The Habits of the Financially Successful


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. (See also: Success Secrets You Should've Learned in High School)

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. (See also: Investment Lessons From Self-Made Billionaires)

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. (See also: Use Goal Sequencing to Get More Done)

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 finances. 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. (See also: How to Measure Your Goals)

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 their mistakes.

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" trap.

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. (See also: 5 Money Questions Couples Should Ask)

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 independence.

Where's a good place to start? Behavior #4: Take Action.

Have I missed any behaviors on my list? Let me know your thoughts in comments.

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Guest's picture
Leslie Tayne

These are excellent qualities to adopt in order to become financially solid and stable. Communication with one's spouse is key to getting one's financial house in order. Being honest and forthright with one another will help to eliminate potential conflicts and financial problems.

Guest's picture

Thanks for your thoughts Leslie. I couldn't agree more, and of course effective communication helps in non-financial matters as well. As a male of the species I've observed that generally men find it a bit harder to participate in these types of communications (just a generalization...there are many exceptions, and I think there's a recent cultural change here in a positive direction)

Guest's picture

I am certainly trying to be all those things while trying to become debt-free. I think the hardest part on that list is persistent and time seems to go by really slow when thinking about my 7-9 year debt-free financial plan.

Guest's picture

I agree, Charlie. The end goal can seem very distant, but if you break down your debts into pieces and start by paying off the first one (say, credit card debt or a car loan), and you set a monthly savings goal to chip away at that first debt, you'll see short term progress every month to keep you motivated. Once the first debt is paid off it will free up perhaps hundreds of dollars of monthly cash flow, which will help you pay off the second one that much faster. These are all little victories that should make you proud, and before you know it they will turn into big accomplishments.

Guest's picture

I am a first grade teacher and I have to say that I think these are the traits of successful people in general, not just those that are financially successful. If you are a parent and you view your job as instilling these 7 traits in your child they will do well in life. And, of course, we should all aspire to establish these expectations for ourselves.

Guest's picture

Thank you for your comment Emily. I think you raise a very important point. My sense is that in education much of our efforts have focused on traditional topics like language, math and science (cognitive intelligence) - and that's critically important. But there doesn't seem to be much of an organized effort to help young people understand social and emotional intelligence - that is, to understand themselves....what are their strengths, weaknesses, likes and dislikes. The more we help young people become more self aware of their traits and preferences perhaps they will become better equipped to engage with others, and to discover their own life passion.