If you were a millionaire, you would have nothing to worry about, right? You would have more money than you could ever dream of spending, a job is now a choice rather than being necessary to support yourself, and you can now afford to experience all the luxuries that the world has to offer. This is not always the case, though.
We typically think of millionaires as being very money-savvy. In order to properly handle such a substantial amount of money, they would need to be good at managing their money. Sure, spending money wisely to them means lavish vacations and expensive outings, but, like us, they still need to be conscious of their spending habits. However, not all millionaires stay millionaires forever.
I’m sure you have heard stories of famous, wealthy people that have lost their fortunes. It happens and it’s often a result of a snowball effect of bad decisions. What can we learn from the mistakes of these millionaires? There are three bad habits that each one of these cases have in common.
1. They did not have a budget.
Whether you are living paycheck-to-paycheck or are the richest person in the world, you still need to have some sort of budget. It’s important to keep track of where every penny goes so that you are paying attention to how much money is leaving your banking account every day, week, and month.
Millionaires who have lost their fortune would not be able to tell you where their money was going. Restaurant tabs and shopping sprees, for example, may not seem like expenses worth tracking, but they can add up quickly and deplete funds at a rapid rate.
2. They let emotions dictate their purchases.
After an especially hard day, it’s not uncommon for people to turn to money to cheer them up. The more money you have, the more expensive these emotional shopping sprees tend to be. Turning to money frequently in trying times eventually becomes a habit, one that is very hard to break.
Millionaires who lose their money quickly are notorious for making very expensive, very emotional purchases. The millionaires who keep their fortunes are the ones who develop a more practical and calm outlook on spending money. It is okay to splurge every now and then – keeping in mind your weekly income – but that means that in the other moments, you need to be more frugal.
3. They didn’t have various forms of income.
Many of us wrongly assume that becoming a millionaire means completely disconnecting oneself from any work or income because there is enough money to sustain living a good life. This couldn’t be further from the truth. They would need to continue making up for the money they are spending with some form of income. But relying on one source of income has its risks as well. That is why it’s recommended that one actually have multiple sources of income, just in case one of the sources falls through.
Learn from these mistakes so that you can develop good habits when handling your own money. Keep track of your spending, don’t let your emotions dictate your shopping patterns, and always make sure that you have a steady source of income!