5 Big Money Mistakes of Wealthy People

5 Big Money Mistakes of Wealthy People

You’d think they would know better, or at least hire people to know better for them. But the truth is, when it comes to handling their money, wealthy people often make boneheaded mistakes. That’s right. They’re just like the rest of us. The only difference is that their mistakes involve a lot more zero’s after the decimal point. Should you find yourself in the world of the wealthy, through inheritance, a smart stock tip, a lucky Lottery number or hard work and determination, here are 7 money mistakes and misconceptions to avoid at all costs.

1. Money won’t change me or the people around me:

The notion that wealth, especially sudden wealth, won’t have a behavioral effect on you or those around you may seem noble, but it is just plain foolish. It’s a fact of human nature that money changes people on both sides of the coin, so to speak. The trick is to be aware that certain changes are inevitable and prepare yourself to deal with them. A good example of this would be the sudden appearance of friends, people you didn’t really know or were mere acquaintances before your windfall. Although this may seem fun and flattering at first, it’s important to ask yourself these fundamental questions, Why me? and Why now? Not asking these questions can leave you vulnerable to the users, people who are only hanging out with you because they’re looking for a handout. The problem is made worse if you choose to flaunt your newfound fortune by making lavish purchases that attract attention to the fact that you have money. This doesn’t mean that you can’t enjoy being wealthy. It simply means that you need to exercise caution and resist the urge to adopt a whole new lifestyle. A common effect of the new friends syndrome is that the person with wealth withdraws from social interactions, no longer being sure who is a genuine friend or just an opportunist.

2. I don’t need to budget anymore:

In a song from the popular musical Evita, the character of Eva Peron sings some telling lines:

When the money keeps rolling out you don’t keep books
You can tell you’ve done well by the happy grateful looks
Accountants only slow things down, figures get in the way

Regardless of your income, unless you keep track of what is coming in and going out, there’s a very good chance that what is going out will be more than what is coming in. In other words, you have to keep a budget, or hire a professional you trust to keep the books for you. One of the characteristics of wealthy people who know how to handle money is that they are aware of how every dollar that comes in is either spent, invested, or saved. The rags to riches rock star mindset that the money will just keep rolling in more abundantly than it goes out and that there will always be enough to go around is a sure way to end up in bankruptcy court.

3. I can afford financial risks:

Another pitfall wealthy people can fall into is the notion that having more money allows them to take big financial risks. After all, it takes money to make money, is the reasoning here, along with the greed driven idea that you can never really have too much money. With an expanded circle of friends the wealthy are much more likely to be taken in by skillfully pitched get rich schemes that are always a sure thing

4. I don’t need a game plan:

Right up there with failing to keep a budget and taking unnecessary risks is the failure to have a financial game plan with goals and investments that can be tracked and evaluated in terms of meeting those goals. Buying too much stuff on credit can also be a major problem, as it can lead to runaway spending, whereas paying cash can often make even the very wealthy think twice about what they’re purchasing. Another critical mistake often made from not having a game plan is failing to update Wills and Trusts to keep up to date with current assets and the people they should be directed to.

5. I’m above being frugal:

Just because you no longer need to clip coupons to get by doesn’t mean you shouldn’t. You’d be surprised to know how many people who are considered very wealthy still live well within or below their means. Chances are, being frugal is how they acquired their money in the first place. They buy used cars and pay cash, they eat in, and they refrain from spending a lot of time and money at the casino or the track. Face it, if you could choose to be rich or smart, wouldn’t you rather be both? When it comes to handling wealth you can’t afford not to.

4 Reasons Why Your Friends Can Make You Wealthy

4 Reasons Why Your Friends Can Make You Wealthy

They say that you should choose your friends wisely. I firmly believe in this advice and try to follow it as best as I can. You may not be able to choose the people you meet or your circumstances but you can choose your friends. If you want to become wealthy then you should be mindful with who you hang out with. Here are 4 reasons why your friends can make you wealthy.

Network. Your network is equivalent to your net worth. You may be good in what you do but in order to succeed you will need certain people to help you get there. A powerful set of friends will speed up the process. Why do you think organizations exist? It is so that like minded people can gather together and help each other. But in order to receive, you have to giving. Receiving without giving back will result in bad karma. An open hand can receive more blessings compared to a clenched fist.

Mindset. If you want to be a millionaire hang out with millionaires. These people think and act differently from “normal people.” When you look at rich people and poor people you will see that they are not much different from each other. They are basically the same when it comes to looks, talent or skill. The only real difference between rich and poor people is mindset. Wealthy people have a powerful mindset. When they want something they don’t look at the barriers along the way. They focus on the goal. Friends are a powerful influence. Hanging out with successful people will equip you with the mindset you need to become a success.

Resources. Your friends can be your resource. Where do you turn to when you have problems? Aside from this, your friends can become your business partners. You can use each others expertise to mutually benefit each other.

Moral support. The road to wealth is fraught with trials and hardships. But you need not do it alone. Having the support of your good friends can go a long way towards driving you on to continue the journey.

Good friends are like diamonds. They are rare and difficult to find. So treasure the friends you have and look after them.

Chris Zuckerman is the President at his b deck and steel deck fabrication facility located in Atlanta GA. He loves to play golf and travel around the world with his wife and 3 kids.

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