The Millionaire Mindset: 6 Mistakes the Rich Never Make

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secrets of richIncome inequality. One percenters. The wealth gap.

Unless you’ve been living under a rock lately—or you avoid network news like the plague—you’re probably pretty familiar with these terms … and the implication that true wealth in America is too exclusive for most of us to ever attain.

Well, the truth is you don’t have to launch a blockbuster tech company, sport the last name Buffett—or pursue the kind of career that could be featured in a Michael Lewis book. (Although let’s be real—those things don’t hurt.)

What you do have to have? The right money mind-set, as well as the financially savvy habits that go with it.

“The primary difference between the wealthy and the rest of us is that they’re in control of their money—they don’t let money control them,” says Jaime Tardy, a business coach and author of “The Eventual Millionaire,” who has interviewed more than 150 millionaires on how they accumulated their wealth.

“They have taken the time to learn how to work successfully with money, and as a result, they are the captain of their ship,” she says. “On the other hand, if you approach your finances from a place of fear or ignorance, you’ll be like a boat floating around the ocean without a motor.”

And that type of aimless attitude is what can lead you to make serious dollar-sucking mistakes—unless you learn to adopt some key good money habits of the wealthy.

So with that goal in mind, we rounded up the biggest financial blunders many people make—but prosperous folks avoid at all costs—so you can start to put their strategies into action to boost your own net worth.

RELATED: Net Worth: Why You Need to Know It—and Grow It

  • Bunny

    So this business of automating all your payments: It’s great if you’re the type of person who forgets to pay bills, but terrible if you don’t have a consistent income to work with. I ended up paying over $100 in overdraft fees last summer because of my auto-payments (student loans, credit card, and savings transfer.) I was working on commission at the time and thus couldn’t accurately predict what my income would be. I’ve since gotten promoted to management and make a flat hourly rate now, but some tips for those who don’t have a reliable income would be really helpful. I’ve got a whole office full of employees who don’t ever know for sure that they’ll be able to pay their bills.

    • mostlywentzel

      I agree, but that is why I automate my bills thru my bank – I don’t allow creditors to draft the funds. That way, I can go in and adjust the dates and amounts anytime I need to. Also, if you’re not already using a credit union, maybe try one. I get paid once a month, and when I receive the check can sometimes vary by up to a week. I have forgetten a couple of times (about once a year) to adjust my bill dates and ended up overdrafting. They have been willing to forgive the fees.

    • DG

      Completely agree, since that is the boat I’m in more often than not at this point.

  • mostlywentzel

    With the exception of #6, I would say this is just a list of mistakes that responsible people don’t make – not exclusively the wealthy. If it was true that the wealthy were all smarter about their money, then you wouldn’t see people like the Giudices and the Siegels (The Queen of Versailles – if you haven’t seen the documentary yet, watch it.) going bankrupt, over-borrowing, defaulting on loans, abandoning projects, etc. It’s the wealthy who usually end up doing time for tax evasion, not the poor or middle class. It’s also the wealthy who usually have enough money to cover their mistakes.

    • Gigi Cake Shoppe

      I DID see the Queen of Versailles. Outrageous waste of money….I try to be careful, but inconsistent income is the issue. Very trying times….

  • http://carotidartistry.wordpress.com/ C.A.

    My main take-away from this list (of admittedly sensible things) is again being struck by how much money you need — enough to be able to lay out upfront what you need to invest in value, buy in bulk, be in a position to ask for raises, etc. — in order to afford not to be poor.

    • Noah Wood

      I worked my way up from homeless to not in 4 months w/out a job. Didn’t even apply for foodstamps or any other welfare program, which probably made me work even harder. Now I’m planning for college, finishing high-school, and working a part-time job with a few side-hustles which I hope to turn into small businesses.

      Go a week without eating while sleeping outside in below freezing weather, you’ll find a way to earn some money.

      • http://carotidartistry.wordpress.com/ C.A.

        I’m very happy for your success! If it was meant as a rebuttal to my statement regarding this article, however, I fail to see how the two relate.

        • Noah Wood

          You said it requires money, it doesn’t. It requires hard work.

          Businesses don’t run simply because the owner is rich, if they do he won’t be rich for long, and that business won’t be around for long.

          • http://carotidartistry.wordpress.com/ C.A.

            You seem to be responding to my comment without the context of the article, which is specifically about managing money — and you can’t manage money that you don’t have. I was not making a blanket statement regarding being poor. I was responding to tips such as “Rich people will rarely be caught paying their bills late” (sure hope that you haven’t had a sudden/unexpected drop in income or an unexpected huge medical bill that you don’t have an emergency fund to cover for), “Use the hour you would have spent researching the cheapest online purveyor of dish detergent to brainstorm ways to bring in a side income” (if you have that leisurely hour to spare), and “You buy cheapie $50 shoes instead of a good-quality $200 pair that will last longer” (of course better value makes sense, but sometimes immediate needs — your child not going hungry, not being barefoot, etc. — get in the way). The article is not about working your way up from the bottom, as you have done. It is about how to manage and invest one’s resources (both time and money) for the least waste and best return in order to be like “the rich,” but that assumes a certain level of resources.

            I honestly have no idea what you’re talking about with running businesses. It sounds like a true statement, but again, it doesn’t seem to relate to the conversation.

            (Tangentially, I never said that being rich didn’t require hard work. But if all that were
            required were hard work, then there would be a lot of hard-working poor
            people who would be rich and a lot of lazy-ass rich people who would be
            poor. Hard work is a vital factor in determining one’s outcome, with amazing things that can be achieved by it, but it is not the only factor.)

  • JD Curtis

    Heres an idea I RARELY see used and is sooooo simple. TELL YOUR KIDS NO! They wont burst into flames, or be traumatized, or explode into a million pieces. I hardly ever hear anyone today say AND MEAN NO. AND THAT GOES FOR GRANMA GRANPA TOO!!!! No will NOT kill the child and it might even teach them to become self reliant productive citizens. Try it. Purse your lips together, that’s right, and say “NOooooooooo”!!!!!

  • Cici Chang

    This is a good article. I pasted the advice I follow below, while it won’t make me “Warren Buffet rich”, it has been working for me so far:

    1) Pay off your debts as fast as you possibly can. If this means living in a crappy studio apartment and eating ramen everyday for a couple of years, do it. If you want to buy a car, get a reliable beater. Get insurance for $25/month from 4AutoInsuranceQuote. Forget about buying a house until your debts are paid off.

    2) Once you are out of debt, stay out of debt. The only exception to this rule is a vehicle and a house. If you want to get a nicer car, buy used and be able to pay it off in a year or 2.

    3) If you are going to stay in the same spot for at least 10 years, buy a house, preferably with at least a little bit of usable land. An acre is good, 5 acres is better. Take the amount you are pre-approved for and cut it in half – that’s how much you should spend on a house. Come to the table with at least 20% down and make a couple of extra mortgage payments every year. If you’re going to be transferred or relocate every 5 years, forget about buying a house and rent instead.

    4) Develop multiple revenue streams. Do contract work. Start a business on the side. Invest in a business as a silent partner. Build websites. Buy and sell antiques. Acquire rental property. Sell something that generates residual income. Learn to play the currency markets or trade stocks. Do whatever you can to generate income from multiple sources.

    5) Grow these multiple revenue streams to the point that they generate enough consistent and reliable cash flow to replace your current income.

    6) Make as much as you can. Save as much as you can. Give away as much as you can.

    7) Retire!- the sooner, the better. Be sure you understand that “retirement” doesn’t necessarily mean you stop working, it just means having the freedom to do what you want to do, when you want to do it.

    Don’t be foolish and fall into the trap of trying to measure your wealth by the value of your assets. Markets change. Valuations fluctuate. Instead, measure your wealth by the amount of cash flow your assets consistently generate.

    • Robi

      Thank you so much for this additional advice.

  • Tom

    Nothing new here. Common sense to anyone who is responsible