3 Tips to Master the Money Habits of the Rich

If you want to become rich, it can help to adopt the habits of people who are already wealthy. The good news is, this may be easier than you think. Follow these simple tips to adopt the money habits of the rich and you'll be on track to a bigger bank account and a more secure future.

1. Prioritize the purchase of stock

The wealthiest 1% of U.S. adults own 53% of all stocks, while the top 10% of U.S. adults own 88.6%. By comparison, the bottom 50% of the country in terms of wealth own just 0.6% of stocks, according to a Gallup poll.

Rich people have more spare money to invest, so it's not surprising they own most of the stocks. But, part of why they become and stay rich is that they put their money to work for them. If you want to become wealthier yourself, you must adopt the money habit of putting your money to work.

You don't need to become the next Warren Buffett and do in-depth research into the stock market to do this either. If you open a brokerage account and stick your money in an index fund that tracks the performance of the S&P 500 (a financial index made up of the 500 largest U.S. companies), you can likely grow your wealth over time. Over the long-term, the S&P 500 has returned an average of 10% per year.

If you invest $400 a month and earn a 10% average annual return for 35 years, at the end of that period, you'd have $1,431,008.6. That net worth would make you pretty wealthy.

2. Use debt as a tool

Rich people are not afraid of debt. In fact, they borrow more than poor people do. The top 1% hold 4.6% of all debt in the U.S., while the bottom half of the country only holds 36%. But they don't borrow to fund necessities or to pay for a lifestyle they can't afford. Rich people borrow to grow their wealth. Specifically, they borrow to:

• Buy properties that go up in value, especially since mortgage interest is tax-deductible
• Earn a degree or start a business that helps them make more money
• Use credit cards to earn rewards but pay them off in full before owing interest

You can also use debt wisely. For example, borrowing to buy an affordable home can make good sense rather than continuing to spend money on rent and ending up with no assets to show for it. And paying off your mortgage early is often a bad idea because you can get a higher return by paying only what's required and investing the difference.

You'll want to avoid borrowing for anything that won't make you richer in the long-run, though, as paying interest can have a detrimental impact on your efforts to get rich. Before you borrow, ask yourself if whatever you're buying is going to be an asset that increases your net worth. If not, don't buy the item until you can pay for it in cash.

3. Develop multiple streams of income

Rich people don't rely on an employer to provide them with all their money. After all, a job can easily be lost.

Instead, they often have multiple income streams and make money from sources including dividend income, real estate rental income, business profits, interest income from savings and CDs, and capital gains from selling assets at a profit.

You should also consider looking into ways to earn money outside of your nine-to-five. Starting a side hustle, opening up your own business, and buying different kinds of income-producing assets like CDs and stocks can all help you make more money and reduce your risk of losing everything if you become unemployed.

By mastering these three habits, you should be well on your way to becoming wealthy. Start working on them today.