Brown University has just completed a comprehensive research on people’s financial behavior. The study lasted for five years, during which they followed the financial behavior of 50,000 families, consisting of approximately 150,000 persons. Researchers also observed the most common mistakes of poor people, which cause them to get into financial troubles.
We need to mention here that no people participated in the research who had inherited a significant fortune. The only people studied were those who were working for a living.
1. The family budget
The researchers observed that 80% of wealthy people are tracking their expenses and avoid overspending. They also decide beforehand how much they want to spend on certain items. In their case, the question of what on earth they spent their money on never occurs – they always know where their money went. In contrast, only 20% of poor people record their cash flow and expenses, and they don’t calculate how much they can actually afford to spend.
Only 25% of poor people save 10% of their monthly income. Their main reason for this is they think they earn so little that it’s not worth saving any of it. However, this is a misconception: every penny counts, and 10% of an income is not such a huge amount that one can’t do without. On the other hand, 94% of rich people are saving up some of their earnings regularly, regardless of how much money they earn.
77% of poor people buy lottery tickets once in a while or regularly. Some of them also try out their luck on the slot machine, because they hope to become rich fast. In contrast, only 6% of rich people ever gamble. It is interesting that poor people spend money hoping to get money, while rich people rather work and invest in new projects.
4. A second job
67% of rich people do everything to increase their income; therefore they often have a second job in order to be able to save one of their incomes. In contrast, only 6% of poor people have a second job.
As opposed to poor people, rich people never spend money beyond what they can afford. For example, poor people tend to buy expensive cell phones, even though they have the chance to choose from more affordable ones. Many times they borrow the money and then practically live on bread and water for a few months. Rich people don’t buy expensive phones unless they don’t have to save money for anything else.
Most rich people think books are very important. 79% of them read literature or special publications regularly. On the other hand, only 11% of poor people read books.