4 Common Mistakes Affluent Americans Make With Their Money

4 Common Mistakes Affluent Americans Make With Their Money — and How To Avoid Them

Vance Cariaga    GOBankingRates

Affluence, like beauty, is often in the eye of the beholder. What looks like wealth to one person might not seem that way to others — especially if that “wealth” is offset by high debt and reckless spending. Just because someone earns a high salary doesn’t make them immune to the same financial mistakes as everyone else.

Even defining “affluence” isn’t easy. As Forbes reported, many factors go into determining someone’s wealth — including net worth, household income and location. A net worth of $500,000 might make you affluent in some parts of the country, while in other parts even $1 million falls short of the mark.

A recent survey from financial services provider Equitable defined the “mass affluent” as Americans who have an income level at or above $90,000 per year. According to that survey, 80% of all Americans are “concerned” about the affordability of everyday living costs, regardless of income. Nearly half aim to change their financial habits in 2025 to ease financial stress. Almost 70% of the mass affluent said they plan to increase their savings by $500 or more per month.

Increasing savings is one way to bolster your finances. Another way is to avoid making the same mistakes over and over. Here are four common mistakes affluent Americans make and how to avoid them, according to Nasha Knowles, CFP, a financial advisor with Equitable Advisors who counsels high net worth individuals.

Underestimating Income Taxes

Many affluent people don’t realize the tax impact when they start earning more money, Knowles told GOBankingRates in an email.

“They will now pay more in taxes because they make more, and they will also be in a higher tax bracket,” she said. “It always surprises them how much they are now paying in taxes.”

To avoid this mistake, hire a tax professional or financial advisor to help with tax planning.

Making Big Ticket Purchases Without Considering Related Costs

“Some [affluent] people now want to buy bigger ticket items such as a more expensive car, or a home,” The problem, according to Knowles, is that these items also come with bigger costs, such as more taxes and higher insurance payments. Whenever Knowles’ clients make a major purchase, she advises them to discuss it with her first to calculate the overall cost. Knowles said.

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