6 Things Rich People Don’t Do that Poor People Do (and need to stop)

1. Rich people don’t swipe their credit cards for things they can’t afford​

For many of us, getting our first credit card is super exciting, but it can get you into a lot of trouble if you’re not careful. I was 18 years old making $12/hr when I got my first credit card. For some reason, the bank was bold enough to give me a $5,000 credit limit. Just because the bank was giving me “permission” to spend $5,000, didn’t mean that I should.

Since I only had a few hundred dollars in the bank at that time, which meant that it would’ve been crazy for me to max out the card since I did not have enough cash in the bank to cover thousands of dollars worth of purchases.

Never, ever, ever rack up a credit card bill that you can’t afford to pay in full.

2. Rich people don’t buy brand new cars​

It can be tempting to buy a brand new, shiny car to impress your social media friends who you’ve never actually met in real life. But if you’re trying to build your net worth, don’t buy a brand new car.

The average millionaire has a net worth of $2 to $5 million. Believe it or not, the average millionaire does not waste money on brand new cars. They don’t waste money on physical assets that depreciate in value the second that they use them. After one year of use, a new car will lose 20% of its value. Financially responsible people opt for reliable used cars that are about 2 to 3 years old.

Don’t let yourself get caught up with high card notes and exorbitant interest payments that you may later regret.

3. Rich people don’t lease cars either

Leasing a car is arguably one of the worst financial decisions a person can make. You’re literally paying a monthly note on something that you will never, ever own! Leasing is usually not a cost-effective method of getting a car. Alain Nana-Sinkam, the vice president of strategic initiatives at TrueCar says that “the lowest long-term cost, buying and keeping your cars longer will make more financial sense”.

People with money are not overly concerned with having the latest and greatest things. When they buy things, they are striving to make the smartest financial decision rather than trying to impress people.

4. Rich people don’t chase brand names

While it may seem like  people with money are always buying expensive, luxury items. This isn’t always the case. Financially responsible people don’t chase brands, they chase value. If they do splurge on $500 on a pair of jeans or $1,000 on a new bag, it is because they plan on using the item for several years.

Remember, just because someone looks rich, doesn’t mean they actually are. For the last 10 years, the top 1% have been spending less and less on material items.

5. Rich people don’t delay saving & investing

Rich people remain rich because they don’t spend all of their money and they find ways to make it grow. They build healthy cash reserves in their savings accounts (usually high yield savings accounts like those offered by PNC, Citi, and Betterment). They also prioritize investing because investing your money allows it to grow exponentially. You don’t need $10,000 to become an investor, you can start investing with less than $5 if that’s all you have! Most financial services firms offer free financial advice and have several account options that don’t charge fees, like Fidelity and Vanguard.

6. Rich people don’t allow themselves to become house poor

I once went to a friend’s gorgeous 3,800 sq ft home. The house was full of expensive, designer furniture that left me awe-struck. That didn’t last too long though, when I went upstairs and saw that the entire second floor was unfurnished. She and her husband had been living in the home for several years, but were struggling so much to pay their mortgage and housing expenses that they couldn’t afford to completely furnish the home!

A few years ago, my cousin told me about a great guy that she recently started dating. She was impressed because he was attractive and well-dressed. He also had a very nice, very large, very expensive, brand new home. When my cousin finally went to his house, she saw lost her mind when she saw that he didn’t have any furniture! He had lawn chairs in his  living room because he couldn’t afford to buy a real sofa, and rather than having an actual bed set, he just had a box spring mattress lying on the floor of his bedroom.

Buying a home can be a great way to build your net worth, but rich people and people who hope to become rich do NOT buy homes that are completely out of budget. After all, you don’t want to end up with a foreclosure sign in your front yard

Don’t fall into these financial pitfalls that prevent many people from becoming financially independent. Also, be sure to get your free wealth checklist below!