Making money mistakes is often par for the course on the road to becoming wealthy — and yet, there are many financial traps the rich never fall for.
“One common money trap that wealthy individuals avoid is lifestyle inflation,” said Dana Ronald, president of Tax Crisis Institute. “They understand that as income increases, they tend to upgrade their lifestyle, which can lead to living paycheck to paycheck — no matter the salary,” he said.
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He added that wealthy people are disciplined about maintaining a consistent standard of living regardless of increased earnings.
“Wealth is built and preserved through careful planning and an unwavering commitment to making informed financial choices,” he explained.
Below are the top money traps wealthy folks never fall prey to.
This is problematic when it doesn’t originate in the right place, said Thomas Franklin, CEO and co-founder of Swapped and an expert in the personal finance and banking industry,
“I’ve been realizing that sometimes when people are really giving money away, it’s not a matter of pure kindness,” he said.
Franklin pointed out that they might be attempting to compensate for the emotional damage they have caused their family.
“Or perhaps attempting to compensate for their own sense of not-enoughness or blame for how they earned their money, either by way of causing harm to their family, partners or the rest of society,” he explained. “It makes them feel bad that they were giving to cover emotional issues rather than for the sheer thrill of giving.”
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According to Franklin, it’s normal for those just starting out making more money to conceal their money woes or mistakes.
“They fear criticism or inaccuracy from others — they fear ‘she won’t get it’ or ‘he’ll never forgive me.’”
But secrets such as these, he warned, only serve to tense individuals up, exacerbate their fear and amplify whatever shame they might have felt at the time.
“Moreover, it might shut off support or counsel that could help stop the harm,” he said.
Lack of coverage is a liability trap you don’t want to fall into, said Franklin.
“You don’t want to blow the buck by having too much insurance, sure, but not trusting what your employer is offering is risky, as well,” he warned.
The expert said the majority of the time the life insurance from employment is inadequate.
