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Passive Income MD likes to differentiate between seemingly similar terms “rich” and “wealthy” much in the way that I see financial independence and financial freedom differently.
Read on to learn how Dr. Kim defines what wealth means to him, and how he plans to obtain it. This post was originally published on Passive Income MD.
7 Behaviors of the Wealthy (and How I Copy Them)
The word “wealth” is highly subjective. For some, wealth is a comfortable living without worrying about money. For others, it brings to mind mansions and private jets. But have you ever stopped to think what being “wealthy” means to you? To take it a step further, consider this: Is being wealthy the same thing as being rich?
As I’ve mentioned before, I think that the two terms are quite different. For me, trying to be rich means being concerned with a number, while trying to be wealthy means being concerned with time. Sure, you might make a million dollars a year, but if you don’t have financial freedom or time, then that doesn’t constitute true wealth in my book.
I’m obsessed with the idea of financial freedom (as you may have gathered), and that concept ties directly into my definition of being wealthy. So, I’ve been reading quite a bit about people who have achieved “true” wealth. Who are they? What did it take for them to get there?
Of course, there is no set roadmap to wealth. However, I do believe that many wealthy people do share certain behaviors and common mindsets. If we can adopt these behaviors, then we, too, can find ourselves on the road to wealth.
Wealthy People Make the Most of Their Limited Time
In The Miracle Morning, Hal Elrod uses many examples to show that most of the successful people in the world tend to have a set morning routine, and accomplish quite a bit before the rest of us are even awake. How you set your morning determines how the rest of your day goes. Do you attack your day or let it come to you passively?
I’m always trying to be more efficient with my time, and it can be tough. I’m sure you feel the same. I try to juggle the responsibilities of a physician, husband, and father while also running multiple businesses and vetting any possible passive income opportunities. I am not the most organized person (I’m working on it), so I believe that if I can do it, anyone can.
Wealthy People Think Positive
When it comes to new and interesting opportunities, most physicians truly are their own worst enemies. We doubt our ability to succeed outside of medicine, since that’s all we know. But I believe the opposite is true. It took tremendous drive, intelligence, and competence to get where you’re at. Be proud of it. If we focus our efforts on other things, why would you think that we couldn’t be just as successful?
Don’t analyze every opportunity to death and find yourself in “analysis paralysis,” be bold. If it’s not meant to be, it won’t work out. But at least you’ll never have to wonder whether that opportunity might have been a good one. The cost of inaction is what you should fear the most. Where will you be in five or ten years if you don’t take any chances? And more importantly, are you okay with the status quo?
Wealthy People Surround Themselves with Successful People
As the saying goes, “You are the average of the five people with whom you spend the most time.” I absolutely agree with this. Have you ever noticed that when you’re around motivated individuals, you find yourself motivated? This is the whole point of finding mentors or creating mastermind groups. It’s best to learn from people who have reached the goals you hope to achieve or are at least striving for it. If you keep the company of people who aren’t happy in what they do and take no action, you can get dragged down.
How do you find these like-minded people? Do what I did: ask colleagues around the hospital. I started in the operating room, asking questions like, “What kind of things are you investing in?” and “Do you have any side hustles?” Just from doing this, I found a good group of physicians who were investing in real estate or wanted to learn more. We started meeting to teach each other what we knew and motivate each other.
Other great ways include going on social media platforms, forums, or Facebook groups (like Passive Income Docs, Physicians on Fire, and White Coat Investors).
Find like-minded people and get to know them on a deeper level. Go to conferences that feature subjects related to things you’re interested, and not just having to do with medicine. I had my first discussions about joining the White Coat Investor Network at a conference completely unrelated to medicine (called FinCon). Now that I’ve surrounded myself with people like PoF and WCI, it pushes and motivates me to be better. If there’s one thing I’ve learned, it’s that I’ve got a lot to learn and can always improve.
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Wealthy People Set Definitive Goals
As you all know, the more specific you make your goals, the more likely you are to achieve them. For example, in my opinion, your goal shouldn’t be to be financially independent (someday). It should be something more like, “I want to be financially free from medicine by age 50.”
That was my original goal, and I pushed hard for it. It just so happens I hit it by 40, but I don’t think I would’ve gotten here so quickly if I hadn’t set that goal 4-5 years ago. It made me take steps and not put off taking action. This goal was specific, attainable, and time-bound, and it made for a much more effective motivator.
Of course, since then I’ve created new goals. My next financial goal is to have five 6-figure income streams by the end of 2018. I’m a big believer in multiple income streams and so why not push for it?
Wealthy People Track Their Net Worth
I’ve gone into this at length, but keeping your eye on the score helps you achieve tangible goals. Course correction is part of the game. It’s extremely unlikely that anyone’s path to wealth follows a straight line, and simply knowing where you are on the path can be very beneficial.
There are successes and possibly some failures along the way, but if you keep your eye on the prize and just keep heading in that direction no matter what happens, you will get there. I track my net worth monthly and use Empower, but some people love doing it the old-fashioned way on Excel.
Wealthy People Are Continually Educating Themselves
Can you name the last non-medical book that you’ve read? Or a step further: what’s the last financial book you’ve read? My goal is to read one financial-related book every month (here are some of my favorites).
When do I find time to read? Well, I’ll often read instead of watching television, or when I’m on a flight. I also have the books on my phone and Kindle, so I can read a chapter or two instead of surfing the web. Don’t get me wrong though, I always have to check ESPN at some point during the day, and I do occasionally enjoy a YouTube death-spiral.
Other ways to educate yourself include taking courses like the WCI course, reading blogs, watching webinars, and listening to podcasts. There is an endless supply of resources that can be absorbed in many different mediums. You just have to figure out what works for you.
Wealthy People Are Smart with Their Money
They pay themselves first. This means that they make sure to invest in and build a healthy financial future first and foremost.
Wealthy people tend to understand the difference between value and price. They’re often selectively frugal. They spend money on things that bring value to their lives. I’ve found I enjoy “spending” on things that create more money for me and ultimately free up more time. Investing, for example, is much more exciting to me than shopping, because I know that smart investments will impact the way my family and I live in the future.
Wealthy people know the value of delayed gratification. Sometimes it’s better to forego a temporary pleasure in order to receive a future payoff. Sure, I like nice things like everyone else, but I try to not let that be my main focus or at least try to wait for it a bit.
Also, don’t be afraid to invest in yourself. It’s not a waste of money or time to focus on personal development or educating yourself as mentioned above. Time spent learning can pay huge dividends down the road.
Is There an Easy Roadmap to Wealth?
Life would be so much easier if there was a simple roadmap to follow. Most people would love to just have a detailed manual on how to achieve true wealth. However, when it comes to things like businesses or investments, even though there are hundreds of thousands of books on these subjects, it’s unlikely that any particular one can show you the guaranteed road to success.
Instead, I usually suggest that you focus first on the mindset of success. Get your attitude in the right place and I believe that success will follow.
For me, it helps to think of this whole thing as a journey, and everyone has to figure out what the endpoint is for them personally. I have a financial number goal, but that number is of no use unless it also comes with time freedom. That’s the most important thing for me.
Because of this, most of the books that I read help me to make sure my head is in the right place to achieve the things I want to achieve. I want to live life on my terms and spend it with the most important people in my life. Ultimately, my goal is to be wealthy, not rich.
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What other habits have you gleaned from the wealthy? How do you emulate them?
I agree with you that having a morning routine is a great way to start the day because success is in your routine! I like to start with a priming exercise made popular by Tony Robbins, as well as a daily bible devotional and 30 minutes of reading with breakfast.
I think many people are losing their way, focusing on building wealth instead of happiness. It’s the same way America has lost its way focusing on the GDP instead of the health and freedom of the people. The pursuit of happiness is not equatable to the pursuit of wealth. I think these physician financial websites are losing their way as well. Its become a challenge to see how one can monitize helping out your fellow man. It’s a slippery slope. Be honest, how many medical students/residents would be better off reading a $15 dollar primer on smart financial decision making (such as WCIs original book) or a free financial blog vs similar information in a $600 online course. But do you feel any moral scruples about manipulating (ignore the negative connotation associated with the term, and realize that marketing is a form of psychological manipulation) people to buy the course? Or is it easy to use moral relativism to justify profiteering, as long as some good results (e.g. the advice is still sound if now more expensive, and think how much they’re still saving compared to AUM fees). This sounds like I’m ranting, and I really don’t won’t to sound that way, because the judgmental nature tends to raise defenses and make you immune to criticism that I think if you’re honest with yourself carries some grains of truth. I find myself coming back to these sites less and less frequently as the focus seems geared mostly towards money, and less on relieving suffering, which I perceive as the more noble goal of medicine.
Thank you for the thoughtful comments.
I agree with the premise that many are too focused on expanding wealth and less so on happiness, particularly once a sufficient level of wealth (i.e. financial independence) has been attained. I have written about happiness and often link to articles on the topic in the Sunday Best series. Once you have enough, it’s about living your best life, not getting richer.
Regarding free blog vs. cheap book vs. expensive course, I would start with the free material. The WCI book (reviewed here) is a great overview, particularly for medical students and residents. The $499 course he offers is a next-level product that sets you up with your own financial plan at a fraction of the cost that most advisors would charge.
Some people will do great with just the free material; others need more guidance and are more likely to follow through once they’ve invested some money of their own and feel they have more skin in the game. Either way, you can set yourself up to save tens of thousands of dollars over the short term, hundreds of thousands over the years, and potentially millions of dollars of decades if you are smart with your money and follow principles espoused here, at WCI, and at Passive Income MD (today’s author).
There is a difference between profiting and profiteering, and I believe I’m guilty of the former. I only recommend products I can stand behind and I donate half my profits according to this site’s charitable mission. We donated over $10,000 last week, and I guarantee we relieved some suffering with those gifts.
Best,
-PoF
Thanks for the thoughtful response, POF.
While all of those characteristic are important, for me it was finding like-minded people whom reinforced the right decisions.
They function like a support group.
I think most people could ignore all of the personal finance books and if they just read this one post, they’d be fine. All of the things you discuss are simple, but none of them are easy. Most people take the easy way.
The concept of thinking in terms of net worth is easy to miss. Most people think in terms of income only. The number that lets you cut back or retire is net worth. Income allows you to obtain net worth but many seem unable to convert income into true wealth.
I’ve learned not to talk about my financial dreams to people who don’t have a wealthy mindset. The wealthy mindset group will encourage me, the others tell me why it will never work. They also have an attitude of “just who do you think you are.” If you listen to the naysayers, they will drag you down to their level, which is their goal. Follow your dreams and you will make them happen.
Dr. Cory S. Fawcett
Prescription for Financial Success
I wish I could say that I hit all the above Wealthy Characteristics but I definitely come up short on some of them.
But I take solace in that you don’t have to always fit the mold in order to achieve wealth. You definitely have to follow some of these rules, but I think you will still come out fine if you don’t follow all of them.
I love the term selective frugality. Most of the time I am very frugal and intentional with my money, which allows me to have an incredibly low burn rate. However when I do decide to deploy money into what may be considered a non-essential item, I go big. I figure I don’t go on many vacations for example so when I do I typically go overboard with the luxury experience. It is very easy to get a vacation that costs me $10k for 1 week for just 2 adults and 1 kid. But those experiences bring so much value to my life that it is worth it in my mind.
The one area I am lacking is making the most of my limited time. When I am off from work, especially on my day off, I either do yardwork around the house when needed but if not, I can easily spend it vegging on the couch watching TV and taking naps (although these days I feel it is my best time to get work done on my blog when my daughter is in school).
You address the profoundly important philosophical nuances of the “semantics of money vocabulary” most adeptly in this piece PIMD.