Six Common Blunders That Make Wealth Disappear

Rich Habits
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Sometimes rich people stop being rich. Things can go wrong. Sometimes those things that go wrong are outside the control of the wealthy (i.e. random bad luck) but more often than not they are things that are completely within their control.

As a CPA and Certified Financial Planner, I’ve been advising wealthy individuals in money matters for more than 30 years. Plus I spent five years studying the money habits of the rich and the poor. In my advisory business and from my research, I’ve written many books, articles and done many media interviews about the blunders wealthy individuals make that cause their wealth to evaporate. You would think they’d know better but they don’t always do.

The wealthy who make these mistakes all seem to be reading from the same script. So, I thought I’d share a few of the most common blunders of the rich that steal their wealth like a thief in the night:

  1. Penny Wise and Pound Foolish Many millionaires in my Rich Habits Study were frugal. By frugal, I mean they spent time seeking the highest quality product or service, at the lowest price. They would also squeeze some of those they regularly did business with in order to save money: dry cleaner costs, bank fees, credit card fees, landscaper costs, grooming expenses, such as haircuts and manicures, professional service fees, such as CPAs, attorneys, doctor and dentist charges. They fought like a hell if they thought they were overcharged for a grocery item or a restaurant charge. And then strangely, these same penny-wose millionaires would go out and splurge on an expensive boat, expensive cars, a diamond ring, a Rolex, or take an absurdly expensive vacation. I have seen far too many wealthy business owners fight to keep wages down at their business only to spend their hard-fought savings on yachts, big homes or expensive cars. It’s as if they had a Jekyll and Hyde battling it out inside of them. While it’s a Rich Habit to be penny-wise, it is most definitely a Poor Habit when you take those hard earned pennies and then make an expensive emotional purchase.
  2. Sheep in Wolf’s Clothing – The vast majority of the rich in my study and in my CPA practice are long-term investors. They buy, hold and rarely panic. In fact, when the economy turns south, they might even double down on their investments, hoping to invest more at a discounted price. But I’ve also seen some wealthy individuals who invest aggressively, panic at the first sign of trouble in the markets and begin unloading their investments. These so-called “aggressive investors” were actually conservative investors in disguise – sheep in wolf’s clothing. And their wolf disguise came flying off the moment they start losing money. Staying calm during adversity is a Rich Habit. Losing control of your emotions during adversity is a Poor Habit
  3. Ignore the Details – Most wealthy individuals become wealthy in one of four ways: #1 Saver-Investor Path (Save and invest consistently over many years), #2 Big Company Climber (Devote themselves to one company and climb the company ladder to become senior executives), #3 Virtuosos (They are either Knowledge-Based or Skill-Based Virtuosos who receive a premium for their unique knowledge or skills), #4 Dreamer/Entrepreneurs (Pursue some Dream they are passionate about) or $5 Inherit Their Money. However, some individuals experience sudden wealth before they’ve forged the Rich Habit of paying attention to details. These nouveau rich millionaires don’t review their monthly bank statement, monthly bills or monthly credit card statements in order to make sure there are no unauthorized transactions or fees. They also don’t review certain transactions such as hotel bills, retail purchases or restaurant tabs to make sure they were not overcharged. They also don’t review their expenses at least once a year to see if they can reduce those expenses moving forward.
  4. Eggs Are All in One Basket – In my Rich Habits Study, I discovered that those with the greatest amount of wealth had three or more streams of income. This was strategic. When one stream dried up due to economic downturns, the other streams of income came to the rescue, like a knight riding on a white horse. But some rich people make the mistake of tying the bulk of their assets up in one place, such as their own business or one investment segment, such as real estate, two very ill-liquid investments. For these wealthy individuals, when something goes wrong, they are forced to liquidate their investments or increase their debt.
  5. Lack of Proper Planning – Another common Poor Money Habit is lack of proper planning. The three big missteps in this category include: #1 Lack of Adequate Retirement Planning, #2 Lack of Adequate Estate Planning and #3 Not Having an Updated Will. When Prince died he had no will and no estate planning. Settling an estate with an old will or no will at all increases the costs of probate. Also, without an estate plan in place, you will pay higher federal and state estate taxes and inheritance taxes. Millions of dollars of Prince’s estate will now go to paying the salaries of politicians.
  6. Generous to a Fault – Too much of anything is bad and this applies with giving away your money. Once you give away your money, it’s gone. Most of the self-made millionaires in my Rich Habits Study were very responsible when it came to distributing their wealth to others in need. But the millionaires in my study who inherited their wealth had a tendency to be irresponsible with their giving – easy come, easy go. Those who don’t have to work very hard for their wealth simply do not value their money as much as those who spend decades building their wealth and too often give too much of their wealth away to family, friends or charities. Once family and friends find out you’re rich, some will hit you up for money. It can come from every direction and overwhelm you. Those who work hard to accumulate their wealth understand this and are very cautious about giving too much of their money away.

Staying wealthy is not as hard as getting wealthy, but it’s still hard. Any one of these six missteps can act like an anchor dragging you down off your mountain of wealth. Being aware of them is probably the best insurance you can have to preserve your wealth.



  1. khadija on July 1, 2021 at 9:34 AM

    This article is a real eye opener & highly informative. Thank-You!

  2. Diane on July 6, 2021 at 3:08 AM

    #5 Lack of Planning – I needed to read this one for sure! Thanks always for the good reminders!