Do you know how much money it takes to be considered rich?
In a recent survey, Americans said that you need $2.6 million to be considered wealthy. But have you ever thought of all the drawbacks to becoming a millionaire?
Here are four drawbacks to being newly wealthy you should think about.
Losing money is easy
Financially secure millionaires are financially literate, business savvy, ration professional trust, and keep their money for as long as possible.
Yet many newly minted millionaires, such as lottery winners, are not financially literate. Some lose every penny they earn shortly after becoming rich.
Lottery winners and those who gain sudden wealth from settlements typical lose every dollar they gained within three to five years.
The wealthy are lawsuit magnets
If you ever become a millionaire, you might want to have a good lawyer on retainer.
Millionaires are lawsuit magnets. A potential legal dispute between ordinary people might be dismissed by all parties involved because it costs money to hire lawyers.
Rich people, however, are more likely to be sued.
Insurance Journal published a survey in 2012 showing that 40% of rich people believed they were more likely to be sued when the economy hit rough patches.
A shocking 80% said that being rich alone made them constant targets of frivolous lawsuits.
The average millionaire and billionaire pay about 15.8% in taxes. The tax bracket for the wealthy can be as high as 37%.
Yes, the elite rich are savvy about paying as little taxes as possible and have been doing it for a long time. And every millionaire is not part of the 1%.
And even if you learn to pay less in taxes, you will certainly pay lawyers a lot of money in retainers to tax pros for the privilege.
Trust becomes a precious currency
Beyond trusted business associates, millionaires can never fully trust new business associates or those trying to solicit business opportunities.
Trusting new associates without a full vetting process could get you ripped off, sued, or bankrupt.
It might seem like a minor thing, but building trust is a tax on your time that simply doesn’t happen if you don’t have money to scam away.