The 5 Money Habits of the Wealthy

Most people don’t get rich overnight. But how do most millionaires build wealth over time? Here are five money habits they often share.

Published by Motley Fool Wealth Management Originally posted on Wed, May 11, 2022 Last updated on January 9, 2024

read time 5 min read

Book a call with one of our experienced wealth advisors

• Learn about unique investment solutions
• Increase the potential to obtain your financial goals

Have you ever thought about how most millionaires made their money? Or even if you are in that same club, are you curious about your peers’ financial habits? You are not alone. Many people are interested in learning the fiscal practices of the wealthy.

Let’s start with this fun fact: According to a Fidelity Investment study, 81% of millionaires are self-made, meaning they did not inherit their money.1 That means, for most, becoming one did not happen overnight. In fact, research shows that it takes 20 to 30 years, on average, to become one.2 Besides taking time, it can also require discipline and a focus on developing the right habits.

And what are those habits? We found five behaviors that we believe many millionaires have in common.

1.  They save a lot of money

Millionaires are frugal. Contrary to popular belief, most millionaires don’t own a yacht or drive around in a Rolls Royce. Instead, they save a large portion of their income. This starts with a budget—which lays out where your money is going and how much you can save.

Creating a budget or cash flow plan is essential to controlling your spending. The end goal is to assign each dollar of your income to an expense. It is much better to tell your money where to go than to ask where your money is going!

Many millionaires use the 50/30/20 budget rule.3 They allocate 50% of their income for essentials, 30% for wants, and 20% for savings.

But many of us know that saving is not easy. However, one easy way to save is to set up a monthly automatic transfer of cash to an investment account. That way the money is reallocated before you can spend it. You also won’t have to worry about remembering to save, and it can help you live on the remaining funds.

Millionaires also expect the unexpected and have an emergency fund. They often have several months of living expenses saved in the event of an emergency or job interruption. The alternative, that many non-millionaires might fall back on, is using high-interest credit cards to meet unforeseen expenses. We agree with this strategy and often suggest our clients do a cash carve-out strategy—which sets aside three to five years of their expenses in a separate investment account.

Millionaires understand that a dollar saved is a dollar you don’t have to work for. By steadily saving every month, they can be able to invest so their money works for them, not vice versa.

2.  They focus on raising their income

Millionaires understand that 20% of $250,000 is better than 30% of $100,000. They don’t focus just on saving but look to increase their salary and create multiple streams of cash. Because the more you earn, the more you can save.

According to a study by the IRS, there are seven common types of income millionaires have:

  • Dividend income from stocks
  • Earned income from a job
  • Rental income from real estate
  • Royalty income from selling rights
  • Capital gains from selling appreciated assets
  • Profits from business
  • Interest income from savings, CDs, bonds4

Multiple streams of income should help grow wealth faster. They also can add diversification so if one fails, the others may have the potential to help pick up the slack.

3.  They avoid lifestyle inflation

Millionaires recognize the tendency to spend more as they earn more. Instead of looking to buy a bigger home or the latest car model, millionaires can be relatively frugal. They may not be concerned with keeping up with the Joneses. As a result, they often avoid unnecessary debt and wasted money that could otherwise be used for savings.

To help ensure that saving and investing keep pace with income, consider switching from saving a specific dollar amount to a certain percentage of income. For example, if you commit to saving 20% of your income rather than a specific amount, your savings should rise with your income.

4.  They invest for the long term

There is no doubt that despite the ups and downs of the stock market, investing in stocks can be one of the best ways to build wealth over the long term. It can allow you to take advantage of compounding and have your money work for you.

Unlike short-term trading, long-term investors often don’t let emotions get in the way when short-term market volatility creates uncertainty. So instead of a never-ending cycle of buy high and sell low, long-term investors stay in the market and strive for benefits in the long run.

Data for a hypothetical $10,000 portfolio invested in the S&P 500 for 20 years—from 2003 through 2022—show the performance would drop from $64,844 (9.82% annualized return) if you stayed fully invested) to $29,708 (5.6%) if you missed the 10 best days, a whopping 54% lower return! If you missed the 30 best days, your return would drop to $11,701 (less than a 1% total gain).5 The key is time invested in the market—not timing the market!

In addition to saving and investing on their own, millionaires often take advantage of the tax-deferred growth of individual and workplace retirement accounts, especially if there is an employer retirement match. This is free money that millionaires don’t leave on the table.

5.  They invest in themselves

A recent study that looked at the daily habits of the wealthy concluded that one practice that helped them reach financial success was self-education. In other words, they never stop learning. The study6 found that...

  • 85% of rich people read two or more books on education, self-improvement, or career advancement a month, compared to only 15% for the poor.
  • 94% of the rich perused news-related publications, compared to 11% for the poor.
  • 11% of the rich read for entertainment, compared to 79% for the poor.

Why does this habit make such a difference? Millionaires understand that continually investing in yourself can be important for long-term success. They are not satisfied with the status quo and focus on getting better.

Becoming rich doesn’t usually happen overnight

By constantly improving upon your knowledge, you can acquire more skills and information that may help you to become a millionaire, and more importantly, stay that way.

These habits may take discipline and time, so it may be easier to start with one or two until you can incorporate the others as your money management skills improve. The key is to continue to focus on getting better. Things may not always go as planned, but if you adopt these five habits, you may get closer to achieving your financial freedom!

Related tags

Back to Insights home
sign up today

Like what you're reading?

Join the thousands of readers getting stories like this delivered straight to their inbox every Thursday — for free. Give it a spin, enter your email to sign up.


1 Fidelity, 2018 Millionaire Outlook Study, Oct. 22, 2018

2, Jun 15, 2021;, Jun 14, 2015; Fidelity

3 Intuit Mint, accessed May 11, 2022

4, accessed May 11, 2022

5 JP Morgan Asset Management, 2023

6, Jun 17, 2014. The study defines “rich” as having $160K or more in annual income plus $3.2M in net worth and “poor” as having $35K in annual income and liquid net worth of $5K or less

Next steps to consider

Create your Investor Profile

Create your Investor Profile

Let's see what we'd recommend for you. Create your Investor Profile online right now — for free. It's secure and only takes 10 minutes.

Create your profile
Schedule a call

Talk to a Wealth Advisor

Schedule a 30-minute call with one of our Wealth Advisors and get a financial roadmap at no cost or obligation.

Pick a time
6 Sources of Retirement Income

Download our latest special report

6 Sources of Retirement Income: Must-read tips and tricks we believe all retirees should know. Download your copy today – for free.

Get your copy