If you want more income, you better think about the flip side! More money means more responsibility, not just more fun. If you want to grow and keep your wealth, it comes with more responsibility. They’re a package deal! There are some things you’re going to have to stop doing and some things you’re going to have to start doing at the next level of wealth. Responsibility isn’t a bad thing, even though it might not always feel fun. It’s essentially taking leadership over yourself, your life, and yes, your money. If you fail to take responsibility as your income increases, it’s likely you’ll self-sabotage and your wealth won’t last.
More Money Means More Responsibility
Say Goodbye to DIY
As your wealth increases, you’re going to have to say goodbye to DIY-ing everything with your finances. Unless you’re a CPA or a financial planner, Robinhood and TurboTax probably aren’t going to cut for you anymore. As your income and investments move into multiple six figures, you need the personalized advice of seasoned tax and investment pros.
The same holds true in your business, if you are an entrepreneur. As your income increases, it’s usually a better use of your time and talents to serve your clients, not to do your own bookkeeping (unless that is your business!) Delegating what others can do faster and better than you is a smart way to leverage your time and money, so you can focus on what you do best.
Continuing to DIY your personal and business finances can hold you back from your full potential, and possibly lead to costly mistakes, like over or underpaying your taxes.
Stop Being Cheap
When you’re broke and money is tight, you shop around the cheapest option because you have to. The cheapest accountant, the cheapest website designer, the cheapest hair salon, and so on. It can be challenging to break the super-frugal habit, even when you can loosen up a little on the purse strings. Maybe you’re not DIY-ing your investments, accounting, web design, (and personal grooming), but it might be time to upgrade your service providers.
This can be hard because we’re creatures of habit and we might really love some of these lower cost businesses. Good old Fred, has been doing your taxes out of his basement office for the last ten years! But as your wealth grows, you don’t want to be anyone’s richest or most complicated client, especially when it comes to legal, tax, and financial services! My household income is going to be at least three to four times what it was in 2020, which is amazing!
This also means I need to upgrade to a different tax accountant who understands the complication that comes with the income. I love my former accountant and she was a great fit for me when my business and finances were simpler. Yes, I am probably going to pay 2-3 times more for my tax prep and consultation services this year. However, I’m confident this accounting firm has lots of clients just like me. I’m definitely not their richest or most complicated client, and that’s a good thing!
New & Different Challenges
When you move into a net worth in the millions and income in the multiple six figures, there are more, new, and different challenges to address. You’ll likely need to add more protection for yourself in the form of increased personal (and business) liability insurance, trusts, life insurance, and detailed estate planning. No one really likes to buy insurance or do estate planning. However, if they’re not in place and the worst-case scenario happens, you could risk losing all the wealth you’ve worked so hard to build for your family.
As your side hustle turns into a full-blown business, you’re probably going to graduate a sole proprietor structure to a C-Corp or an S-Corp, making you more tax efficient. You might need to hire employees, buy them health insurance, and start a 401(k) plan. That can be scary, too, since now you’re not just responsible for yourself.
Money Mindset 2.0
Money mindset upgrades are necessary when you have increased wealth and responsibility. The mistake most people make is stopping their mindset work when they become “rich,” thinking it’s no longer necessary, because they’ve “arrived”. Every time we ascend to new levels of success, income, or net worth, we’re faced with new fears and money blocks. As the saying goes, “New level, new devil!”
I hate to be the bearer of bad news. The fear never goes away; it just changes. Previously your fears might have been, “I’ll never have enough money! What if I’m never out of debt? How am I going to make ends meet?” Now it’s replaced with, “What if I lose my money? What if people think I’m one of those evil rich people? Is he just being friends with me because I have money now? Do I really belong here at the country club?”
When I pulled up in my Hyundai Sonata to the Alfa Romeo dealership parking lot to buy my new Giulia last week, my inner critic popped its head up to spew some trash I didn’t even know was in my brain! “Who do you think you are? You don’t drive luxury cars. You don’t belong here!” I teach money mindset for a living, so I knew what was going on. I didn’t give into the fear that screamed at me to get back in my car and go home. (I’ll tell you more about my car purchase in a future post!)
We have as much head trash about being rich and wealthy as we do about being broke and poor. We need to take the garbage out and replace it with healthier money thoughts! Otherwise, we could still be plagued with the anxiety and fear we’d thought we’d be free of, if only we made more money.
Yes, more money means more responsibility! But if you don’t take these things seriously, one of two things will happen. You’ll either stay stuck at your lower (comfortable) income, or you’ll quickly squander your extra income without building lasting wealth. With great power (and wealth!) comes great responsibility. Those who embrace it will build an empire and create a legacy.
Ready to upgrade both your financial strategy and your mindset to welcome the fun and responsibility of more wealth? Let’s chat and see if my Financial Dignity® Coaching is a good fit for your situation.