5 Money Mistakes The Ultra Wealthy Never Make, According to Humphrey Yang
Written by
Yaël Bizouati-Kennedy
Edited by
Daria Uhlig
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Financial advice guru and YouTube and TikTok personality Humphrey Yang recently explained in a video some of the financial mistakes the ultra-wealthy never make.
In this recent YouTube video, “5 Things Rich People Do That the Poor Don’t,” Yang lays out five mistakes and easy-to-follow tips to avoid them, which can end up saving you a lot.
Mistake 1: Buying Daily-Use Items Individually
To explain this mistake, Yang invited entrepreneur Mark Cuban, who explained that you’re better off buying daily use items — such as toothpaste — in bulk or when they are on sale.
“You’re better off buying two years’ worth of toothpast when it’s on 50% discount. That’s an immediate return on your money,” Cuban said.
“The idea here is that if you’re able to get toothpaste, razor blades or even toilet paper at a 50% discount, you’re essentially getting a 50% return on your money,” Yang said. In comparison, the S&P 500 returns about 8% a year.
Mistake 2: Impulsively Spending
According to Yang, “A lot of smart billionaires are actually surprisingly frugal with their money.” Noting that he himself has watches that cost around $1,000, he said that Bill Gates — who has a $151 billion net worth, according to the Bloomberg Billionaires Index — “famously wears a Casio watch, and that is something you can literally buy on Amazon for $46.”
Mistake 3: Lifestyle Creep
Yang noted in the video that there are many people who earn six-figure salaries but are still living paycheck-to-paycheck.
As Rachel Cruze explained in a Ramsey Solutions article: “Plain and simple, lifestyle creep is when your income goes up and your spending creeps right up to meet it. You don’t even notice the shift. It just happens.”
This, Yang said, can happen at any life stage.
“Raises, side hustles, promotions. Any time you up your income, you’ve got to be intentional with that money. Otherwise, your lifestyle will creep in and take over,” added Cruze.
Mistake 4: Trying To Beat the Market
Trying to beat the market with short-term investing isn’t going to make you rich. Instead, think long term, and invest in index funds.
Yang uses an excerpt from a Warren Buffett interview that epitomizes this investment philosophy.
“I know what markets are going to do over a long period of time — they’re going to go up,” said the Oracle of Omaha. “But in terms of what’s going to happen in a day, or a week, or a month, or a year even, I’ve never felt that I knew it, and I’ve never felt it was important.”
Mistake 5: Ignoring Banking and Investment Fees
Yang said that the average expense ratio, or yearly fee, of a mutual fund these days is between 0.50% and 1%.
“That means on an investment of $1 million, if it’s a 1% fee, you’re paying upwards of $10,000 per year just to have your money invested in a mutual fund,” he said. “Billionaires know that every fee will eat into their compound returns, and they’re cognizant of every single basis point.”
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