Name: 7 Biggest Mistakes High Income Earners Make
Uploaded: 2024-08-03T15:57:23.000Z
Duration: 12 min 1 s
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Gerund

Thank you to HubSpot for sponsoring this video.

Making six figures at the age of 25 and then multi six figures at the age of 30,

Modal verbs - A2

I can hands down look back and say there were so many mistakes that I made along the way.

And so in this video, I wanted to share with you seven of what I think are the biggest mistakes high income earners make and strategies to avoid them before it's too late.

Number one, being tied to golden handcuffs.

This is probably the mistake that cost me the most number of years, and it's one of the most common mistakes I see people around me make.

Golden handcuffs is essentially when a company pays you so well that you forget or you sideline what you really want to do.

It pays you enough to forget about your path, your dreams, your vision.

When I first started my job in banking, I was making £35,000 and I remember thinking at the time if I were to do my own thing or change career paths, I'd need to earn the same amount to be able to justify the move. I looked into a few alternatives, but I was so comfortable with where I was, so I just continued to go down that same path.

And then a few years later, I was on six figures and I thought about it again.

I didn't really like my job at this point. I considered switching career paths, applying for other jobs, doing my own thing. I looked into all the options and very quickly realized that I am not going to sustain the level of income that I was on doing something else.

And so again, buried this feeling inside of me, continued working. With every passing year,

I got another pay rise, a promotion, a bigger bonus. And year after year, these golden handcuffs got tighter and tighter. And it was only nine years in to my corporate career where I took a step back and thought, I actually hate what I do. I'm earning a good salary, but I don't even have the time or the freedom to enjoy it. I have very little control or autonomy over my life. And my relationship is shit because I'm always unhappy. And I let myself get to that point before realizing that I had the keys to the golden handcuffs all along.

And what I'm trying to say is that sometimes when you're earning or used to earning a lot of money, it can be so tempting to just stay the path, but don't make the mistake of letting the fear of losing what you have prevent you from chasing what you truly want. Don't let it make you complacent if you aren't happy with where you are. Number two, not allowing yourself to spend.

I know people who have hundreds of thousands in the bank, but they're not able to spend their money joyfully. When you've got to a good place after years of scrimping and saving and counting every penny, it's then very hard to break out the habit that got you there. Even after achieving financial security, the idea of spending money on yourself or for fun or for joy, it just seems like a foreign concept and requires a shift of mindset from one that is of scarcity to one that is of abundance. So something now that I've implemented and I do, I have a fun budget in my tracker, and this is essentially a must spend percentage of my income. And I allocate 20% of my income every month on anything that I want, activities, experiences, eating out, clothes, absolutely anything. That way I'm still enjoying my life while I pursue my bigger financial goals. It's not just one or the other. Remember the hard work and the frugality that helped you accumulate your wealth doesn't have to define your spending habits for the rest of your life. It's okay to let go and enjoy your money. You've earned it. Number three, being overly dependent on one income stream. When you're making a lot of money from one income stream alone, it's super easy to just double down on it and become very reliant on it, overly dependent on it. And up until six years ago,

I was so dependent on my income for my day job, everything, my life, my flat, my car, everything would pretty much disappear if I'd lost my job. And this is a very vulnerable place to be in. It's very easy to be reliant on just one source of income and just assume that it will keep paying you. Yeah. Focus on maximizing what you make from it. Focus on moving jobs, getting a better pay, negotiating a salary, go for the extra promotions, but you still need to have other income streams and do something on the side, do whatever you need to so that you're not relying on just this one income stream because having one stream of income is too close to none. There are a lot of ways to make extra money outside of your nine to five. You just need to be a little bit more creative. In this video here, I talk about the other business ideas and passive income streams that I have as well. If you are looking to start your own side business of any sort, then one thing that can really help you from the start is understanding and being clear about the market potential, your competition, and exactly who your potential customers would be. I only really thought about this seriously halfway through my journey and ended up having to change direction on a few things and would have done some things differently if I knew what I know now back then.

If you want to learn more about how to start a business and you want templates or guides that can prompt you with things to consider from the outset, then I would highly recommend HubSpot's completely free business starter toolkit. It comes with a really comprehensive business plan template which will help you with your business, your vision, established goals, and plan for success. To ensure your business idea is viable, it also offers a feasibility study template.

There's also a free business startup calculator that helps you with the financial aspects of starting a business. It helps you identify the potential costs associated with starting your business. Once again, this business starter kit HubSpot provides is available completely for free if you want to check it out in the description box below. Thank you to HubSpot for sponsoring this video. The fourth biggest mistake I see high earners make is waiting too long to start investing. According to a 2019 report by UBS Investor Watch, Billionaire's Insights it was called, it's noted that as the wealth of someone increases, so does their reluctance to spend or invest due to the fear of losing what they've worked so hard to accumulate. And the report found that over 60% of high net worth individuals suffer from decision paralysis. People prefer, especially at that level, to keep their money in a bank account because it feels safe, especially if they haven't become familiar with the idea of investing. Once you have an emergency fund, once you've paid off your high interest rate debt, you need to start making the rest of that money that you earn work for you. But the problem a lot of high earners have is that because they haven't got into the habit of investing, they have a lump sum that they're ready to invest, but they're now too scared to do anything with it. Their emotions take over. They don't want to lose it. They continue waiting and waiting until they think is the best time to get into the market. If you invest 200 a month for 30 years into the market at an average market return of 8%, you can expect to have a pot of over 270,000. If you wait until you have more money to invest and say you get to a point where you have the ability to invest a thousand a month and only have 10 years to invest it, with the same return, you'll end up with less. You'll actually end up with just over 170,000. Even though we often have the money to start investing with, we fall prey to this myth that we still need more to get started. And then we get to a point where we do have enough. We end up being too scared to invest it because we think we'll lose it. The way I see it, other than the money that you have for your emergency fund, the money that you are saving for an important big purchase or the money that you're investing into your learning or into a side business, the rest should just be parked away, taking along in a low cost index fund as soon as possible. In the comments on my last video that I released, there were so many people saying, where can you get this return? Where can you get a 6% return? Where can you get an 8% return? If you are new to investing and you know you should be doing it, you just don't know how to go about it, then I have a free masterclass that is releasing very soon. We'll cover at what point you should start investing, how much you need, what to invest in, and how to do it safely and strategically. If you want to know more, check the link below. Again, it is completely 100% free.

The next biggest money mistake is not giving money away. There are countless studies that show once you earn enough money to have your basic needs covered, every extra or additional amount of money you make after a certain threshold doesn't really move the needle that much when it comes to your happiness. And what I found is that despite a lot of people knowing this and being aware of it, we don't really consider how else we should use the money to make ourselves feel good.

We just keep spending it on ourselves. And what I found is that out of all the things that I've spent on, the area that brings me the most happiness, the most joy, most fulfillment, is spending on other people or gifting money in some way. And giving away money can mean very different things for very different people. Maybe it's paying for your mom's operation so that she has less pain, paying for your grandma's electricity bill every month so that it's affordable to her. Maybe it's putting money towards the animal shelter down the road that you've wanted to support. Just helping a little is going to make you feel good about yourself and help others in the process. It is literally a win-win. And I truly believe that the more you can give away what has come to you, the more the universe will give you more of it because it understands that it's in the right hands of someone that is using it to do better.

The next money mistake is working too much. There's a book written by an Australian nurse who recorded the top five dying regrets that she found amongst patients that she cared for in their final weeks of their lives. And their number one regret was,

I wish I had the courage to live a life true to myself, not the life others expected of me.

And the second was, I wish I hadn't worked so hard. Money is a huge part of our lives.

It touches so many elements of our day-to-day. It unlocks countless opportunities. But there comes to a point where the pursuit of working more and more just for the sake of money comes at the cost of other things that are more important in life. Spending time with people you love, taking time out and enjoying the money you earn, that's the true essence of why we make money is to live a life that makes us happy. And when it comes to a point where the scale tips and you're working just to make more money, even though other things will actually bring you more happiness, then you know it's time to tip that scale the other way again.

The next money mistake is ruining relationships because of money. TD Ameritrade's 2018 survey found that 53% of millennials say it would be worth it, quote-unquote, to go into credit card debt if it meant that they can attend a wedding of a close friend or a family member. We live in a society where it's almost an expectation now to attend someone's wedding or a hen or a stag, even if it means going into debt as a result. But not everyone has the same priorities as you or as someone else when it comes to money. And thinking otherwise can cause the end of really good friendships. Looking at my Saco friends alone, I have some friends who openly acknowledge that they've chosen a career that doesn't pay well because they're doing it out of passion, out of service, and they don't care about the money side of it. And there are others who openly acknowledge that they're only doing their job for money and they have zero passion for it. To maintain a genuine friendship with people from different backgrounds that isn't based on how much money you have, you have to be mindful that not everyone has the same priorities when it comes to money. Just because one person wants to eat out at a fancy restaurant doesn't mean other people want to do the same or they have the same standard. Just because one person can afford to go on an extravagant destination hen or to organize an extravagant destination hen doesn't mean everyone else can. If you want to maintain genuine, authentic relationships and friendships, we can't let money or lack of define our connections. It's the shared experiences, the shared understanding, the mutual respect, that is where the foundations of genuine relationships are built, not in the size of a bank balance. And number eight, this is a bit of a bonus one that I thought about as I was recording, and it's not hiring an accountant or a lawyer.

 When you have a sizable amount of money, it's easy to still think in the same ways that you did before making a lot of money. And that may mean you cheap out on a few things. You may not have an accountant. Instead of having a lawyer, you ask chat GPT to line up a contract for you. But as more and more money is involved, spending more in these areas to protect you and to protect your wealth will save you a lot more than it will cost you. The more money you have, the more money that you have to lose. And so hiring a good accountant and a good lawyer are two of the most important things you can do when you've built wealth. If you enjoyed this video, you might also enjoy this video right here on why so many high income earners are still feeling broke. Thank you for watching and I hope to see you there.