5 Things Rich People Do With Their Money

Do you think you can learn something from rich people?  How much do you know about them?  Have you studied their habits to see what you can learn? Do you think they inherited most of their wealth? (They didn’t.  In fact, only 10% inherited their wealth). Did they start on their paths toward financial responsibility earlier than most?  (They did, with the average wealthy person starting to save by the age of 14).

What are the top 5 things rich people do with their money? Are there common themes which could benefit you if they were applied in your own life?  Today, we’ll review some interesting traits of wealthy people.

5 Things Rich People Do With Their Money

I read an interesting survey this week from US Trust, which covered 684 high net worth investors, with at least $3 Million in investable assets.  There are some very interesting findings in the survey, which is my focus for today’s article.  There are, indeed, some very common traits among these folks.  All of us could benefit from studying their habits and applying them in our own lives.

Rich folks have some common traits regarding their finances. How many can you apply yourself? Click To Tweet

Here, then, are the top 5 common traits regarding how rich people manage their money.  Think about which ones you already do, and attempt to apply a few that you don’t.


1. They Start Early

start early

According to the US Trust study, a common trait among the wealthy is the fact that they had parents who instilled a strong sense financial responsibility at an early age.  The average wealthy person began saving at Age 14, began working for money at Age 15, started charitable giving (time or money) by the Age of 23, and started investing in the stock market by Age 25.

I started working (and saving) when I was 10.  In elementary school, I started shoveling driveways in the neighborhood, and got my first “real job” (a paper route) at age 13.  I saved diligently, and had several thousand dollars in my savings account by the time I graduated from high school.  Clearly, my parents instilled the work/thrift ethic in me, and my wife and I have worked to instill it in our own daughter.


2.  They Delay Gratification

delay gratification

I had a discussion during lunch with a financial planning friend last weekend, where we discussed the single most important attribute required for wealth creation.  We both agreed that delaying gratification is likely one of the most important things within our control for creating wealth.  (By the way, my friend’s name is Ed Wolpert, and he’s written 3 books on personal finance.  Have a look here).

Apparently, the wealthy feel the same way about delaying gratification, with 80% of them saying that investing in long-term goals is more important than funding current wants and needs. As I explained to my daughter when she expressed a desire for a motorcyle, if you want to build wealth you need to save the money first and buy things you WANT in cash.  It helps you delay your gratification, and insures your money works for you (instead of the other way around).


3. They Focus Their Investments On Buy-And-Hold

buy and hold

In spite of significant wealth, 85% of high-net worth investors say they made their biggest investment gains through long-term buy and hold strategies.  Rather than being savyy day-traders, they automate their savings month in and month out, and gradually watch their net worth grow.  They keep their investments simple, with 89% using a traditional buy and hold approach in mostly stocks and bonds.

In addition, the wealthy maintain cash reserves, with 54% of them holding at least 10% of their portfolios in cash. They also invest in tangible assets, with roughly half of high net worth investors owing real estate or farmland that produces income and appreciates over time.  Compare this to the “average” person, who borrows an average of $30k on a 68 month loan to buy a new car, which depreciates immediately.  Smart?  Not.


4. They Are Charitable


Wealthy folks share a common trait of feeling a deep commitment to give back to society.  74% donate their money, 61% volunteer their time, and 47% serve on boards.  They find a way to contribute to others, which is counter to the stereotype so often attributed to the wealthy.

As I wrote in “No One Has Ever Become Poor By Giving”, generosity brings unexpected rewards to the giver.  The wealthy have discovered that reality, and most do not hoard their wealth.


5. They Manage Their Own Destiny


Whether the wealthy gained their riches via private business or corporate roles, they all agree that owning a business is a path to greater wealth than working for someone else.  I read a lot, and there are dozens of articles like this one that point to the reality that entrepreneurship is the surest way to real wealth.  It can be a difficult path, however, as 70% of the wealthy who are business owners agree that it’s more challenging than just “having a job”. Regardless, 80% still prefer to run their own business, demonstrating their motivation to take control of their own destiny.  The wealthy work hard, and often make sacrifices.  71% say work responsibilities take priority over personal needs.  Think about what you really want in life before you pursue wealth, there are tradeoffs.


Wealthy people share some common themes in how they manage their money.  I don’t know whether it’s cause or effect, but the principles outlined above have been proven time and time again to be fundamental building blocks for wealth creation.  Yet again, this survey by from US Trust proves these principles are critical, and followed by a majority of people with significant wealth.

How about you?

How many of the items on the list above are apparent in your life?  Are there a few that you can begin applying to your personal situation?  Work toward implementing all 5 in your personal finances, and you’ll be well on your way to…

…Achieving A Great Retirement (my tag line!)




  1. This is depressing, Fritz. Here’s how I did on these five key traits.

    1. No. Didn’t start saving for retirement until I was in my 40s.
    2. Bad in my 20s and 30s. Woke up in my 40s. Now I would rather have a maxed-out 401(k) than a BMW.
    3. Yes. Good here. Dabbled only a little with individual stocks. I’m a big index and ETF fan, and I believe firmly in buy and hold.
    4. Need work here. I’ve just lost faith in our charitable organizations. Too much overhead, too many CEOs making north of $500K. I read a story a while back about a man in Tennessee who gives 50 percent tips to restaurant servers. I like this idea. No overhead. I want to be more charitable, but I don’t won’t to outsource it any more. I want to help people directly.
    5. Not good here either. I’ve always had the W-2 mentally. I think this is the result of fear (starting a business is scary) and a lack of imagination (what business could I start?).

    I guess the goods news is that you can acquire these traits rather late in life (or not at all in the case of trait 5) and still achieve financial independence. But the later you fail to embrace these traits, the harder it gets. I certainly wouldn’t recommend the path I took to any young person. What saved me was marrying Mrs. Groovy. Without her I would have remained a “normal” broke American with plenty of fabulous toys.

    What do the rich say about marriage? I’m sure many of them are married to their high-school sweethearts. And I’m sure many of them would advise young people to choose a partner wisely.

    Thanks for sharing the habits of the rich, Fritz. We all need benchmarks, and these benchmarks are great.

    1. Mr. Groovy, great comments, thanks for sharing your personal “hits” and “misses”. Good question about marriage, and an interesting element that the survey didn’t address. I, like you, expect many have been faithfully married for decades. I just did a quick Google search, and found several articles that seem to indicate that pattern (poorer folks seem to have a higher divorce rate than wealthier folks). Perhaps that’s fodder for a future post…..

  2. I got three out of five! I didn’t become charitable until I was in a high tax bracket and I don’t fully believe in buy and hold. Having owned my own business, I became more aware of business cycles, business do fail to grow so many long term holds can easily go down in value.

    1. Rico – thanks for your comments on the article! As a lifelong “corporate guy”, I sincerely appreciate the input from one who has actually owned his own business! Thanks for participating in The Retirement Manifesto community!

  3. Good points. I have 2 out of 5.
    My real fully aware investing career only started in 2014, age 38. Better late than never. Good thing is that I did the right thing and maxed out my Belgian tax pension plan as from the first year I have worked. That gives me an edge.
    I still work for the man. I see myself in best case become a freelance consultant. We that happens, maybe one day I dream to join a partnership. Sweet dreams for now.
    My donations to good causes stopped last year due to a bad experience with the cause I gave (minimal) donations.

    Still a lot of room for improvement.

  4. I’ve done a good job with 1, 2, and 3. After my first year of work I realized I barely gave anything back. This year I’ve already been more charitable. I don’t have my own business although if I have an idea I’m passionate about in the future I love the idea.

  5. I am starting very late. Yes, I have buy and hold mentality . Charity… not that much. But still give. Not that much creative to have a good business idea. But, I take my work as my business.

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