Breaking the High Income Curse

Retirement

Breaking the High Income Curse

Posted by Infinite Wealth Advisors, LLC
3 years ago | August 22, 2016

Portrait of happy senior man with computerThe idea that high-income earners are “cursed” sounds ridiculous to most people. After all, doesn’t more money equal more wealth, more freedom, and more happiness?

Well, it can… when managed properly. But if a high annual income always guarantees permanent wealth, why do 78 percent of NFL players eventually experience serious financial crises, including bankruptcy?

The fact is, some people who earn a high income don’t actually stay wealthy for a long time. These people face most of the same temptations and problems as people in lower income brackets, but they’re playing a game with higher stakes. When things go bad for wealthy people, they can go really bad. It’s often called the high-income curse.

There’s nothing superstitious about it, of course. What happens is that people who earn a high income can often develop a feeling of immunity, or of false security. If you’ve ever struggled financially, you know that budgeting and worrying about money becomes a part of your everyday life (or you can at least imagine it). Those with higher incomes don’t worry about money, and might focus their thoughts elsewhere. And that’s where the tendency to overspend, go into debt, and neglect retirement savings can creep in.

Luckily, there’s a fairly easy way to break the “curse”. If you earn a higher than average income, remember to follow these four rules.

  • Don’t spend more than you make.
  • Spend less than you make.
  • Save for retirement. Divert a percentage of your paychecks directly into a retirement account.
  • Pay off your debts. That high income is not guaranteed to last forever

Finally, remember that earning a high income does not automatically equate to having a high net worth. You should build your net worth over time, after getting your spending under control. In the future, when you are able to retire comfortably, you will thank yourself for putting your high-income years to good use. For more information on building wealth and preparing for the future, give us a call. We specialize in helping our clients reach their fullest potential.

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