37 Habits That Separate Financially Secure High-Earners From the Pack

Your habits and behaviors play a major role in determining your financial security and wealth. These habits are common among the most financially secure individuals.

I believe that as individuals, we all march to the beat of our own drummer. However slight that difference may be, there are some very noticeable differences in the way financially independent go about marching.

As of the end of 2015, approximately half of American adults were considered part of the middle class. This boils down to about 120.8 million out of 242.1 million individuals.

As I have discussed in a prior post, your habits and behaviors manifest over time into whether you will ultimately reach your financial goals or be endlessly hoping that it will somehow materialize on its own.

It's up to you to decide if you will be part of the 21% in the upper portion, and hopefully enjoy a more financially secure life.

The following are 37 insights into some of the commonalities often seen in financially secure high-income households.

Financial Literacy

1. Financially secure individuals are more likely to take an active role in putting in the time necessary to increase their financial literacy.

2. Higher income people are more likely to have a high financial literacy score as gauged by the ability to answer questions in regards to inflation, interest, compounding, and risk diversification.

3. They are more likely to self-assess for gaps in this financial knowledge and take steps to address it.

4. These households are more likely to report being “Good with day-to-day financial matters” and having a budget.

5. High-income individuals don't see doing a little basic math as a burden because it is a necessary tool for their goals.

6. They also spend more time keeping up with financial news.

Cash Flow Management

7. Financially secure individuals are more likely to make having an emergency fund a priority.

8. They are half as likely to spend more than they make.

9. They also make sure to plug the holes for any leaks, such as tracking finances and making sure they are not incurring fees or being dinged by unnecessary fees like over drafting from an account.

Savings and Investments

10. Financially secure people plan ahead and work to save for their children's college expenses if they have them or plan to in the future.

11. They are more likely to take advantage of a 529 plan to meet these goals as opposed to other saving methods.

12. They save more much more than the generally publicized 10-15% of take-home pay.

Retirement Planning

13. High-income individuals take the time to figure out how much they will need for retirement.

14. They try not to use social security as the decider of when it’s the right time to retire.

15. Financially secure individuals are more likely to calculate what they will be able withdraw from their accounts after retirement.

16. High-income individuals are more like likely to contribute regularly to retirement and automate the process as well.

17. High-income individuals are more likely to rebalance retirement accounts and maintain diversification in those accounts.

18. They are much less likely to withdraw from retirement accounts during times of hardship (See habit number 7 for the reason why).

Credit Management

19. High-Income individuals have actually checked their credit score in the past year.

20. They are more likely to compare auto loan providers if working to purchase a vehicle.

21. They also make sure to compare mortgage providers as well.

22. High-income households are 25% less likely to have high-cost loans.

23. They are conscientious as to avoid late payments and incur credit card penalties.

24. They also tend to make it a priority to not carry a credit card balance month over month.

Insurance Planning

25. When it comes to insurance, they compare insurance providers and consider being covered for disability in addition to other areas of their lives.

26. They also review their insurance coverage to ensure they continue to be adequately covered for health, life, auto, and homeowners/rental insurance as they enter different seasons of their lives.

Income Sources

27. They are more likely to have multiple sources of income and thus less likely to experience drops in income from year to year.

Savings and Investments

28. They are more likely to compare banking institutions for rates on checking as well as savings accounts.

29. They are much more likely to also invest outside of their retirement accounts in addition to their pre-tax contributions.

Retirement Saving

30. They take advantage of employer-sponsored retirement plans.

31. They are more likely to take advantage of non-employer-sponsored retired accounts as well.

32. They are more likely to bench-mark and track their retirement accounts amount in terms of progress made.

33. High-earning individuals are more likely to have more than half they retirement accounts in stocks.

34. They are also less likely to engage in uncalculated risks and gambling.

Retirement Funding

35. High-income households are more likely to draw from various sources of funding:

  • Pension plan payments
  • Savings, investments, and retirement accounts
  • Dividends and interest income
  • Salary, wages, and/or self-employment income
  • Rental income and/or the sale of real estate

Real Estate

36. They are more likely to be homeowners as well as more likely to be drawing additional revenue from rental income.

Interest Rates

37. They are more likely to have lower mortgage, credit card, and auto loan interest rates and a large part of that being due to the traits mentioned here.

Your ability to cultivate a growth mindset or wealth building mentality and proactively doing something to move the needle is key. At the end of the day, the difference will lie in your understanding of your finances and where you want to be down the line.

In addition, as you come to have a better understanding of what may be holding you back, you can start formulating an actionable plan.

What habits or traits have you noticed that can help tip the scales in your favor?