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5 Financial Mistakes Rich Folks Make

I read an article in Business Insider Rich people make the same 5 mistakes repeatedly. I found it amusing because it attempts to fool you into thinking that if you act like rich folk, you’ll become one. Unfortunately, Lies travel faster than truth.

Maybe the article attempts to convince you that Rich Folk and you are similar since you make the same mistakes. This is hardly the case.

Why are rich folk rich?

  • They started with money, most of the time. Family money makes getting rich a lot easier than you think.
  • Education and advantages that being rich give you. Not just what you know but who you know.
  • Pay lower tax rates because they have people who make sure that happens.
  • They have enough money to make mistakes. They can take risks that most folks can’t.

Rich People Can Make Financial Mistakes

That is what you should take from this story. Rich folk have the luxury of being able to make financial mistakes. They can recover from them. Most of us don’t have the wiggle room to escape financial blunders.

Rich folks can become like the rest of us if they make mistakes. That is true. The story the great Investment Monolith wants you to believe is that the reverse is possible too. It is possible, but the former is much more likely.

Mistakes are easily made. We all do them every day. To succeed financially takes dedication, discipline and damn hard work. The mistakes mentioned in this article are bad:

  1. Assuming they can out-earn bad spending habits. That is not a mistake reserved to the rich, in fact this is how we all dig the big hole called debt.
  2. Not automating their savings. Another spin on paying yourself first, which is something you can do as long as you are not spending more than you make.
  3. Not speaking with a professional for tax-planning or estate-planning purposes. This seems like sound advice, if you take it as, making sure you do your taxes well, and have your Will and Power of Attorney up to date.
  4. Assuming they don’t need a financial adviser because they’re successful. This is the heart of the article, as it seems to have been written by a financial professional. I have a great mistrust of the financial industry in general and in advisors in specific, but if you use this type of service, you had better trust them (and watch them closely). In the end, it is your money.
  5. Not having any idea how much they spend, again not a mistake reserved to the rich. I had no idea I was that far in debt ? We’ve talked about that before.
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What Should You Do?

Don’t make financial mistakes? Easier said than done, but you must be careful with your money. Don’t make rich folk financial mistakes? Because you don’t have the luxury of making them.

Why are you reading this if you are one of the Rich Folk?

Originally written in 2019, updated with more snark.

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