1. THEY PINCH PENNIES … THEN SPLURGE

Corley said that many millionaires are frugal — penny pinching everyday costs and fees. “They will fight like a Tasmanian devil if they think they were overcharged for a grocery item or a restaurant charge,” he said.

But then — after working hard to keep costs down — they’ll splurge on a boat, jewelry or an absurdly expensive vacation. “While it’s a rich habit to watch your pennies, it is a poor habit when you take those hard-earned pennies and make an expensive emotional purchase,” Corley said.

2. THEY OVERPAY

On the flip side, some wealthy people don’t pay attention to the details and end up wasting money. For example, they don’t audit their accounts for unnecessary fees, review bills for overcharges or compare prices on services to get the best deal, Corley said.

“If you don’t spend any time trying to find the lowest price, you are likely paying too much,” he said. Even if you have a lot of money, you don’t want to waste it by overpaying for products and services.

3. THEY DON’T KNOW WHERE THEIR MONEY IS GOING

Even the rich have trouble sticking to a budget. Winnie Sun, founding partner of Sun Group Wealth Partners, said she often hears her high-net worth clients who work in the movie and TV industry say, “I just don’t get it. I know I make so much money, but I don’t have that much money left over to invest or save.”

The problem, she said, is that they don’t track their spending. Often, the more you make, the more you spend. So even if your income is high, you need know where your money is going so you can make the most of your hard-earned cash.

4. THEY TRY TO KEEP UP WITH THE JONESES

People who acquire wealth — rather than grow up rich — tend to make the mistake of trying to maintain a lifestyle other wealthy people lead, said Michael Kay, president of Financial Life Focus and author of “The Feel Rich Project: Reinventing Your Understanding of True Wealth to Find True Happiness.” They work so hard and spend so much to keep up with others that it’s not sustainable, he said.

Kay said that one wealthy individual who came to him for help had stopped paying taxes because he used every dime he had to sustain a lifestyle. The man owed more than $1 million in federal taxes.

5. THEIR WANTS BECOME NEEDS

There are plenty of things most of us might want but can’t afford. But when you have the means to afford your wants, they tend to become needs, Kay said. For example, you need a bigger boat, or you need a better vacation.

“That’s a big mistake,” Kay said. “You don’t have to be wealthy to make that mistake.” But when you’re wealthy, mistaking wants for needs can be much more costly.

6. THEY HAVE CREDIT CARD DEBT

A lot of people assume that people with a high net worth don’t have credit card issues, but Sun said that a good portion of her clients had credit-card debt when they first came to her. Sometimes it’s because their cash was tied up in their business, so they got in the habit of charging purchases. Or sometimes it’s a simple matter of overspending.

Sun said it’s important to make a plan to pay down credit card debt as quickly as possible. That means directing money toward debt as soon as it hits your checking account. Then, rather than wasting money paying interest, you can start earning interest by investing your money.

7. THEY’RE AFRAID TO SPEND

While some wealthy people end up overspending to maintain a certain lifestyle, others — especially those whose family members suffered through the Depression — don’t want to spend a dime. “Even though they have all the wealth in the world, they live with a Depression mentality,” Kay said. That’s a mistake, because hoarding money doesn’t create comfort, he said.

Kay encourages clients to spend on things that give them joy from time to time, whether it’s taking a vacation or giving money to charity.

8. THEY’RE NOT SAVING ENOUGH FOR RETIREMENT

Sun said that her wealthy clients typically are good about saving for retirement, but aren’t always saving enough to maintain their standard of living once they are no longer working and making money. They worry that they won’t be able to retire because they’re used to a certain level of spending.

The key is to figure out how much you’ll need to live comfortably in retirement, and create a savings plan to have enough to replace your income once you’re no longer working.

9. THEIR INVESTMENTS AREN’T DIVERSIFIED

A survey of high-net worth investors by deVere Group, one of the world’s largest independent financial advisory organizations, found that the number-one mistake they said they made before seeking financial advice was failing to diversify their portfolios.

Sun said she sees this with her clients, who have put all their money into their own business or have most of the retirement money invested in their company’s stock. If that company takes a hit, their savings could be wiped out. You can lower your risk by investing in a variety of stocks, bonds or mutual funds, and other assets such as real estate.

Read more here: http://www.msn.com/en-us/money/personalfinance/the-biggest-money-mistakes-rich-people-make/ss-AAhmUVE?li=BBnb7Kz#image=10


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