If you hope one day to be rich – or even a millionaire – what you do in the early stages of your life will be incredibly important. Few people are striking oil in their backyards these days, so the way to get rich is a matter of establishing the right habits early in life. What are some of those habits?

Practice delayed gratification

This sounds too old-school to even be real, but it is the ultimate key to prosperity. Simply put – you must choose to do without today to ensure a more prosperous future. This will enable you to live on less than what you earn, and to bank – and ultimately invest – the difference.

In practical terms, this will require sacrifices especially early in life:

  • Buying used cars rather than new
  • Buying the least expensive house you can afford, rather than the most
  • Eating dinner at home instead of in restaurants
  • Taking less expensive vacations, or forgoing them entirely
  • Deciding not to compete with family, friends, neighbors, and coworkers in the ongoing race to acquire stuff

There’s no question that this type of lifestyle will not be as exciting as the way other people live. But as the years pass, you’ll begin to notice that your prosperity is rising, while those around you are mostly running in place.

Save a higher percentage of your income

millionaire in the makingWhat are you going to do with all of those extra dollars that you’re not spending as a result of practicing delayed gratification? You’re going to save them, and begin investing them. As you do, your wealth will begin to grow. Keep it growing, and you will reach pay dirt soon enough.

You’ll also want to increase the percentage of your income that you’re saving, especially as your income rises. While others are saving 10% or 15% of their pay – mainly for retirement – your goal be to save 20% to 30%, or even more (I’m at 23% so far!). The more money you can save now, the quicker you will begin to amass real wealth. The combination of relentless savings on your part, and the compounding of investment earnings will get you moving forward even faster than you could ever imagine.

Stay out of debt

When you avoid debt, you almost win by default. All of your income is yours, and not subject to prior lien by one or more lenders. You aren’t burdened down by paying for yesterday’s obligations; instead, you are investing a disproportionate amount of your income in the future.

If you are truly practicing delayed gratification, staying out of debt should be extremely easy.

Invest – don’t speculate

If you are practicing delayed gratification, saving an outsized percentage of your income, and staying out of debt, the next most important component of achieving financial success will be implementing a winning investment strategy. That will require taking a non-conventional view of your investment choices.

You will want to avoid speculating – which is putting money into various investments with mostly the hope that they will increase in value. But if you’re going to accumulate wealth, you’ll have to pursue “patient capital“. That means making smart investment choices, and being prepared to wait until they pay off.

There’s no magic way to get rich investing, but there are some methods that have withstood the test of time.

  • Buy investments that have strong fundamentals, not merely those that happen to be rising in price at the moment.
  • Favor investments that provide a cash flow, particularly dividend paying stocks with growth potential.
  • Buy when prices are low, and sell when they’re high – this is the exact opposite of what most people do.
  • The best investments are often found in the places where no one is looking; look for neglected stocks and industry sectors. You’ll have to wait longer, but the returns can be much higher.
  • Keep some money in cash and cash equivalents – you never know when a good investment will turn up, so you’ll need to be ready to find them at any time.
  • Forget about get-rich-quick investments. They never work anyway.

Related: Read our eBook on ETF Investing

Be self-employed

This isn’t to say that you can’t get rich working for someone else, only that it’s often easier when you’re self-employed. There is no income ceiling when you own the business, and you will also have much greater ability to control your future. This is especially true if you’re particularly good at what it is you do for living.

In addition to the potential to earn more money during your career, being self-employed also offers you the opportunity to sell your business at a substantial profit once you decide to retire. A business that you start on a shoestring can be sold for millions of dollars 20 or 30 years later.

Being self-employed also affords you the flexibility to move your business into different directions. For example, you will be able to add a new product or service to your business if you believe those lines will be profitable. You also have the potential to leverage your business by hiring more people, or by partnering with other businesses.

The earlier in life you can implement these changes, the greater the likelihood that you’ll be financially independent well before you hit middle-age. You’ll definitely be “different” in the eyes of most people your age, but you’ll also pass them by on your way up. They’ll probably think that you just got lucky, but you’ll know better – you adopted the right habits early in life.

Do you think you can add these habits to your own life, and maybe one day become a millionaire?