By: Keith Whelan
If you think about it, achieving success in some of our most important life
activities requires two key ingredients: knowledge and behavior. Knowledge by
itself isn’t enough; knowing what to do only gets you halfway there. You also
need to follow through by taking action.
Take a job, for example. On paper I might be an expert at my profession. Very
knowledgeable. But if some aspects of my behavior are lacking ” say, weak
organization or communication skills ” and they lead to poor or failed execution,
then my chances for rapid career advancement are slim.
The same holds true for financial success. There’s certainly no shortage of
information and advice on managing our finances. But what are the behaviors that
contribute most to turning that knowledge into successful results? A good place
to look is among people who are financially successful.
To help identify these behaviors, I’ve drawn from “The Millionaire Next Door” by
Tom Stanley and William Danko, from Daniel Goleman’s “Emotional Intelligence,”
and also from my own experiences and observations. What did I find? The
financially successful tend to have seven behaviors in common.
1. They Are Goal Oriented
As the expression goes, they “keep their eyes on the prize.” That prize is
financial independence. It requires a longer term perspective and the ability to
focus all their financial decisions and actions on achieving it.
2. They Are Organized
According to “The Millionaire Mind,” about two-thirds of America’s millionaires
are self-employed or business owners, and they apply the same organizational
tools and methods that make their businesses successful to their personal
finance. So not only do they set specific, measurable financial goals, but they
also develop a plan ” a financial plan with deadlines ” and they establish an
organized process for reviewing progress against plan.
3. They Are Open Minded
Life happens, which means circumstances change. We’re all confronted with
unforeseen events, and as much as we try not to, we also misjudge some situations
and make bad decisions. The financially successful understand and accept this.
They’re quick to acknowledge change and to recognize, learn from, and correct
4. They Are Action Oriented
The financially successful are comfortable with making decisions and taking
action. If one approach doesn’t solve the problem, they try another one.
Sometimes it’s two steps forward and a step or two backwards, but in the end
there is progress. By contrast, fear of making a mistake leads to fear of making
a decision, and that rarely moves you forward.
5. They Are Frugal
This is perhaps the most common behavior of all, as reflected in Stanley and
Danko’s profile of the typical millionaire: “We live well below our means. We
wear inexpensive suits and drive American-made cars. Only a minority of us drive
the current model-year automobile. Only a minority ever lease our vehicles.”
Instead they pay off vehicles quickly, keep them for years, and use the freed up
cash flow to get further ahead.
Importantly, as their income increases their expenditures do NOT (or at least,
not as quickly). In other words, they don’t fall into the “make more, spend more”
6. They Are Team Oriented
Do you know any couples with split financial personalities? While one is a model
of frugality, the other is a poster child for extravagance. Result: Financial
(and emotional) disarray.
Not so among financially successful households. They typically have a primary
breadwinner, but the spouse or other partner is, according to Stanley and Danko,
“a planner and meticulous budgeter.” As one millionaire stated in a focus group,
“Most of us will tell you that our spouses are a lot more conservative with money
than we are.” It’s all about communication and collaboration, not conflict.
7. They Are Persistent
Last but certainly not least, ultimate success requires perseverance. Achieving
financial success is a long term activity; it’s a marathon, not a sprint, and
there will be obstacles and setbacks along the way. Overcoming them requires
self-control, self-motivation, and patience. Slow and steady wins the race.
Is This How You Behave?
All of this leads to a question: How many of these seven behaviors do you have?
The good news is that it’s not an all-or-nothing proposition ” that you either
“have” these behaviors or you don’t. Rather, we all have the ability to develop
each one. Sure, some of us need to develop certain behaviors more than others.
That’s OK; the place to start is by becoming more self-aware of our weak spots of
the behaviors needing the most development.
Here’s some more good news. You don’t have to go it alone. This is a team effort
” and you’re not limited to just a two-person team. In addition to your spouse or
partner you have many other people, tools, and resources at your disposal.
Financial advisors can assist with setting goals and guiding decisions. Software
is available to organize the effort and help you manage your progress against
goals. And you can lean on a support network of family, friends and colleagues to
see you through the disappointments and setbacks on this journey to financial