The rich share tips on how to be rich - opinion

I had a meeting this week with a couple that received a sizable inheritance. At one point the wife said that she wanted to feel rich. The fact is that they didn’t inherit millions of dollars but for them, and most people, it was still a lot of money. I asked her to define what she meant by “feel rich.” She said that it wasn’t having huge amounts of money and living a life of luxury. That being said she knew what it wasn’t but she had a tough time defining what it is. Then I said, “It’s when you are in control of your money. If you need to buy something, you don’t have to run around trying to figure out how to pay for it, you know that you have the money ready to make the purchase.” She liked that definition. 

In between Passover and Rosh Hashanah many read a weekly chapter of Ethics of the Fathers. A few weeks ago we read chapter 4. The beginning of the chapter says, “Ben Zoma would say: Who is wise? One who learns from every man. As is stated (Psalms 119:99): ‘From all my teachers I have grown wise, for your testimonials are my meditation.’”

That we can gain knowledge from every man points to the individual worth of each and every one of us. No one has a monopoly on wisdom. Yet there is no doubting the fact that certain individuals may have an expertise that others lack, so most questions in that specific field should be directed to the expert. When it comes to money, we can learn a lot from how the rich relate to their wealth. I am fully aware that the continuation of the “Ben Zoma” quote is “Who is rich? One who is satisfied with his lot.” Nonetheless, and it may be applicable to those satisfied with their lot as well, wealthy people tend to have a similar approach to their money. Lest you think that they grew up rich and are used to a different standard of living than most of us, interestingly enough, 77% of those surveyed grew up middle-class or poor!

A few years ago US Trust did a survey of nearly 700 high net-worth individuals and it showed that there are many similarities vis-à-vis their financial management. Based on the survey, here are some tips on how to manage your money.

As I write about all the time, it’s very important to plan for the long term even at the expense of some current pleasure. Over 80% of these high-net worth investors said that investing in long-term goals is more important than funding current wants and needs. You need to pay yourself first and make saving a priority. If you spend first and save second, you will find out that there is nothing left to save.

It’s not by investing in fads like Bitcoin or GameStop that creates wealth. Plenty of people have been crushed, buying at the high. According to the survey, Catey Hill of Marketwatch said, “Fully 85% of high-net worth investors say they made their biggest investment gains through long-term buy and hold strategies (in which you buy investments and hold onto them for many years), and they did this using mostly traditional stocks and bonds (89% prefer this approach).”

They don’t day trade. They buy good, quality investments and hold them for a very long time. I know it’s boring, but it’s the tried and true way of building wealth. They create an asset-allocation model, and stick to it, updating it from time to time as their goals and needs change.

And a note to my kids. Many other surveys point to the fact that those who are self-made millionaires, don’t spend a lot of time in front of the TV. They tend to watch sports and the news, but that’s about it. They don’t waste their time watching reality shows. They believe that they should live their own life, not waste time watching other people live theirs. They attribute their success to ambition, hard work and family upbringing. None of them answered that they got rich by watching bakers make beautiful looking desserts, or by watching brides finding the perfect wedding dress.

Let’s learn from those self-made millionaires and apply their approach to life and money to our own financial situation.