High Income Personal Finance and Estate Planning
Everyone thinks the high income wage earner has it "made." Surely, the person making 250k or more in income will have no problem building up a nice estate. Well, in theory, that should be true. $250,000 is certainly plenty of income to use to build a large estate. But, theory is often not reality.
The problem the high income wage earner faces is that he (or she) often has such a high standard of living, that he spends as much (or even more) than he makes. It's human nature to find ways to spend all that we make and in modern society there is no end to what you can spend money on. You can even rationalize it as a worthwhile expense.
For instance, the maid and butler will perform tasks that can free you up to spend time with your family. Except that when that "time" comes you find yourself on the golf course spending more money. Country club dues, caddy, trip to Hilton Head -- it goes on and on. And you rationalize that with "well, I deserve, no need time to relax...."
And, you don't want your family to be embarassed if they don't have top of the line cars, clothes, schools, lessons, etc, etc, etc. Everyone feels a need to "keep up with the Jones'" they associate with. The only difference is that high income "Jones'" are much more expensive to keep up with.
And, the maintenance will kill you. Bigger, more expensive homes cost more to heat and air condition and maintain and insure. Same thing for the cars and boats and vacation property. And, you need more costly life and disability insurance because it will cost more for your family to maintain that high lifestyle if you die or become disabled.
The high income earner also often faces the unique challenge to deal with expectations that he (or she) contribute to charity; help out struggling family members; host holiday parties; give gifts to employees, etc.
Sounds like a nightmare!
Again, so many ways to spend money; so little money... Wait a minute. I thought we were talking about the high income earner. We are, but, for better or worse, the high income earner faces the same struggle as everyone else (see low income; middle income; and single working mom) to balance personal finance expenditures with estate planning goals.
Everyone, even "rich" people, need to priortize the way they handle their personal finances to that they save and invest enough to create the capital that is essential to long term wealth.
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