Everyone struggles with money at one point or another in life. Regardless of who you are, what you do, or how much you make, it’s bound to happen. And, yes, this even goes for the wealthy. The truth is, even the wealthy make financial mistakes that can significantly cost them.
Here are four areas where the incredibly wealthy can often slip up and end up in a financial downturn.
Taxes. We see all the time celebrities and the incredibly wealthy that owe millions in back taxes. A certain level of wealth can come along with an invincible attitude among many. Many claim that they since they’ve contributed to society on such a powerful and great level they don’t feel they need to pay taxes or some due to the high-powered lifestyle “just forgot”. So from there, we proceed to the next reason…
Success vs. Finances. Many celebrities or the incredibly wealthy will often confuse success in their careers with finances. When income continuously flows into the bank account, and it isn’t properly invested or managed, it can be easy to spend and spend until it is depleted. The wealthy don’t realize that bank accounts do have a bottom, and that bottom is financial ruin.
Retirement. The wealthy will most often lead a successful life and career to only retire, sometimes at a young age, and bask in their millions for the rest of their lives. However, the same concept above applies true here as well. After a wealthy individual retires, if they haven’t properly invested their income through life, they will surely outlive their retirement savings.
Enough is enough. Then, the most obvious reason the wealthy can end up in financial downturn and struggle is spending. Houses, cars, furniture, jewelry, boats, and all the great luxurious items we all dream of, the wealthy has. But at what cost? The cost of everything…including financial stability and comfort.
The moral of the story here? Even if you make millions, or at least six figures a year, you still need some form of a budget to control finances. Investing and saving is just as important as if you made only $40,000 a year. Spending habits, credit habits, and investing behavior are all still as important. The concept between income levels and tax brackets is the same, but obviously the numbers are different. Regardless of whether we are talking about $1,000,000 or $100,000, money still requires proper management.
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