Rich People Still Worry About Money — Here’s Why

Have you ever felt like a specific sum of money would solve every problem you have? Maybe you’re working toward a certain threshold where you will actually feel “rich” — even if you’re technically at that point already. If so, what sum of money would finally leave you feeling secure?

These are good questions to ask yourself, although the way you define “rich” may predict how likely you are to get there. According to a recent study from GoBankingRates, 26.2% of 5,021 respondents said they would need to earn over a million dollars per year to feel “rich.” Another 47.3% said they would feel rich earning less, and 11.7% even said they would feel rich if they earned six figures. To add even more contrast, 12.8% of respondents said they wouldn’t feel rich unless they earned $10 million dollars or more.

Seven Reasons Rich People Still Worry About Money

This just goes to show how American ideals on wealth can be drastically different. One person’s “rich” is another person’s average lifestyle, and the level of wealth one needs to feel secure can vary by a lot.

Even if you’re “wealthy” in a traditional sense, it’s also quite likely you worry about money for one reason or another — and that’s true no matter how big your bank account is.

But, why do American ideas on wealth vary so much, and why do some people need a lot more cash to feel like they could never worry again? We interviewed financial planners to find out. Here’s what they said:

#1: Money is a finite resource — even if you’re rich.

It’s easy to assume that reaching a certain level of wealth protects you from financial peril, but there are plenty of examples that show this isn’t the case. We’ve all heard stories of professional athletes and celebrities who have earned millions and burned through it all: Mike Tyson. Allen Iverson. Dorothy Hamill. Johnny Depp. Toni Braxton. And so many more.

Financial advisor Kelly Wright of Pinnacle Advisory Group says that rich people often worry over money since they are keen to the idea that it’s not what you make — it’s what you keep.

“Many wealthy people with enormous incomes have gone bankrupt by not focusing on their expenditures,” she says.  In that sense, the wealthy may be wise to worry over money and how their spending could leave them penniless if it gets out of control.

#2: Wealthy people worry about opportunity cost.

Alexander Lowry, professor of finance at Gordon College, says that the “rich” may not have to worry about daily money troubles like paying bills or keeping food in the fridge, but they still have plenty to mull over when it comes to their cash — specifically, how to put their money to use.

Lowry says that wealthy individuals often adhere to the concept that those who understand interest earn it and those who don’t pay it. “This means that they compound their wealth in intelligent, income-producing securities,” he says. In other words, they look for ways to earn interest while reducing their outflow. Ultimately, the quest to maximize their money can lead them to worry even when money isn’t scarce.

#3: When it comes to money, everything is relative.

Lou Cannataro, a partner at Cannataro Park Avenue Financial in New York City, notes that wealthy families often strive to build a lifestyle that they feel they can afford and deserve. Once they get accustomed to a certain level of wealth, however, their new lifestyle and its associated costs become the new normal.

But the quest for wealth can also turn into a treadmill. The more the rich get used to being wealthy, the more accustomed they are to worrying over whether they can keep it up all the way to retirement. And since many of them have worked hard to achieve their success, the last thing they want to do is see their life change for the worst due to bad decisions or mishandling of their wealth.

Many people believe that a random sum like $3 million would solve all their money woes, says Cannataro, but they don’t realize they would just take on a new level of worry.

Average people “know how bad it feels to live check to check or feel like they won’t have enough for college or retirement,” he says. “If they hit the lotto and the money arrived yesterday, they would strive to set their life up in a new level of satisfaction and comfort and try to hang on for dear life.”

#4:  More money means more problems.

Women’s wealth advisor Jessica Weaver says that one of the biggest reasons the wealthy worry about money is the fact that having wealth requires you to face increasingly complex financial decisions.

If you think this through, makes some sense. When you have hundreds of thousands or millions of dollars to invest, the stakes are higher; you have to do more than stash money away in a high-interest savings account or simply boost your 401(k) contributions; you have to come up with a solid investing plan that helps you maximize earnings while reducing taxes. This feat isn’t always easy.

Weaver says financial decisions regarding wealth can be overwhelming to people who aren’t sure which move to make next. “If they don’t have a trusted team of professionals to help guide them, they will always worry if they are making the most of their wealth,” says Weaver.

#5: Being successful in business doesn’t make you a successful investor.

Many people believe that becoming financially successful is their ticket to financial freedom. When you have a larger than average income, what could possibly go wrong?

Massachusetts-based wealth manager Liam Timmons says that earning money isn’t enough and that rich people seem to be keenly aware of their limitations. They may have excellent entrepreneurial skills or the ability to bring in a big paycheck, but that doesn’t mean they know a lick about investing or protecting their wealth.

That’s because the accumulation of wealth requires a different skill set from maintaining and managing the wealth, he says. This is also why many rich people who seem to be well-versed in investing still hire a team of professionals to help them. They’re smart enough to know they don’t know everything, so they hire the best help money can buy.

But not all rich people hire professional help. Many assume that earning a lot is enough, and they waste their financial potential as a result of not saving and investing enough of their income.

“Part of the issue is education, says financial advisor Roger Ma of Life Laid Out. “People aren’t required to learn the basics of personal finance in school.” As a result, they may think simply earning a high salary will lead to long-term financial stability, when having a modest salary and being deliberate about expenses could actually prove to be a better plan.

#6: Lifestyle creep can be a problem.

For many families who earn more than average over time, lifestyle spending tends to increase along with income. A 2017 study from CareerBuilder even found that 10% of households making more than $100,000 per year live paycheck to paycheck. This is a first-world problem for sure, but lifestyle creep is still very real for many people who earn a lot but can’t figure out how to spend less than they bring in.

Lifestyle inflation can be an especially big issue for people who are “suddenly rich” — as in, they’re earning a lot of money for the first time in their lives. “Even as you accumulate higher earnings and maybe build up some savings, it still feels more precarious than you’d have imagined when you were making half or less that amount,” says financial planner Ryan Frailich of Deliberate Finances.

Since humans adjust very quickly to whatever circumstance becomes normal, a salary they may have only dreamed about three years ago can quickly become something they’re accustomed to. They’re used to spending their entire paycheck, so they quickly adjust their spending to whatever they’re earning now. Ultimately, even wealthy people can struggle if they don’t learn to live below or at least within their means.

#7: They want to leave a legacy behind.

Finally, let’s not forget that wealthy people think about more than just their own lives; they also dream about the future. According to Cannataro, the rich often place a priority on providing for their children and making sure they have every opportunity to become successful in their own right.

Many wealthy people also realize the odds of their children becoming as successful as they have are not in their favor.  As a result, they may worry over how to preserve their wealth or how to protect it against the poor decisions of future generations.

The bottom line: The wealthy may be rich already, but chances are good they want their children, grandchildren, and future generations to have the same lifestyle they’ve had or better. And can you blame them?

Holly Johnson is an award-winning personal finance writer and the author of Zero Down Your Debt. Johnson shares her obsession with frugality, budgeting, and travel at ClubThrifty.com.

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