10 Rich Habits - How the 1% Live Differently

They're lauded, revered, and respected - they're the 1%. They're the seldom few who've mastered their financial lives to create rich amounts of abundance. The media exalts them, extolling their fabulous lifestyles wrought with excesses in luxury, comfort, and class. Still, others look at them with skepticism and distrust, as if they've bent or broken the rules somewhere along the way.

Regardless of how they're looked at, the majority of the 1% didn't achieve their wealth through any small feat. They worked and toiled endlessly, year after year, methodically saving and investing along the way, employing rich habits that helped to fuel their quest towards financial dominance. It didn't happen overnight; it occurred slowly over time.

Yet, regardless of how many books, blog posts, or videos we might watch, depicting the 1% and their lifestyles, the consensus often is that the rich somehow got lucky or were blessed with some God-given talent that helped them to achieve their goals, or simply put, they cheated their way to the top. Because, not just anyone can pull off becoming the 1%, right?

Well, the 1% are no different than anyone else in this world. In fact, most of them came from sheer poverty such as Oprah Winfrey and J.K. Rowlings. But, what they did that most others failed to do, was to wholeheartedly embody a set of rich habits to help fulfill their dreams. Without those habits, they couldn't have achieved their goals.

Every single one of us has a set of habits that creates the foundation of our characters. We have relationship habits, financial habits, social habits, and work habits. Those habits help to impact and influence the direction of our lives. The good habits help to empower us, while the bad habits work to limit us.

In fact, at the heart of all that we are, say, and do, are our habits. And studies have shown that 40% of behavior is habit-driven. From what we do in the morning after we wake up, to what we eat throughout the day, to the route we drive to work, to the way we spend our money, to the things we say, and even the Websites we visit, are all driven by our habits.

Yet, when it comes down to what we do on a daily basis, it's far harder to see just how much our habits are affecting us. This is evident no matter what area of our lives we speak about, whether it's health, career, relationships, or finances. And, the truth of the matter is that, we might say we want to live a certain life, but our habits help to dictate otherwise.

But, in order to get ahead and stay there, we need to embody a certain set of habits that will help to fuel our quests towards success. For success in health, we need good health habits; for success in our careers, we need good career habits; in our relationships, we need good relationship habits; and, of course, in our finances, we need good financial habits.

The basis of all our habits resides in our minds. At the epicenter of 80 billion neurons exists a neural network that interlaces all of our thoughts, behaviors, and emotions. Neural pathways that have been etched over months, years, and even decades, connect seemingly unrelated neural networks together, helping to form the foundation of the habits that we've come to know so well today.

Forming rich habits is no different than forming any other type of habit. All it takes is constant repetition over time. How long? According to one study, habits can be formed anywhere from 18 to 254 days, with an average of 66 days for their formation. Want to ensure that the rich habits stick? Stay consistent for at least 90 days and that behavior will become autonomous.

I know that it's easy to say, well, just do something for 90 days and you'll form a habit. But, it's the truth. After 90 days, behavior becomes automatic; the mind shifts into autopilot, accessing the habits that we've learned in our subconscious minds. But, in order to form those rich habits, some of us need more than just the saying "Do it for 90 days straight."

Yet, when it comes to habit development, that really is at the heart of it: consistency. But then again, that really is the true ticket to success. Being able to stay consistent with your behavior, regardless of what you're trying to achieve, is a foundational element. But, beyond the consistency, every habit really does have a structure that guides it, rich habits being no different.

In his book, The Power of Habit, Charles Duhigg describes this as the habit loop. Every habit has a habit loop, or a set of components that help to define it. The three components, according to Duhigg, are as follows:

#1 - The Trigger

A time or event that signifies the start of a habit loop. This can also be called the habit "cue." We have triggers that exist for all types of habits. If you'll recall the example of Pavlov and his dogs, the bell was used to signal the start of a habit loop. The bell created a response that became steeped in conditioning.

When the dogs heard the bell, they began to salivate. To them, the bell signaled the start of a habit loop that would include food. Later, when the food was removed from the equation, they still salivated when they heard the bell due to their conditioned response.

Similarly for us, we all have triggers that start our good and bad habits. Finishing a meal might trigger a cigarette-smoking habit to a smoker. Getting in the car no a morning drive to work might trigger a coffee-craving habit for a coffee lover. And so on.

#2 - The Behavior

The behavior is what comes after the trigger. If the trigger is waking up at 5am, the behavior might include a morning routine with a run. The trigger of waking up might involve immediately putting on running shoes, getting dressed, and going outside to begin that habit loop.

The hardest part is ensuring the repetition of the behavior to solidify the habit loop in the neural pathways of the mind. For rich habits, those behaviors are the conditioned responses to how we behave when it comes to money. But they also interweave emotional and physical behaviors as well.

#3 - The Reward

Every habit has a reward. This reward doesn't have to be a physical one. It can just be the sheer satisfaction of the completion of the habit loop. For example, when someone writes a to-do list in the morning, which some consider as a rich habit, a physical reward doesn't exist, but an internal reward does.

Often, the mere satisfaction that comes out of performing a good-habit behavior is enough of a reward for us. Because, not every habit is going to have a physical reward, especially good habits. Some bad habits might have perceived rewards, such as a feeling of relaxation after smoking a cigarette or drinking alcohol.

The 1% didn't get rich by spending what they made. They saved their money from month to month, ensuring that at the end of the month, there was always a surplus. This rich habit calls for saving at least 20% of your income.

Think you can't get by with saving 20% of your income? Well, you would be surprised at just what you could cut out of your life if you were committed enough to doing it.

Did you know that if you were to save $500 every month for 10 years, at a 6% return compounded monthly, you would have $81,941.49? After 20 years, that would be $231,023.76; after 30 years, $502,263.54; and after 40 years, $995,756.32.

This rich habit is also a keystone habit. Why? When you methodically track all of your expenses, several things start to happen. First, you begin to recognize patterns in your spending. A few dollars here and a few dollars there might not seem like a lot until you add it all up.

Benjamin Franklin once said, "Beware of little expenses. A small leak will sink a great ship." That $5 latte-a-day habit might not seem like a very big deal at first, but added up over time, it amounts to $140 per month or $1680 per year.

If you took the amount of $1680 per year, and added just $50 per month to it, at an annual interest rate of 6% compounded monthly, your initial investment would be worth $60,343.68 after 30 years, and after 40 years $117,983.06.

By tracking all of your expenses, you can see where the money goes. When you see where the money goes, you can adjust your spending accordingly.

Debt is a big burden to most people. As of November, 2014, the American Household debt statistics were as follows:

• $15,593 - Average U.S. household's credit card debt.
• $153,184 - Average U.S. household's mortgage debt
• $32,511 - Average U.S. household's student loan debt

The enormity of that debt can overwhelm most people, especially those that are living paycheck to paycheck. But, anyone who's committed enough, can pay down their debt by going on a spending fast or even a spending diet.

One easy way to hide from our obligations, is to ignore them. By avoiding bills and not opening them in a timely manner, it's far easier to shroud our financial lives in a layer of obscurity. But, this rich habit calls for us to open bills immediately upon receipt.

To some, this might seem like a foreign concept. If you're the type to hide your bills in a drawer, or wait until the end of the month to open them, then you need to heed this advice. Immediately open and catalog all of your bills so that you're clear on just where you stand at any given moment.

By opening your bills, this rich habit will enable you to plan your financial future accordingly, and not give into your every impulse and desire to spend money when it shouldn't be spent.

Late fees, overdraft bank charges, creditor phone calls, and legal fees are just some of the penalties associated with not paying on time. The unfortunate truth is that most people find themselves in greater debt than they can service on a monthly basis.

If this is the case for you, you absolutely must do something to rectify your situation. Whatever expense cuts you need to make on a daily, weekly, monthly, or annual basis, must be done so.This rich habit won't improve your life overnight, but over time, it will help you to sleep more soundly knowing that you'll be able to cover your expenses every month.

This rich habit calls for an audit of all your monthly expenses. Mistakes do and will arise in your statements, and it's important that you be prudent about checking the accuracy of your statements against your receipts.

For example, for this rich habit, you should match up all of your separate receipts billed to your credit cards or debit cards with the actual invoices themselves. Are there any discrepancies? Check through and ensure that you're not paying more than you're supposed to pay.

Your ability to budget dictates the quality of your financial life. This rich habit involves determining, before hand, just how much money you can spend in the various areas of your life. This includes things like fixed expenses such as car loans, variable expenses, such as credit cards, and any other expenses such as meals and entertainment, healthcare, and so on.

Do you know exactly how much disposable income (income after taxes) you have to spend every month? How much of that is being eaten away by costs that can be avoided such as late fees and bank charges? How much of that money can be invested? And so on.

This rich habit involves a stringent look at your money and just where it's going, how your lifestyle can be changed to improve your situation, and what ways you can save the extra money you do have on a monthly basis.

If you don't presently own your home, it's important that you make the necessary adjustments in your life to do so. Often, people think that they won't qualify for a home loan, when just the opposite is the truth.

For this rich habit, setup a meeting with a mortgage broker who will understand your needs and pre-qualify you for a particular loan according to your particular situation. Find out what you can afford and do whatever is necessary to purchase your own home.

Owning a home will usually be the single biggest investment most people make in their lives. Ensure that you invest money into the areas that count in your home such as kitchens and baths in order to boost your resale value.

Regardless of how invested you are in the markets, it's important that you take the time to study and track investments. How much do you understand about the financial markets? Where is your money invested?

If your money is in a 401k, how much do you know about the investments of that 401k. Do you know the value of your investments? All of these are important questions. Ensure that you study and track investments and understand where your investment dollars are going.

This rich habit also involves studying and understanding other investment vehicles. How much do you know about the foreign exchange (forex) markets, or the commodities markets? How about stocks and bonds? The 1% spend ample time on their investments every month. How much time do you spend?

This rich habit means that you should, if you don't already, mind your own business. Mind your own business? Yes. The majority of the 1% make the majority of their money through capital gains and the sale of companies that they run, not through high annual income, which is heavily taxable.

If you don't already own your own business, what's stopping you? Take the time to research businesses and see just what you could do to launch and run your own business. Running a business is an extraordinary amount of work, but it can be done with the right amount of commitment, especially if you want to join the 1%.