Bad Habits, Some like it hot.


Vanguard Financial Informer - Q4 2019


The path to financial independence is fairly straight forward for some but terribly difficult for others. However, on closer inspection, those who find it difficult are often nothing but the product of bad financial habits. Thomas C. Corley, a certified public accountant and certified financial planner, spent five years studying millionaires and gathered his insights in multiple books, including "Change Your Habits, Change Your Life." According to Corley, there are sev-en bad habits that won’t lead to wealth.


Habits are daily, often unconscious, behaviours that either contribute to or inhibit our success. Corley interviewed 233 people with at least $160,000 (roughly R2.4 million) in annual gross income and $3.2 million (roughly R48.5 million) in net assets, 177 of whom were self-made. He al-so interviewed 128 Americans with $35,000 (roughly R530,000) or less in annual gross income and $5,000 (roughly R75,000) or less in liquid assets.

Through these conversations and further analysis, he was able to identify two types of habits: those that helped people build wealth ("rich habits"), and those that worked against them. The latter habits have the power to cause financial, emotional, and mental destruction in a person's life, he says. To achieve success, one must identify these habits and replace them.

"Adopting one rich habit has the effect of eliminating many poor habits. That's why the rich habits are so powerful. Each one you adopt is like a double or triple in baseball," he writes.

Below are seven habits that won't lead to wealth, according to Corley.


1. Overspending

You simply can't get rich spending more money than you make, whether it's buy-ing a car or house you can barely afford or racking up a credit-card bill.

"Ninety-five percent of the poor in my study did not save and most accumulated debt to subsidise their standard of living," Corley wrote. True wealth comes from saving and investing a portion of what you earn, no matter the size of your salary.

2. Reading only for entertainment, or not at all

Reading with intention is a top habit of millionaires.

In Corley's study, 92% of people with minimal assets did not read to learn. "Success requires growth. That growth comes from reading and educating yourself on a daily basis," he writes.

3. Toxic relationships

It's hard to sever ties with people who may be holding you back. But if you're serious about setting yourself up for a rich future, it has to be done, Corley says. He found that only 4% of the low-income people he studied associated with "success-minded" people.

"You are only going to succeed in life if you surround yourself with the right type of people," he writes. That is to say, people who are encouraging, positive, curious, and helpful.

4. A single stream of income

Many of us rely on one job to make money, but that's not how future millionaires operate. Sixty-five percent of the rich people in Corley's study had at least three different streams of income set up prior to making their first $1 million.

This not only supercharges earning potential, it acts as ...