7 Financial Habits Separating the Quietly Wealthy From Everyone Else
The people who quietly build wealth rarely look the part. They often drive older cars, skip flashy purchases and make financial decisions that seem almost boring. While many assume wealth comes from high salaries or brilliant investing, financial experts say the real difference is usually a collection of consistent habits repeated over years.
Here's what quietly wealthy households tend to do differently and how middle-income families can follow suit.
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1. They Make Consistency More Important Than Income
Experts overwhelmingly agree that consistency is what separates quietly wealthy households.
Andrew Van Alstyne, a certified financial planner (CFP) and founder of High Rock Wealth Management, explained.
“They are consistent with their saving patterns, consistent with their spending patterns and consistent with their investment strategy,” he said. These folks tend to only make changes to their financial habits only with “good underlying reasoning."
2. They Invest Their Income Increases
The quietly wealthy avoid lifestyle creep by saving and investing all of their income increases, according to Jacob Bayer, a CFP and founder of Jacob Bayer Wealth Management.
"Over a 30-year career, thiikk6 s one habit is more important than any skill in selecting investments,” Bayer said.
Also, this enables them to take advantage of “the magic of compound interest,” Bayer said. He added that wealthy people aren’t more intelligent, “they have [just] eliminated daily temptations to make expensive decisions."
3. They Live Below Their Means Instead of Looking Rich
Despite what many people assume about the wealthy, these folks tend to avoid flashy expenditures and spend intentionally, staying within their means and resisting lifestyle inflation.
“They buy a car that fits their needs," said Van Alystne. "They dress according to their lifestyle without necessarily looking for designer goods … They'll go on vacations that fit within a budget … They're not playing the proverbial game of keeping up with the Joneses."
While they may appreciate luxury, which they can afford, according to James C. Knapp, a Certified Plan Fiduciary Advisor (CPFA) and managing partner at Knapp Family Wealth, it usually doesn’t come “at the expense of financial discipline."
4. They Automate Saving Before They Spend
Rather than relying on budgeting apps or constant self-control, quietly wealthy people's money movements happen on “autopilot” but in a good way, Bayer said.
"Savings and investments go to their accounts. Bills are paid. Money is saved and invested before it is even money we can spend."
In other words, they treat saving “as a non-negotiable monthly ‘expense,’” Knapp said.
5. They Ignore Investment Trends and Stick With a Plan
The quietly wealthy tend to be surprisingly boring investors. Rather than reacting emotionally to market swings or chasing hot investments, they trust long-term strategies. If they do switch investments they first [revisit] the underlying principles, Van Alstyne said.
Bayer said they also tend toward "low-cost diversified funds and consistent contributions and almost no reactive trading."
Their wealth buffers them so they can remain calm in market downturns, as well.
6. They Think About Debt Differently
Quietly wealthy households distinguish between debt that builds wealth and debt that drains it; they have the financial buffer to use debt as a tool.
Van Alstyne finds that some prefer to be entirely debt-free, while others “like to leverage debt to increase the velocity of money” but don’t extend beyond their means.
7. They Measure Wealth Instead of Income
Bayer said it's important to distinguish between income and wealth. High earners aren't automatically wealthy. By focusing on net worth over income, they prioritize building wealth.
For example, he said, a family with $120,000 income that saves and invests $30,000 will have a larger net worth than a family with $300,000 income that saves and invests only $15,000.
These Habits Are Available to Almost Everyone
Though quietly wealthy people may have had a head start in some ways, most of their habits are available to nearly anyone. Van Alstyne recommended focusing on “budgeting, your current spending habits and a sound investment philosophy that fits within your objectives and risk tolerance."
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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