I’m sure you’re well acquainted with the advantages of becoming wealthy. You can buy what you want, travel in luxury, and when your wealth makes you financially independent, work becomes optional.
Have you spent any time considering the disadvantages of becoming wealthy? Perhaps you’ve read the stories of lottery winners who wish they had never played the game. Sudden wealth can, in some instances, create more problems than it solves.
Mark LaForet, the author of today’s Friday Feature, isn’t opposed to building wealth. In fact, you could say he’s all LaForet, but that would be a terrible pun. Mark is also aware that there are some cons to pair with the pros of getting rich, and he highlights 11 of them below.
This post originally appeared on Money’s the Game.
Most people dream of being rich and having all the money in the world. It’s a fantasy that’s been happening for thousands of years. You get to wake up, and everything is easy! No worrying about money anymore. No worrying about how you will afford your mortgage (assuming you have one) and toys; OH boy, the toys!
But in reality, being rich isn’t like that. There’s always good and bad in every situation.
1. Significantly More Responsibility
Most people aren’t actually born rich. The vast majority of people who end up rich build their wealth themselves. This usually involves a business or several. Owning your own business is hard work and long hours.
Most entrepreneurs end up working significantly more than their peers and employees. This added responsibility makes a big difference in the lives of the rich and wealthy. Not only are they responsible for their business, but if they have employees, they need to be actively taking care of their needs as well.
Taking care of employee needs doesn’t stop at a paycheque; there are taxes and salaries based on the economy, yielding the highest pay possible for your employees while still maintaining your business’ sustainability. Then, try to provide security for your employees in pension plans, health benefits, etc.
This is, of course, on top of those same responsibilities that the wealthy have for themselves and their family except for one thing. They have to take care of that all on their own. As business owners, they don’t have someone setting up and maintain a pension plan for them.
Assuming that the rich person(s) has investments such as Real Estate or paper Assets such as Stocks or Bonds adds a level of responsibility to understand their investments and manage the money effectively. Even if the wealthy person has investment advisors, understanding how money works and how investments vary with taxes and different account management is important.
It’s hard to maintain wealth when you can’t manage your money. Someone else can only do so much, and if everything is lost through a risky investment, the people who were hired aren’t losing the money the investor is.
2. Naive Association To Everyday Things Compared To Your Peers (Privilege)
There has always been a separation between the rich and poor or middle class regarding what they can afford. This gap can create a naive sense of the world, especially for children who grow up in a rich or well-off family.
The kids don’t get exposed to the challenges that arise when people don’t have money. These kids may also have more opportunities than the poorer families, such as going to ivy league schools or having brand-name clothes.
While materialistic views aren’t always the case when talking about the rich, opportunity has its advantages.
The ability to pay for the school to become a doctor isn’t available to everyone. Neither is the availability of better food. Some people are stuck eating what they can because they can’t afford the highest quality. This has health implications for both the rich and the poor.
While it may not seem like much, knowing you have better food than someone else can be the simplest distinction that can create mental separation between peers.
3. Being Judged By Wealth Rather Than Character
Let’s face it, rich people have money, and non-wealthy people can admire it. This can lead to people’s assumptions, good or bad, into who you are as rich people.
Some people will think that you’re rich, so you must be materialistic, greedy, selfish, and many other nasty things. This can come about even if it’s the first time meeting this person. They have already pictured who you must be just because of your money.
Encountering people who automatically judge you based on your financial status or your parent’s financial status builds a wall between your own character and the judgments of your peers.
Researchers have documented incidences in which individuals from upper-class families are uncomfortable identifying themselves as such and try to distance themselves from those with a similar socioeconomic status (SES) because of negative stereotypes of upper-class privilege – Bradley T. Klontz
Over the past many years, the media and politics have highlighted the gap between the rich and the poor, referring to it as the 1%. This further separates rich people from the public because of the publicized view that the 1% own everything and the poor are taken advantage of.
Associating with “the Rich” becomes taboo and leads to people resenting anyone that seems rich or wealthy. This can lead to the wealthy only associating with other well-off people or the wealthy, avoiding other people, so they don’t receive the same judgment from people who don’t know them.
4. It’s More Work To Be Humble
Unfortunately, being rich is a lot of work. As stated before, you have more responsibility, but you also have to balance that with the rest of your life.
With the added stress from being judged not based on character, you will have to work harder to be compassionate. There is a stereotype that the rich aren’t compassionate towards people in lower socioeconomic classes. While this may be true for some wealthy people, the vast majority of rich people are just like you, compassionate and understanding towards life’s struggles. But this isn’t always the case.
Some people who have built or received a certain level of wealth may have difficulty empathizing with people in the lower classes. This isn’t isolated to just the rich either. The middle and lower class have the same challenge.
Furthermore, we may hold particularly negative views toward people who started out at a similar social class as we did but raised their relative socio-economic standing higher than we have. As a result of this envy, wealthy individuals may feel a sense of paranoia and be more secretive about their income and financial status.- Bradley T. Klontz
The difference is that the “Financial Gap” is smaller and creates an easier flow of empathy because of similar economic challenges. At the same time, the financial Challenges of the rich are vastly different than the poor.
Forgetting or not realizing that some people can’t afford shoes when a wealthy person may have a closet full challenges people’s compassion.
5. You Sacrifice A Lot
How much do you want to be rich? There are always good things but bad too. A substantial reason people don’t end up rich throughout their lives is to create a certain level of wealth; you need to sacrifice many things.
Time with family and friends will be lost, free time to play and do what you want will be lessened. Just starting your own business almost guarantees you will need to be working more than any wage-earning employee. This is time away from the people you love.
Building wealth for having more time is one of the most common goals for people looking to become rich. After all, having money and not being able to enjoy it doesn’t sound very appealing. Unless it’s 6000 quarters, but where would you get that many quarters?
While it is possible to build wealth and not sacrifice family, you will have to sacrifice other things. Time, in particular, there is never enough time to make money.
Sacrificing time is common when the result is betterment. Think about yourself for a moment. Would you work a few extra hours around Christmas Time or another holiday if it meant you could get your children something extraordinary?
Odds are, you would consider it. I would, and I’d be happy to do it. This self-sacrifice is exactly what the wealthy are doing; just it’s not a few hours for a week or two; to build true wealth, it’s a constant sacrifice over a long time.
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6. You’ll Have A Lot Of Friends
When I say “friends,” they may not be your friend. It’s a funny thing about how money influences actions. People with a lot of money end up having others flock to them for multiple reasons.
If they can experience things that most cannot, friends will be around to enjoy those experiences, and the rich person can pay for it. After all, they have money…..
This association with “you have money” so I want to hang out with you can lead to some very untrue friends or people trying to take advantage of the fact that you have money.
It doesn’t stop just with social interactions. Investing is a shark game; the waters are full of sharks and other fish. If you have $10, there is someone who “knows exactly what to do with it.” Now imagine having $10,000,000; there will be quite a few more people drawn to “advise” you on what to do with your money.
These friends may not be “helping” you in YOUR best interest. They may be helping themselves just you “benefit” from it. Which a good Robo Investor can do the same job for cheaper!
With more wealth comes more influence. This influence draws attention and brings people to them that may require a character judgment before being considered a friend.
You are better off stashing your money in a safe savings account or money market account than trusting everyone that comes around looking to use your money.
7. Addiction and mental illness
The unfortunate truth is that while being wealthy can create a more stable economic situation, individuals’ mental health can be affected. The stress of being “an outsider” from society is very influential because we all want to be accepted and treated equally.
When that isn’t the case, and someone is treated differently just because of money, it can develop into serious problems.
The British Medical Journal found;
In contrast to findings in the general population, the suicide risk for patients admitted to hospital with a mental illness fell significantly with decreasing income. – British Medical Journal (nih.gov)
While most of us would believe that being in a financially dangerous place would make suicide more likely, the risk of suicide was found to decrease when people’s income decreased.
This doesn’t mean that everyone rich has a higher chance of committing suicide, just that wealth and mental illness can affect risk.
People with a history of mental illness and a high income are at greater risk of committing suicide than their lower-income counterparts. – British Medical Journal (nih.gov)
More potential problems can arise for families with a high socioeconomic status (SES).
Specifically, affluent youth reported significantly higher levels of anxiety across several domains and greater depression. They also reported significantly higher substance use than inner-city students, consistently indicating more frequent use of cigarettes, alcohol, marijuana, and other illicit drugs.- The Culture of Affluence: Psychological Costs of Material Wealth (nih.gov)
Over the past several decades, more studies have been done on children of affluent or well-off parents and mental illness. The studies show some staggering results based on stress, an expectation to achieve, and parents’ isolation.
8. Added Stress
Just like the children, parents can have added stress areas based on their economic status. With more work, more sacrifices, and responsibilities, the stress adds up and can influence health and other areas.
Some stress level in your life is good, but it needs to be balanced and not develop into other problems—stress from running a business, trying to be fit and healthy, spending time with family.
The sense of being rushed can grow into anxiety and a cycle of downward mental health. This can lead to addictions or other vices.
There are ways to help reduce stress; being philanthropic and caring about the common good can help. Giving is a great way to show appreciation and create a feeling of generosity.
Some extremely wealthy people, such a Bill Gates, step down from their active business to pursue philanthropy solely. While there will still be stress from working with others in an organization or helping in general, it can relieve the stress of not having time.
9. You May Not Be Prepared If Wealth Is Thrust Upon You
There’s a common problem when people have money thrust upon them. They don’t know what to do with it or how to handle it. Financial Literacy or lack of is one of the most common financial problems.
It’s a dream to win the lottery or have some long-lost uncle who passes away and leaves you a fortune of unimaginable size. The freedoms that being rich can offer!
While it would be amazing, it’s not very common. That being said, it does happen, and people aren’t prepared.
After all, do you really think you will win the lottery?
The rich tend not to bet on the lottery, they “bet” on investments. They learn and understand how money works and how to use it. When someone buys a lottery ticket and wins, they may not know how money works, or they’d probably be rich already.
So what do people do when they have wealth thrust upon them? Spend it!
Of course, they do, they just won $1,000,000, and now they want to party! But that’s not a very sustainable way of managing money. Many will pay off debt, maybe buy a few things and invest the rest, but others can take full advantage and have income for generations.
This requires a level of understanding, such as how compound investing works. Or, why letting your money sit in the bank may not be a great idea.
Protecting your wealth isn’t a concern for many people because they don’t have the level of wealth they want, and this leads to a potential situation where people end up losing the money they inherit or have thrust upon them.
Financial education is the cure but isn’t easily learned on short notice.
10. You May Feel Guilty
Having more money than other people can make you feel guilty and sad. It’s quite common and is one of the main reasons people with wealth end up doing a lot of good for their communities.
They donate to charities and events, provide help to those less fortunate, and spread their wealth to those who need it. If they didn’t, there might be some guilt in their lives knowing what they have and seeing people who may not afford shoes for their kids.
Fortunately, there is always a good cause around that you can help with. Kids can always use help to get more involved in sports or camps. The homeless shelters are in constant need of resources.
Feeling guilty can be used for good, but it can also negatively affect you if you did not act.
11. Time Management Can be More Difficult
Being Rich is having a lot of money. True Wealth is having money and time.
Balance is the spice of life that makes life special. You probably don’t want to be 770 years old with poor health; that’s a lifetime journey, something that can’t be fixed by eating a salad when you are old and ignoring the earlier years.
Finding time for proper nutrition and exercise is a part of life, as is work and family. Making time for family will enrich your life way beyond being rich.
Kids, a husband/wife, influence our mood and happiness. Sharing your time with them can become difficult when you have many obligations to work or business creating this wealth.
Every aspect of your life takes time. Finding and balancing things when you have more responsibilities is a challenge of epic proportions.
Building your wealth is hard enough; knowing that your life will never be the same when you have money can change the way you perceive being rich. Why work so hard to become rich just to be burdened with so much?
Is entrepreneurship even worth it? Does it make life easier?
That’s up to you and your life’s mission. No matter what, we are in this together, and everyone needs support!