Can You Be Too Rich for Household Budgeting?
A new study finds that the vast majority of affluent investors don’t use a household budget, and don’t think they need one. That may be fine, as long as they’re truly well-off.
Insurer John Hancock surveyed thousands of investors with household incomes over $75,000, and assets of more than $100,000 – and found that a full 67% of them shunned household budgeting.
More than 20% of those surveyed said it would be too time-consuming to prepare a monthly budget, while 16% didn’t think it would help them, said Hancock.
Are they right? Well, it depends how “affluent” you are. Bill Gates probably wouldn’t benefit much from clipping coupons, and watching his grocery spending. However, these days $75,000 doesn’t exactly put a household in Gates territory.
Given that many affluent households reside in expensive neighborhoods – with relatively high house mortgage payments, property taxes, etc. — $75k isn’t’ t a level of income that allows a family to scoff at opportunities to save money, or have a “devil may care” attitude towards household spending.
It’s true that many affluent households are safely out of the “living paycheck to paycheck” trap: John Hancock said that only 5% of its survey respondents said they need to spend everything they have to make ends meet.
But “making ends meet” does not automatically mean “investing enough for retirement” or “saving enough for our kids’ educations.”
Every bit of money saved can be used to help meet those goals, and the more affluent among us certainly aren’t out of the woods when it comes to meeting future obligations. What about an unexpected job loss? Or an illness?
Bottom line: Unless you’re on some Forbes list of rich people, you could benefit from having a reasonable household budget, and sticking to it.
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