywhere with your current company, work on your resume and start networking within your industry to find a new, better opportunity.

Poor people blame other people and circumstances for their financial difficulties.

Change Your Habits

We all have bad habits that we know are bad like smoking or procrastinating. But sometimes we have bad habits that we don’t realize we’re doing or that they’re hurting us.

This is especially true when it comes to financial matters. We know it’s bad to eat fast food every day, we know it’s bad never to exercise. But we may not realize how bad it is to never make a plan to reach our goals or to spend money when we’re angry.

But when we recognize these things are bad habits, we can change them.

We can adopt habits that make us rich. None of the things under the habits that make you rich section are complicated or hard to at least make a start on. You can make a budget with Mint for free right now.

If you have $5 and ten minutes, you can start investing with Acorns right now.

Rich people aren’t a different species from the rest of us, and the vast majority of them are not among the super rich, cruising around on yachts and flying on private jets.

They don’t know some secret formula for spinning straw into gold that they are selfishly keeping from the rest of us.

Most of them are average people who adopted the habits that make you rich. You can make these habits your habits too.

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