Which habits prevent people to become rich?

I often write on Quora.com, where I am the most viewed writer on financial matters, with over 262.2 million views in recent years.

In the answers below I focused on the following topics and issues:

  • Which habits prevent people to become rich? Not investing? Lack of focus? Or something else?
  • What are the disadvantages, if any, of being wealthy? I speak about aspects such as risks, happiness and much else.
  • Why do most wealthy families go broke by the third or fourth generation, but some escape that fate, such as European royal families?

If you want me to answer any questions on Quora or YouTube, or you are looking to invest, don’t hesitate to contact me, email (advice@adamfayed.com) or use the WhatsApp function below

Which habits prevent people to become rich?

Source: Quora

Perhaps the biggest one is not defining what they mean by rich. Many people define it as being high-income and living the high life:

The more sensible thing is to aim for wealth, as opposed to income alone.

The reason that is essential is that there are many poor mid and even high-income people.

Easy come, easy go. If they get into that habit early, they will always be like that in some cases.

So, the most obvious habit is living below your means and investing the surplus wisely, regardless of your income level.

That habit can ensure even the mid-income can become wealthy by 35, 40s, 50s or later.

Apart from that habits to avoid are

  1. Vices. Excess alcohol, gambling, drugs, partying etc. Moderation can work for many people. Doing it all the time seldom does. Vices reduce focus. Focus is one of the keys to success. It is also neglecting your health.
  2. Giving up. Not being persistent.
  3. Not reading enough. Some of the most successful people spend hours a day reading. Audio is a good alternative to reading.
  4. Getting into debt. Certain types of debt, like credit cards, is incredibly expensive. Some forms of debt are OK, however.
  5. Not thinking ahead. Many people don’t delay gratification. Investing 200 a month when you are 22 might not sound like a lot, but it will become huge over time.
  6. Not taking advantage of luck. Most of us will get a big, unexpected, lump sum. That could be from a redundancy, inheritance, bonus or whatever
  7. Not paying attention to some things. Some things add up. Think about weight loss or gain. Some changes can be huge over time. The same thing applies to wealth. Some reductions in costs, or investing earlier, can eventually make a huge difference.
  8. Delaying. Procrastination can cause a lot of issues. As Jeff Bezos, Alex Ferguson and countless other high performers say, quick decision-making and then pivoting if needed is better than waiting to be 100% sure.
  9. Wasting too much time. If you ask people how much time they waste, it is amazing the responses you get.
  10. Just staying in your comfort zone. We all like what is within our comfort zone, but most great things come from outside it.
  11. Caring too much about failure. We all fail. It is important to learn more.
  12. Thinking negatively. Many people fail and think negatively. Others see the positive. Look at coronavirus. Some people complained. Others saw the opportunity of people moving online.
  13. Spending too much time with toxic people. Spend more time with uplifting people.
  14. Making excuses. It is best to look in the mirror when failure comes.
  15. Marrying the wrong people. Divorce is expensive!
  16. Not taking enough calculated risks. The only low risk way to get wealthy is invest for decades. Start young and small. Increase it. Boring but effective. If you aren’t young anymore, taking risks is essential. Even if you are young and want some excitement, it makes sense to take risks.
  17. Emotions. Many people do things like panic when the stock market crashes. This harms the wealth creation process.
  18. Not keeping things simple. Many people think they need to create the next Amazon or Facebook. You don’t. Most of the world’s millionaires just invested for decades and/or created more modest businesses after getting a job in the domain. Think the person making 100k a year after having a job in the space for years, living below his/her means and investing on the side.
  19. Saving money instead of investing it.
  20. Worrying about things we can’t control. It is true that no matter how many great decisions we make, our risks we take, we can not succeed, but we can’t change that. That is like saying we shouldn’t be healthy as some people have heart attacks at 25 even if they have made the right choices.
  21. Not playing the numbers game. Most people fail and have the bad times. Sometimes you need to try many things to gain success, and be persistent and thick-skinned to go along with it. 
  22. As a follow-up from the last point, caring too much about what other people think, when most people don’t even care to begin with. I know several people who saw big, huge, megatrends like YouTube and LinkedIn videos a mile off. So, why didn’t they take advantage? They were worried about how they would look!
  23. Not adapting to changing times. Things change in business. People need to adapt to those changes to survive and thrive.
  24. Not being willing to make huge sacrifices. 
  25. Not leveraging technology, time (other people’s time, compounded returns etc) and money in business. It also usually makes sense to leverage strengths, and not improve weaknesses, after a certain age.

It also depends on people’s character’s. For people who want low-risk, investing for decades with a regular job makes sense.

Small amounts will become larger sums. Others need more risk and entertainment.

Which ones, if any, are the disadvantages of having money?

Source: Quora

A few days ago I watched an interview with the British businesswoman Baroness Michelle Mone.https://www.youtube.com/embed/HpXKWDp4MgY?wmode=opaque&autoplay=1&autohide=1&iv_load_policy=3&enablejsapi=1

She spoke very honestly about some mental health issues she has. She also mentioned how some wealthy people she knows are depressed.

Yet in the same interview she made a good point. Money brings options and can be the icing on the cake.

If you are already relatively happy, or very happy, and you add money to the equation, you are adding fuel to the fire.

In comparison, if you aren’t happy already, the money isn’t likely to make you any happier.

Therefore, many unhappy wealthy people aren’t unhappy due to the money. They were often unhappy with money as well.

Despite this, there are plenty of people out there who believe that money will automatically make them happier, or that money can never help with happiness (the opposite end of the extreme).

None are true. People who don’t learn that often miss out.

Beyond that I would say:

  1. “Rich people’s problems”. One set of problems gets replaced by new ones. That could be dealing with demanding workers or clients, accountants, lawyers etc.
  2. Becoming a target for scams and spam. Most people don’t try to scam others of course, but a small minority do, and they often target people they perceive to have more. What is more common is to get loads of spam emails, LinkedIn requests etc.
  3. Less time. This one doesn’t always have to be the case. Some sensible wealthy people use the money to buy more time, and therefore engage in activities, such as exercise, which can increase happiness.
  4. Loneliness. If people have come from a poor or middle background, and become very wealthy, they might feel disconnected from friends and family.
  5. Declining marginal utility. If you go from being a student to making a comfortable income, that can make a huge difference. As you earn more, it means less. The same with wealth.
  6. You might become a target for hate. This is a bigger issue in the social media age. It is best to have a thick skin or don’t become public to begin with!
  7. Risks. In certain situations, your risks go up, and your liabilities. This isn’t the case if you are a salaried employee who invests on the side. But if you start your own business and get success, you also have more potential liabilities as well.
  8. Less excitement. This one might sound strange, as if you have more, you can engage in more interesting activities. For some, though, having to save up for something is more enjoyable than being able to buy an item or service asap.

Usually, the disadvantages are caused by the wrong decisions people make, rather than the money itself.

For instance, spending all the money, and therefore not having wealth but just a higher income.

Or getting wealthy, but not caring about things like health, time with family etc.

Sensible wealthy people have realistic expectations about what the money can actually do.

If you have those realistic expectations and make sensible choices, then happiness is more likely to flow as compared to thinking you will never have worries.

Why do some wealthy people stay wealthy while others lose their money within a few generations?

Source: Quora

What Jelmar has said below is true “The pattern usually goes something like this. The patriarch does something clever and becomes rich. His children freeze, afraid to squander the family fortune.

The third generation does not experience any of the sacrifices that went into creating their wealth. They take it for granted and seriously start spending. End-result: no more prosperity”.

If you think about your own network, I guess you will know many first, second and even some third generation rich, but few fourth generation wealthy.

A quick look at most rich lists confirms the same thing.

However, there is another factor here.

Why have some families in Europe, like Royal Families, stayed wealthy?

There are many reasons for this, including that some have regularly married into industry when they were running out of money.

Yet one factor is that the wealth can’t just be spent. Often it is in trusts and foundations.

This is one reason why business families who want to create dynasties try to create structures with the help of family offices, which ensures that income is continually paid out to the generations, as opposed to one person getting the whole family business and riches to manage.

Another factor is unexpected events, and failing to prepare for such occurrences.

Every time there is an unexpected event like a military coup, war, political unrest or indeed a pandemic like Covid, a percentage of wealthy people become broke.

We have seen that this time. For all the talk of “the rich getting richer during the pandemic”, many hospitality businesses have gone to the wall.

That has included firms that have been going on for generations, passed down by grandads in some cases.

After WW1 and WW2, there was a record number of wealthy people who were broke.

Few asked themselves what they would do if such black swan events happened.

Finally, there are some people who simply want to give away the money, and would prefer their kids not to inherit large sums.

That has become more popular amongst the super wealthy, as opposed to the merely wealthy who usually want to pass something on.

Pained by financial indecision? Want to invest with Adam?

Financial Planner - Adam Fayed

Adam is an internationally recognised author on financial matters, with over 262.2 million answers views on Quora.com and a widely sold book on Amazon

Further Reading

In the article below, taken from my online Quora answers, I spoke about the following issues and subjects:

  • Why do people always get scared to invest? Are all of the reasons illogical and irrational, or are there some good reasons not to invest, such as losing a job?
  • Is Seoul, Tokyo or Hong Kong best for expat living? With the changes in Hong Kong, brought about by Mainland China, is it still a first-tier expat location?
  • Is investing a game for the ultra rich, or do most people participate in the market?
  • Which is the best place to start a business other than highly populated places like India and China? I break the question down into which industry you are in, skills, experience etc.

To read more click on the link below.

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