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How To Act Rich To Become Rich

Acting rich is a good thing. Acting how you think rich people act is a bad thing. One of the most common misconceptions about rich folks is that they spend their money frivolously because they are so wealthy that they don’t have to worry about it. While it is true that some wealthy people, professional athletes in particular, live an over-extravagant lifestyle, the majority of rich people got to where they are by living below their means and persistently investing money. Once you learn to act rich, you will hear the phrase, “You spend money like a millionaire”, and take it as a compliment.

How Normal People Treat Money

The middle class is one of the biggest groups of spenders there is. The sheer number of people willing to give up their future by spending cash that they don’t have is astounding. Below is a list of ways that most people spend money and how it affects them financially.

• Financing or leasing a new car. After working years to get a bachelors degree and finding their first real job, many people feel that they’ve earned the right to a new car, so they put the minimum down, and finance a brand new vehicle with the longest terms available. This is a bad idea for several reasons. New cars realistically lose 15%-20% of their value immediately after being driven off the lot. On top of that, the longer the terms are on your financing, the more interest you’ll end up paying. You might end up paying $30,000 or more for a $25,000 car depending on the interest rate you receive.
• Putting things on credit cards with interest. Credit cards can be very useful in building up credit or earning cash or points rewards, but unfortunately, credit cards are often used irresponsibly. Millions of middle class consumers owe thousands of dollars to credit card companies and only make the minimum payments every month. With interest rates as high as they are, some debts can take over a decade to pay off. This is the absolute worst way to use a credit card.
• Living paycheck to paycheck. One of the first signs of financial problems is living paycheck to paycheck. If you pay bills based on when your next check comes in, you need to reevaluate your financial situation. The number one rule of personal finance and working towards financial freedom is to spend less than you earn, and living paycheck to paycheck indicates that this is something you aren’t doing.
• Neglect saving money. One of the biggest mistakes people can make is to put off saving or investing money because they “don’t make enough to save”. The worst thing you can do in this situation is to use that as an excuse to continue living the way you are and saying, “I’ll start saving when I make more money.” If you don’t have any money to save (which I would argue is never actually the case), it is just the result of the core problem, which is that you are living beyond your means and spending more than you have.

How Rich People Treat Money

In contrast to the majority, rich people look at money in a completely different way, and by adopting the same attitude, you will gain the ability to earn and save like they do. Below is the contrasting way in which rich people treat money when put in the same situations.

• Paying cash for a late model used car. Instead of paying interest and monthly payments, financially savvy people will save enough to pay cash for their vehicles. They will also not buy a brand new car, but let the original purchaser bear the burden of the initial depreciation. A car that is one or two years old will have minimal usage and will often have some of the original manufacturer’s warranty intact. By purchasing cars by these rules, they get the best value possible.
• Using credit cards to earn rewards. The rich will use credit cards to their advantage. They will pay them off in full every month and use rewards programs to gain points, miles, and cash bonuses. They will rarely close a credit card because they know that the average age of their credit history affects their credit score.
• Spending only a fraction of their paycheck. Wealthy individuals continually increase their wealth by following the first rule of personal finance and spend less than they earn. They always pay their bills right away because they are not worried about overdrawing their bank accounts.
• Saving 10%-20% or more of every paycheck. Rich people know that no matter how much money they make, they can always find a way to save some of it. They don’t put all their savings in one place and find ways to save more every month. Wealthy people know that the more they save now, the faster there money will grow.

The Millionaire Next Door is a great example of how to become financially free through frugality and perseverance. It’s a great resource in which you can gain a new understanding of what it really takes to gain financial freedom.

There are many other ways you can apply the principals demonstrated above. Learn to squeeze the most value out of everything you buy, spend money on things that will make you even more money, and learn to save as much as possible without depleting your love for life. It is a delicate balance between having what you want now, and delaying gratification for the future.

What areas in your life do you think acting like a rich person would be most beneficial?

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