Savings: The Reasons Why Rich People Go Broke

[moonchild]

In a book I just read, An athlete in the United States earning $657,480 a week, went broke to the point of filing for bankruptcy, sources affirmed that the said athlete was always living large, rented houses for his family members in Beverly Hills, bought exotic sport cars and was always out of a country for a vacation anytime NBA goes for a break.

Now, tell me, why this guy won't be broke obviously he's living above his means and wanted to carry a lot of people along, I'm not saying it's bad but one needs to watch how much comes in and how much goes out.

If for example this guy lived within his means and save most of his money, in a few years he can retire rich and live the life of his dreams.

Bad financial decisions doesn't respect income, even if you're earning a million dollars, if you spend recklessly you can go back to square one in no time because you're not disciplined, that's why in my last thread I said, savings is a culture you have to cultivate for yourself, it doesn't have to much, just be consistent enough to be able to monitor your spending.

 

[Finger Geek]

That is the problem with most athletes and celebrities. When they are still active and been paid huge. They never thought of a day to come and that they will stop earning as they currently does. With this they will spend lavishly and leave a luxurious life. I don't say that it is wrong to do so. But you can live like that if you have a stable investment that will provide for you for the rest of your life.

I have read of many athletes and actors that live lavishly when they were on point. But now they have nothing. Most of them are on debts. Just that I don't want to mention there names.

There are many celebrities that are wise now. Most of them, apart from earning money as a celebrity. They have other sources that generate money for them. Even if they retire from acting or athletic today, they will still be rich. And that is because of there investment that they have started with the money they earn for been a celebrity. Most of them now apart from been called a celebrity, they are also called business men and women because they are business owner. But the ones that spend lavishly without business or investment will surely suffer at the end.

 

[Abigael]

This is a very tragic story of a rich guy going broke. And it actually happens to so many people. When you are earning so much money, you get carried away by the wealth and you choose to live large. You forget that there is a future.

Most people who earn so much monthly usually forget to invest that money for the future. They choose to live big lives forgetting that there is retirement, possibility of getting injured and not going to work anymore or even being fired.

Some rich people even decide to spoil every family and friend around them. Well, for me, that is a waste of money. Those family and friends will only be close to you when you are rich. If you go bankrupt, you won't see them anymore.

Therefore, rich people should remember to invest. Investment starts from having the most important insurances such as that of health, life and property. You can also invest in a side business or any other investment method that is great. And remember not to spoil everyone with your hard earned money.

 

[Kingsley]

Most people think that when they have somuch money then it will be difficult for them to go broke. But amazingly this is not true, there are so many people we know today that were rich before, but they became poor all because of their poor financial decisions that they had made and taken. Money does not grow when it is kept in a single spot this is why I always encourage people to always think of investment rather than just saving money somewhere without knowing exactly what they are going to be doing with the money they had been saving. This is why they always go back to their savings whenever they need money and they spend without fear because the money was not kept for anything initially. Then another reason people become broke after they had been rich, is because they may suddenly become sick and may require some form of medical attention that may require alot of money to take care of there health, we have seen alot of cases like that where people spend all they have and become broke and they are unable to meet up with all the bills and will have to still borrow.

 

[TOZZIBLINKZ]

A lot of rich people think that the act of saving are not for them but for those who earn minimal amount of income so as not to run out of cash thereby going broke or bankrupt . Rich and wealthy people must understand that no one is guaranteed to be rich forever . One thing could lead to the other thereby causing the individuals wealth and riches to vanish into the thin air . Whether we are rich or poor it is important that saving is entirely for everyone . The act of saving is not for the poor persons only because saving is meant to to handle unforeseen circumstances like health issues and paying unexpected bills which I think anyone whether rich or poor is prone to face .

If if you are a rich and successful individual looking for ways to develop the habit of saving . You must be truthful and consistent about it . Sticking to savings is actually the moment of Truth . For example you intend to save $30 every time you return from work you must stick to this routine and not fail . in conclusion , a lot of businesses owned and controlled by business owners have been saved as a result of the business owner savings which are reinvested into the business as ploughed back profit .

 

[eldavis]

The issue here is not just with celebrities and the likes. Most people today tend to live large, they end up spending more than what they earn, which leads to taking of loans or begging others for assistance. Saving is a good thing but it should not be the only thing you do. While you save, also try to make investments and never rely on just one source of income.

 

[Alexandoy]

This topic reminds me of 2 actors who were very popular when I was a teenager (they are of my generation). The most popular was Nora and the rival to stardom is Vilma. Both of them had been making movies from time to time like 5 to 8 films in a year. Most of those movies were blockbuster so both actors earned so much. When they were more than 30 years old there was the issue of the tax. Nora sold her big house to pay the back taxes to the government. Vilma had a compromise with the tax officer that she would be paying the tax arrears in installments.

Now, how did that happen when both actors should have been very rich? They were spending too much courtesy of their generosity. Even some of their fans exploited them by asking financial help or asking a budget for a project that is related to their stardom. Oh well, if they had saved enough I guess they do not need to work anymore.

 

[Sotherefore]

Thank you for sharing , this is really enlightening and we just have to take this as serious as we can because it deals with our finances and if we make the mistake of mismanaging the little resources we have it may not likely yield us a good profit. Personally I just have to make sure I plan out my finance perfectly because this is what will determine your future.

Based on your explanation living above our means is one of the reason why most people are likely not to be successful in life , yes I believe this is true Because when we live above our means our income and earning won't likely sustain us . This is not the best option.

Bad decision planning could also leads to bankruptcy that is why we are advice to try as much as possible to save our money and possibly invest our money in something reasonable because that is the only way we can be able to plan for our future.

A situation in which we do not have savings or any other thing that could back us up in the future then it might be very difficult with us because there is no way we could plan for the future when we do not have savings.

 

[Chibson]

I also heard a story of a one-time richest man in Brazil who went broke. And I was like what the hell is that?.

One of the main reasons a lot of people who are rich and certain point of their life go broke is because they do not have good advisers and even their family members do not have knowledge.

I recently listened to an interview of someone who is a comedian and was talking about how he has invested in a lot of landed properties because, there is time for fame and riches and then a time when your investment will speak for you.

That is one of the wisest interviews I have a listened to recently because the guy was explaining that the main reason a lot of people go broke after becoming rich to an extent is because they do not plan well and they do not invest in the necessary things.

Someone who is making such amount of money on weekly basis should have invested in a lot of things and bought a lot of landed properties. Imagine someone who makes such amount of money renting a house for his family instead of building his own house and buying properties. To be honest, he is the cause of his problem.

 

[Ayuba Ernest]

Wow, how come she lost so much amount of money without even thinking of investing or starting up something for himself. This is what happen when rich people think they own the world and doesn't want to think about the nearer future or that of their kids. All these goes down into making a very bad budget and good decisions when spending money. No matter how rich you are, when you have a bad budget you're definitely spend a lot without investing or saving or having the touch of a retirement plan. If a rich man or a successful businessman doesn't budget properly or in the right part and he starts spending money or materialistic things such as expensive cars, luxury house, he may quickly run out of money. It is good to make a budget or a plan b if you have a lot of money so as not to end in Doom financially. Although, from what I have learnt most of the NBA players comes from middle class and lower class income families and they tend to make bad budget when they become rich, making them spend their money unwisely without the thought of investing or starting up a side hustle business for themselves.

 

[Ithedicious]

Just this morning , I came across a write-up on social media that says that saving is even more important than the money you make on daily basis or monthly basis . I somehow believe what the person was trying to say because no matter the amount of money you are making at the end of the month , if proper savings and management is not applied the possibility of us mismanaging the money is very high..

That is why in most cases I save my money for purposes and I do not just save it for saving sake I believe if I have purpose for which I am saving money for then such will definitely encourage me to saves more..

So many people may be rich financially but without proper savings , the possibility of them spending the money extravagantly is very high which could definitely makes them poorer in the future as the original poster has said .