5 Common Money Mistakes Even High Earners Make

If earning a high income made people immune to financial mistakes, then the rich would never go broke. That’s not the case, however. Plenty of wealthy and successful people have filed for bankruptcy because of financial missteps.

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The fact is that high earners make many of the same mistakes everyone else does. Think of it this way: Earning $600,000 a year won’t do you much good if you spend $650,000 a year. But someone earning $75,000 a year can be on sound financial footing if they budget well and make smart investments.

These are some mistakes that are especially prevalent among the wealthy.

A characteristic many successful people have in common is confidence in their abilities and intellect — it’s often a big part of why they’re so successful. But that confidence can spill into overconfidence when you start to believe you’re good at everything just because you’re good at commanding a high salary.

One of the biggest mistakes high earners make is believing they’re better investors than they really are. This can lead to risky investments that not only don’t pay off, but can sometimes lead to huge losses and even financial ruin.

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Earning a high salary doesn’t necessarily mean you’re an expert at handling money. One mistake many high earners make is that they don’t consult professional financial advisors or take advantage of free financial tools that show where they stand financially.

Financial advisors are knowledgeable and can explain all the options available to you and your finances, helping you focus on your goals and the steps to get there. Moreover, the variety of free tools on the market means you can find one that suits your needs — whether that’s budgeting, investing or automatically saving.

Regardless of your income, consider taking advantage of free tools to help you make the most of your money. Depending on the app or website you choose, it only takes a short amount of time to create a free dashboard and see how well you’re tracking toward your goals.

When you earn a lot of money, you also owe a lot of taxes. Many high earners fail to implement strategies that can minimize their taxes, according to the New Trader University website.

You can save thousands by taking a proactive approach to tax planning, but a lot of high-income individuals fail to do so. Building wealth through a high salary doesn’t do much good if a big chunk of it ends up going to the IRS.