Yahoo Finance 9 Things Wealthy People Spend Too Much Money On
No one is immune to overspending–not even the wealthy. That said, indulging in the finer things in life is one of the major perks of being loaded.
But what are these tastes, specifically, you might ask?
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“In my experience, they often purchase and maintain multiple luxury homes, penthouses, or estates around the world, which can be an extravagant cost,” said Michael Benoit, certified finance expert and owner of ContractorBond. “Some wealthy people even go as far as buying private islands or owning yachts, which are expensive assets that require constant maintenance and upkeep costs.”
“One example is the billionaire businessman, Richard Branson, who owns a private island in the Caribbean and spends millions of dollars on its upkeep and renovation,” said Benoit.
Below are more things the wealthy spend way too much money on:
Designer Clothing and Accessories
“Designer and luxury labels often come with a hefty price tag, and wealthy people tend to splurge on designer clothing and accessories more frequently than the average person,” said Benoit.
He adds they often spend on fashion brands for clothing, handbags, shoes, and accessories such as Gucci, Louis Vuitton, and Hermes.
“For instance, the famous Hermes Birkin bag can easily cost over $11,600 to $12,700 and is often seen as a status symbol among the wealthy.”
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Rhett Stubbendeck, CEO and founder of Leverage Planning, similarly agrees.
“It’s easy to be drawn to designer labels. However, I encourage our clients to think about cost per wear. Often, less expensive items can prove more valuable over time.”
Art and Collectibles
“I have seen that they often invest in high-priced artwork, rare collectibles, and antiques for personal enjoyment or as investments,” said Benoit.
“Some may even participate in high-stakes auctions to acquire these items,” said Benoit. “One of the most expensive paintings ever sold was Leonardo da Vinci’s ‘Salvator Mundi’ for a whopping $450.3 million by a wealthy Saudi prince.”
High-Tech Gadgets and Gizmos
Benoit says it’s common for wealthy people to own cutting-edge technology gadgets, smart home devices, entertainment systems and gizmos, even if they do not necessarily need them.
“They may spend thousands of dollars on the newest smartphones, smart home devices, or high-end cars with all kinds of technological features,” said Benoit. “For example, Tesla’s Model S Plaid costs a whopping $129,990, making it one of the most expensive electric cars on the market.”
Luxury Cars
Wealthy individuals often overpay for luxury vehicles, said Dennis Shirshikov, finance professor and head of growth at Go Summer.
“While cars like Ferraris and Lamborghinis can be symbols of status, they depreciate quickly compared to their initial cost,” said Shirshikov.
Luxury Real Estate
Another significant area is high-end real estate in premium locations, said Shirshikov.
“While property is typically a sound investment, the very top of the market does not always appreciate in value proportionally to its cost, especially when custom features limit broader market appeal.”
Other experts agree.
According to Emma Collins, certified financial expert at Trading, the wealthy frequently invest in expensive properties in exclusive neighborhoods that entail high maintenance costs, property taxes and can be difficult to liquidate quickly without a loss.
“This kind of spending often ties up capital that could be otherwise invested more wisely,” said Collins.
High-End Educational Expenses
Another significant area of overspending is on private education.
“From elementary schools to elite universities,” said Collins. “While investing in education is undoubtedly valuable, there is a diminishing return when the costs far exceed the potential benefits, or when similar educational outcomes can be achieved at less prestigious, less expensive institutions.”
Gourmet Foods and Wines
“Indulging in fine dining and expensive wines can add up,” said Stubbendeck. “One client realized he was overpaying for wine that was available much cheaper elsewhere. It’s all about shopping smart, even when you can afford to splurge.”
High-Cost Financial Advisors
“The wealthy are focused on generating commissions, these advisors often recommend frequent trades, leading to unnecessary transaction costs,” said Jonathan Feniak, general counsel at LLC Attorney.
“Frequent trading, contrary to common perception, does not necessarily equate to higher returns,” he explained. “An index-based investment strategy, for instance, might deliver comparable results at much lower costs.”
Extravagant Vacations
According to Feniak, exotic vacations and 5-star resorts are common big-ticket expenses for the affluent.
“However, the value of these experiences can sometimes be more about prestige than actual enjoyment or relaxation.”
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This article originally appeared on GOBankingRates.com: 9 Things Wealthy People Spend Too Much Money On
