Credit Suisse's 2018 global wealth report says that there were 3,43,000 millionaires in India by mid-2018. Do the rich have money problems or are they content in life spending on all their whims and fancies? Well, it turns out that the rich also have money problems. Here are some problems that they face -
More Money – More Complex Financial Decisions
The rich have a lot of money. They need to think about all the different investment opportunities and choose the most optimum ones. The ticket size of their investments are big too. Moreover they are bombarded with investment ideas and have to constantly analyse and decide the best investment avenues. They worry about the returns, losses and also the opportunity loss of not investing in certain investment options
People Ask For Money
Wealthy people are surrounded by many people beyond the family and close friends - extended family, friends of friends etc. Many of these people ask for money either as a loan or as investment for their business ideas or personal problems and it is difficult for them to refuse to give money. Random strangers too put in requests for money which can be overwhelming.
Increased Lifestyle Spending
As one grows rich, the wants increase. There is an upgrade from a sedan to a luxury SUV. The family of four has three cars instead of one. Weekend getaways become expensive. More people are hired for help. For example a successful actress hires a manager to manage her schedule, bodyguards, fitness expert, beautician etc. There is a feeling to buy the best brands and most expensive things for the family as anything less seems a compromise.
Deal with expectations and comparisons
Many have to keep up with their counterparts or feel they have to live up to others expectations of the rich. They feel obliged to buy bigger houses, bigger cars, and more accessories due to peer pressure. In certain social setups, people are pressurised to throw lavish parties and maintain a certain image. This results in wasteful expenditure.
Finiteness of Money and Possibility of Opportunity Loss
Money is a finite resource. If it is not managed properly, it will disappear. Rich people constantly worry about earning more to keep up with their increasing expenses. They are also worried about how best to make the money work. People who have not invested properly have lots of idle cash or money invested in low return assets and worried about the opportunity loss.
It might be good to worry about issues such as how best to make your money work or how to earn more. At the same time, spending sleepless nights over purchasing one more limited edition timepiece or a private jet will just prevent you from having a content or a happy life.
Rich or middle class or poor, however you may classify yourself, it is important to have a financial plan in place. Tracking expenses and income and investing regularly for optimum returns will help to ease off some of the worries.