This is what rich people know about money that you don’t


One thing people get wrong about wealthy people, according to Manisha Thakor, is assuming they don’t fret about their bank accounts. “I see people with $10 million, and they can tell you exactly how much they’re saving each month,” says Thakor, VP of financial education at wealth management firm Brighton Jones. “I think it’s a huge misconception that people who are wealthy are not paying attention to how much they’re saving and spending.”

For people who didn’t inherit wealth, saving money can be key to making money. “My observation is the savviest people are the ones who made their money themselves,” Thakor says. These are some things rich (and richer) folks know about saving and making money–lessons you can try to apply to your own financial life.


People with money tend to be careful about opening credit cards, usually opting for one primary card and one backup option, and largely using credit over debit for increased fraud protection. (If they run their own business, however, chances are they keep personal and business expenses separate by using different cards.) “Most wealthy individuals carry fewer credit cards than the average American,” Thakor says. They rarely get suckered into opening store credit cards. “They know that store credit cards have higher than normal interest rates to begin with and exceptionally high penalty rates,” Thakor adds.

It’s also important to choose the right credit cards, even if it means paying a higher monthly fee for one “premium” card. People who travel a lot should opt for a card with better travel perks–like the American Express Platinum card or Capital One Venture card–while others may want a card that offers cash back or more points. When people have a secondary or backup credit card, Thankor says it is usually one with no fee that offers reliable fraud detection and protection. Danetha Doe, a personal finance expert who runs the blog Money & Mimosas, adds that it’s important to find a credit card that rewards you, if only slightly, for your vices. “If you’re someone that is never going to cut back on restaurants,” Doe says, “find a credit card that rewards you for those lifestyle choices.”As you might expect, wealthier folks also pay off their credit card balance monthly without fail, usually through automated payments. But not everyone has the luxury of emulating that behavior. Thakor recommends not charging anything you can’t pay off, but in the event that you have to, you should make the necessary changes to try and cover the payment. “The fact of the matter is, every so often life just spits in your eye, and you just have a cash crunch,” she says. “What I tell people is not to put your head in the sand. You want to immediately start identifying where you can find extra money–maybe you cut your discretionary spending for a month or six weeks.”


If you are already vigilant about tracking your finances–whether it’s your bank account or your 401(k)–you’re already on the right path. According to Thakor, some of the most valuable money you can save is the money you earn in your 20s and 30s. “When it comes to building wealth, some of the fundamentals are regularly looking at your finances,” Doe says. “I recommend having a weekly money date.” (She adds that the basics of building wealth are “pretty easy to understand, but challenging to implement.”)

In fact, Thakor says people whose net worth is somewhere in the range of $10 million are often the most unassuming and don’t feel the need to keep up with the Joneses. The ability to live beneath your means–rather than look wealthy–is crucial if you’re angling to become a millionaire. “You can make a million dollars, but if you spend $1.2 million, you’re in no better shape than someone who makes $40,000 and spends $42,000,” she says. Another characteristic of people who are likely to build wealth more successfully is a willingness to self-educate, even just at a basic level.

Even people with money pay attention to the minor tweaks that can save them money–canceling obsolete recurring subscriptions, for example, like one of Doe’s well-to-do clients did. Doe also suggests monetizing your checking and savings accounts as much as you can by using a high yield account with a better interest rate.


“Non-wealthy people think you get wealthy by finding the hot stock,” Thakor says. “Wealthy people understand the key to building wealth is compounding.” That means you can start to build wealth by simply maxing out on your employer-based retirement plan, and then supplementing it with an individual retirement account (IRA). The best option in both cases, she says, is a target date retirement fund: long-term investments that are pegged to a future retirement date. “The holy grail is those that are index funds, as opposed to actively managed funds where the adviser is trying to beat the market,” she says, noting that both Vanguard and Fidelity offer such funds. “The first thing a person can do to mimic the habits of the wealthy is narrow the universe of choices and then pick the lowest-cost, simplest way to invest. That’s not always how wealthy people invest, but that’s the simplest way to start investing.” In other words, stick with index funds.

As Doe points out, the barrier to entry for investing is far lower with the advent of platforms like robo-adviser Betterment and Ellevest, Sallie Krawcheck’s investment platform tailored to women. She recommends testing the waters with money that you’re comfortable losing, whether that is $100 or $1,000. “When it comes to investing, I would say get started,” she says. “If you’re nervous or intimidated about investing, know that no one was born with that knowledge. We’ve all experimented and started before we felt we were ready, and then learned as we went along.”


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