I’m a Financial Advisor: 3 Things My Wealthiest Clients Never Do
Written by
Gabrielle Olya
Edited by
Heather Taylor
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Being a wealthy person means not only making money, but then taking steps to maintain that wealth. That means avoiding certain money behaviors that the average person might do without thinking twice.
To get further insights on the money habits the wealthy avoid, GOBankingRates spoke with Keith Fenstad, vice president and director of wealth planning at Tanglewood Total Wealth Management. Here are the things Fenstad said his wealthiest clients never do.
They Don’t Make Impulse Purchases
You might think that being wealthy means buying whatever you want without having to think twice, but Fenstad said that his wealthiest clients don’t live this way.
“A lot of our wealthy clients don’t make impulsive decisions on either spending or investing,” he said. “Impulsiveness with spending can be ‘new car fever.’ It could be big things, it could be little things, but a lot of wealthy clients pull back and and give themselves some time to think.”
Fenstad said that unlike many of us, the truly wealthy people don’t feel the need to “keep up with the Joneses,” which helps keep their spending in check.
“That’s a constant pressure for many folks — to see somebody driving a new car, or there’s always somebody that has more than you do. But I think a lot of our wealthy clients, they’re just content in their space,” he said.
They Don’t Make Impulsive Investment Decisions
Fenstad said that his wealthy clients are less likely to make decisions based on their emotions when it comes to investing.
“When there’s big moves in the market, when things are on the news or there’s a new administration, emotions can drive investment decisions that aren’t based on strategy,” Fenstad said. “You can boil it down to fear and greed. The fear element can make people get more conservative or go to cash. The greed side of it is, people see a lot of the growth in bitcoin and in a lot of the tech stocks, and so they chase after that.”
His wealthy clients are more likely to stay the course, despite whatever else may be happening.
“A strategy we employ is more around just living through the market cycles,” Fenstad said. “Staying the course, in my history, has always been the best long-term strategy.”
They Don’t Take on Credit Card Debt
Even if you make a lot of money, thanks to lifestyle creep, it’s easy to always want more. This can lead to living beyond your means — but Fenstad said his wealthiest clients avoid this.
“The wealthy live well within their means,” he said, which means they don’t take on credit card debt.
“Credit cards, for most wealthy people, are just [used] to leverage the advantages and points,” Fenstad said. “They pay them off every month. [For them], credit cards don’t give additional capacity to spend and improve their lifestyle — credit cards are just a convenience. There’s never really a balance built up on it, so it’s a mentality of convenience versus a mentality of consumption.”
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