Here’s what it really takes to become wealthy and financially successful.

(Assuming, of course, you don’t have a very rich relative who leaves you a lot of cash or you’re not on track to be the next Silicon Valley tech startup wunderkind.)

Most of us take a similar path to building net worth, increasing assets, and growing wealth. The formula is not complicated or secretive.

The following 5 steps will set you on a track to weath:

1. Earn a good income and seek out growth-oriented careers with potential for income beyond just W2 paychecks (like bonuses, commissions, equity compensation, and more)
2. Deliberately strategize to increase your earnings throughout your 20s, 30s, and into your 40s and 50s (before your salary eventually plateaus)
3. Spend far less than you earn; when you do use your money for purchases, make sure your spending aligns with your values
4. Save the net cash flow you create by living below your means
5. Invest at least 25 percent of your household income in long-term growth assets

If you want to be “first-generation wealthy” — meaning, you’re not getting a massive inheritance and will have to build your wealth yourself — this is the most basic way to here there.

Given that these steps, while not easy to achieve, are simple and straightforward… why aren’t more people wealthy?

Common Habits and Patterns in Financially Successful Households

The real, full answer to why more people aren’t creating bigger and bigger balance sheets is complex and nuanced.

It includes factors both within one person’s control (like skill and agency) and completely outside of an individual’s or household’s abilities to influence or change.

That includes longstanding, pervasive, and often oppressive systemic issues, as well as plain dumb luck. Randomness and chance are real, and can work for you… or against.

This article isn’t meant to address (nor dismiss) broader problems that stop many people from even getting started on that 5-steps-to-building-wealth framework listed at the top.

Instead, the focus is on what is within one’s control to do or at least influence to become financially successful.

There are a few things that people who “make it,” financially speaking, tend have in common.

Studying those patterns can help us see what we can replicate in our own lives to enjoy the same success — and wealth.

This is what financially successful people tend to do differently, and how it pays off:

1. Financially Successful People Are Proactive, Not Reactive

A complex topic such as “how to be wealthy” can’t have a single source explanation, but if you had to point to just one factor?

It might be the tendency toward proactivity.

Getting proactive with your financial life means doing things like:

• Creating a plan before you need it to guide you through a challenging time.
• Taking action while you have the time and energy to do so (rather than scrambling after something’s already happened and you’re forced to react).
• Seeking good positioning; looking to go forward from a place of strength instead of playing catch-up or defense.
• Planning ahead and preparing for a range of outcomes, from ideal to challenging to downright unfair.
• Understanding that while the future is unknowable, that doesn’t mean you have to wait for it to just happen to you.

Financially successful people know how powerful it is to be proactive.

People who struggle with money — even though they earn high incomes — often feel stuck because they don’t plan or think ahead.

They don’t consider where they want to be in 5 years (let alone 10 or 20!) so they never start making the necessary moves today that will position them for what they want tomorrow.

Those who are proactive, however, do plan. They strategize.

They take time to dream about the future and work backward from there to get to the action steps they have to take now to make such dreams into realities.

People who are proactive with their finances tend to create, build, and keep more wealth than people who merely react to things after they’ve already happened.

Here are some examples of what that proactivity might look like in action. Financially successful people tend to:

• Set up emergency funds to prepare for unexpected expenses. They might not know exactly what they’ll use the money for, but they know it’s reasonable to assume things will go wrong (or just not according to plan) and that might require some extra cash to cover.
• Create room in their cash flow for savings. Even if retirement is a long way off — or they don’t even want to “retire” in the traditional sense — they know that one day working to earn a paycheck won’t be an option (whether by choice, necessity, or trend, like aging out of the workforce). Therefore, they proactively choose to target high savings rates rather than waiting until they have to save more.
• Fund goals, even when they don’t know what the specific goal is. It’s crazy to expect you’ll know exactly what you’ll want for your life in 30 years — much less knowing exactly what you’ll want in the next 10, or even 5. But financially successful people understand no matter where they’ll end up, they’ll need some amount of money to underwrite their goals or lifestyle.

To be financially successful requires that you get in motion and seek good positioning. You must proactively save and invest to build wealth. It’s something you intentionally create, not something that falls in your lap or just happens to you.

2. They Think Positively, Not Negatively

Did you know your circumstances only account for about 10% of the influences that determine how you’ll react or feel about a situation you find yourself in?

Both Solve for Happy by Mo Gawdat and The Geometry of Wealth by Brian Portnoy break down this research and these numbers, and make a compelling case for claiming your own agency over how you feel and how you respond to what happens in life.

If you suddenly lose your job, for example, the actual event of losing the job only exerts about a 10% influence over how your react to it or feel about it.

Another 50% of your reaction will likely be determined by your genetics.

If you’re naturally inclined to feeling more negative or unhappy as a baseline, which some people are, you might have to work harder than the next person to find the silver lining in an unpleasant circumstance.

But even accounting for our circumstances and how we’re wired, that means 40% of how you react to an event in your life is up to you to decide.

You control it. You decide how you feel, how you react, and how you respond.

That gives you a lot of power in deciding how your life goes.

It seems clear that a major factor that sets successful people apart from people who find themselves struggling is chosen optimism — chosen, meaning, you can decide to be an optimist regardless of whether it comes easily or naturally.

People who are successful think positively. They reframe negative situations. When something “bad” happens to them, they tend to choose to respond in a positive and productive way rather than in a negative or self-defeating way.

This isn’t just a platitude. Optimism really does seem to play a role in the success of entrepreneurs, leaders, and wealthy individuals.

Check out some of these articles on the subject:

• CNBC explains why you should be optimistic if you want to be successful.
• An article on PsychologyToday points out 4 reasons optimism helps entrepreneurs.
• HBR says positive teams are more productive.

When you keep an optimistic outlook, you’re primed to look for opportunities.

When you keep yourself down in the dumps, it’s hard to see anything but doom and gloom ahead.

There’s actually a scientific reason for this. It’s called the Baader-Meinhof phenomenon (or the frequency or recency illusion).

Once you think about or notice something, your brain tends to pay more attention to that thing and therefore thinks or notices more of the same than it did before… even though the likelihood or amount of that thing never actually changed.

Think back to the last time you bought a car. Afterward, you might have felt like you suddenly saw that same car everywhere.

But that wasn’t because the cars increased in number. It was only that your brain became primed to notice them after buying one yourself.

You can apply this idea to your financial life.

f you prime your brain to pay attention to opportunities or good financial habits, guess what your brain pays attention to? More of the same.

The opposite, however, is also true.

Think negatively and assume the worst, and your brain will respond by giving you more negative, worst-case scenario thoughts that keep you feeling down and stuck.

Positive thinking alone will not make you rich. You’re not going to manifest or wish your way to success.

But your mindset and choice in how you react to what happens around you and in your life is a prerequesite. Choosing a more optimistic outlook sets you up to successfully engage in all the other behaviors and actions that will help you grow your wealth over time.

3. Those Who Are Financially Successful Ask Questions, Not Assume They Already Know

The third important factor that tends to set most financially successful people apart from people who struggle with money?

Successful people tend to ask a lot of questions.

They don’t assume they have all the answers and they highly value various, diverse, expert inputs.

Yes, they’re smart, motivated, and capable — but they’re also self-aware enough to understand they don’t know everything, there is value in other perspectives, and there’s a reason professionals at the highest level are not operating on their own knowledge alone.

They tap networks of other professionals. They leverage highly-credentialed and experienced experts with both technical knowledge and the wisdom to deploy information effectively.

People aren’t just naturally “good with money.” Anyone who is financially savvy wasn’t just born that way. They learned. They experienced. They asked, and they listened.

Admitting you don’t know something or feel uncertain isn’t a weakness.

In fact, it’s overconfidence in your own knowledge and all your assumptions about what you know that will land you in trouble.

Acknowledging what you don’t know, and even acknowledging there are some things you don’t know you don’t know, is powerful.

It puts you in a place to actually find the real answers instead of acting on false assumptions, incomplete information, or bad advice.

Simply asking for clarification can do wonders for your financial trajectory.

Asking for help, advice, or guidance could mean the difference between a massive, costly mistake and getting on the right path early to maximize your potential.

And small gains — getting that little thing right — grow exponentially over time.

James Clear explains the idea of these marginal gains, explaining that you’ll progress farther if you simply focus on making incremental progress (rather than trying to knock it out of the park once).

Financially successful people don’t just assume they’re doing all the little stuff right and only worry about their money when it’s a big deal. They constantly ask, “how can I make this small tweak and become 1% better?”

Ask, don’t assume.

And while you’re at it, think ahead. Be proactive — and stay positive!

Combining these three hallmarks of financially successful people will serve you well on your own journey to build the kind of wealth you need to meet your stated goals while living the life you want.