The Number 1 Rule Wealthy People Live by


There are countless articles online that show what the wealthy do differently as compared to the rest of us. Most self made millionaires have similar characteristics with one another and this research has shown has allowed them to be successful and wealthy. Some of these traits include: setting goals, networking, avoiding procrastination, actively reading, never giving up and having a mentor. Whilst all these characteristics are important if you want to become wealthy, I believe that there is one thing in particular people need to do if they want to become rich – Live Within Your Means.



Wealthy people have been able to build up their bank balances because they live within their means. They avoid overspending by paying themselves first. Research has shown that the wealthy live on 80% of their net income whilst saving the excess 20% – sometimes more!

If you look at the typical person who’s financial house is in a mess, they are all mostly living above their means. They speed more than they earn and keep accumulating debt in order to keep up their appearance. I have written before that debt is a destroyer of wealth. So if you want to end your financial struggles, you need to make a habit of paying yourself first and creating a budget so that you do not overspend.

Here are some sensible ways to budget your monthly net pay:

  • Housing – Spend up to 25%. It doesn’t matter whether you own or rent, if you want to build serious wealth, limit your housing budget.
  • Food – Spend up to 20%. We all love good food but that does not mean we should eat out everyday. Making food at home is better for your health and bank balance.
  • Entertainment – Up to 10%. Movies, nights out, concerts, it doesn’t matter, limit this to 10% of your pay.
  • Vacations – Spend up to 5%. This may mean holidaying at home rather than abroad but if you want to increase your wealth, these are the sacrifices you need to make.




These are the main expenses most people face. But no matter how you set out your budget, remember that you should pay yourself first by automatically putting 20% of your pay check into a savings and investing account. Another important thing to remember is to avoid credit card debt. If you are accumulating debt, it’s a clear sign that you need to cut back somewhere. Once you start living below your means, you will see the drastic improvements to your net worth. Once you get to the part where you are out of dent and accumulating money on a monthly basis, have a look at the ladder method to see where to begin investing your excess money.

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