Some people struggle all their lives to meet their ends, but there are others who make a fortune. Making money isn’t a piece of cake. It requires persistence, dedication, hard work and a host of other attributes on the part of the person. All successful billionaires we see today have gone through their share of struggle to reach the position where they stand today.
At the same time, there’s another theory that’s floating around- people who earn money too quickly are callous about that wealth. They are likely to spend the money more quickly than what they earn as their regular salary. They fall into a tough financial loop at times, often finding it challenging to manage their money.
Dominique Grubisa, a well-known solicitor and provider of wealth management services, has achieved remarkable milestone throughout her professional career. She believes that money management issues are not always faced by the poor owing to their high debts and finances crises. It’s also the rich who fall prey to the consequences of financial mismanagement.
Here are a few issues according to Dominique Grubisa that the rich face when it comes to managing their money:
- Allocation of finances
First and foremost, the rich often find themselves in a fix when it comes to allocating their money to different expenses, both essential and wasteful. Let’s take the example of a celebrity. He or she will invest whopping sums of money in jewellery, accessories, clothes, cars and other things that make up their luxurious lifestyle. He or she cannot afford to look ‘just’ good, but to be the best. Hence, they tend to splurge without any limits.
- Too many ideas floating around
Rich people tend to find any opportunity in almost everything they come across. Investment opportunities and ideas flow to them on a regular basis. It’s not at all unusual to see property dealers and mutual fund companies flocking to their companies to strike a deal. Most rich people often go ahead with the investment without much thought or prior knowledge. This can culminate into a huge financial risk if the pros and cons are not appropriately weighed.
- Ever-increasing household expenses
Let’s face it: we live in an expensive world. What’s worse is that economic inflation is only rising. There could be many reasons behind this, but the result is always the same: your household expenses skyrocket. The situation can be extremely demanding when your family is large, and your lifestyle requires to maintain a standard. Dining in expensive restaurants, buying luxury brands, going on holiday trips, all of these are typical of the rich. Irrespective of their bank balance, some of these activities can be a considerable drain on their finances.
- Trusting employees too much
Owner of a multi-billion dollar business often doesn’t get time to do mundane tasks like accounting, bookkeeping, budgeting or filing taxes. These are performed by specialised professionals who know the job the best. These employees are valuable resources for the organisation. However, should owners draw a line somewhere? Yes, they do. Too much trust placed in employees can backfire. More often than not, they don’t know how employees hired for the purpose is managing their finances.
How to fix money management issues?
The above are just a few of the many issues that the rich face while managing their finances. Some of these issues may be small and easily correctable. But some can increase to a catastrophic proportion, sometimes costing them their valuable business.
It shouldn’t be so bad if people know how to manage their money well. To do so, they will have to start acting today. Here are a few money-management tips from Dominique Grubisa that the rich should follow:
Create a buffer income
The business landscape can be very uncertain. While there may be times when the market is booming, providing a good inflow of money, there may also come times when the business is down, and money doesn’t come. What should be done then? Perhaps, creating a buffer income for contingencies or an alternative investment income should save their beacon during financial problems.
Re-looking at their assets
Even though real estate and other assets involve a high tax rate, people should have them in their own name rather than in the name of their family members, relatives or friends. It’s essential that people take a close look at their assets and maintain proper documentation for the same. They have to ensure that their maintenance costs lower and the price of the asset increases over time.
Last but certainly not the least, rich people should control their tendencies to overspend. It becomes increasingly important for them to channelise their financial resources to processes, activities and things that matter. Wasteful splurging is something that people should curb to manage their finances more efficiently.