Learn From These Money Mistakes Wealthy People Have Made
Written by
Angela Mae
Edited by
Amen Oyiboke
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Although it might seem like wealthy people don’t make financial mistakes, the truth is they’re just as susceptible as the next person. Sometimes, they make decisions that end up costing them significantly more money since they have more to lose.
Whether you’re trying to avoid making money mistakes of your own or you just want to learn what others have done, you’re in the right place.
Here are four major money mistakes wealthy individuals have made and how you can avoid them.
Not Having a Prenuptial Agreement
“One of the most frequent and costly financial mistakes high-net-worth individuals make is entering into a marriage without a prenuptial agreement,” said Melissa Murphy Pavone, founder of Mindful Financial Partners and a certified divorce financial analyst.
A prenuptial agreement is a legally binding contract a couple signs before marriage. The contract specifically details the debts, assets, and spousal support that will occur in the event of a divorce or untimely death. Having a prenuptial agreement, especially if you had a lucrative business or substantial assets before getting married, is often considered a wise decision.
But not everyone gets one.
One famous example of a marriage without a prenuptial agreement was between the founder of Amazon, Jeff Bezos, and his then-wife, MacKenzie Scott. Fortunately, things worked out well in the end as Scott ended up with a 3% stake in Amazon, making her the 40th richest person in the world. As of December 2024, Bezos’ net worth is sitting at about $239 billion.
If you’re getting married and have accumulated some wealth on your own, you might want to consider getting a prenup. It might not be very romantic, but it can sometimes be necessary.
Overspending and Not Paying Attention
When you see someone in the news with a high net worth, you wouldn’t be alone in assuming they haven’t made the mistake of overspending. But you’d be surprised at how many people who make six figures or more struggle with money. According to PYMENTS, nearly half of people earning at least $100,000 a year live paycheck to paycheck.
Even high-net-worth and ultra-high-net-worth individuals can overspend on things that fuel their luxury lifestyle. But just because they have a lot of money doesn’t mean they’re well-versed in budgeting or handling it.
One example is the actor Al Pacino. In his memoir, he shared that he spent $400,000 a year on his home, which he didn’t even live in. He also had 23 different cell phones and 16 cars. He went from a $50 million net worth to practically nothing.
While overspending was definitely part of it, Pacino was also scammed by his accountant, who signed all of his checks. As Pacino later put it, the saying “a fool and his money are soon parted” was unfortunately rather applicable in his case.
Making Bad Investments
Sometimes, to become financially successful, you need to make a few bad investments along the way. Such was the case with Warren Buffet, who purchased the Dexter Shoe Company in 1993 and later admitted this was a mistake.
Buffett didn’t pay for that company using cash. Instead, he used 25,203 Class A shares from Berkshire Hathaway, which is worth about $8.7 billion today. People have made worse investments, but this was a particularly costly one.
You might not always recognize a good investment from a bad one. You might even have to take a few risks that don’t pan out before building long-term wealth. What matters is learning from those mistakes and working to avoid them in the future.
Not Being Financially Prepared
Financial experts often recommend having at least six months’ worth of expenses set aside in an emergency savings fund. Some experts recommend having even more, especially if you have a particularly expensive lifestyle.
But even wealthy people don’t always follow that rule. Even those who do have some money set aside for emergencies can find themselves in financial hot water and, in extreme cases, filing for bankruptcy.
For example, the rapper Curtis Jackson (50 Cent) and director Francis Ford Coppola have both filed for bankruptcy in the past. Jackson filed for Chapter 11 bankruptcy due to debts totaling $36 million and assets under $20 million. Coppola has filed for bankruptcy three separate times.
While bankruptcy can be a solution to your money troubles, it should almost always be a last resort. To avoid getting to that point, keep an emergency fund, keep costs reasonably low, and pay attention to where your money goes every month.
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