6 Things the Upper Class Wastes Money On, According to Financial Experts

If you are dreaming of becoming wealthy someday, you probably are not thinking about how much money you will have and save until the end of time. You are probably imagining elaborate ways of spending all that cash to live in the lap of luxury.

Just because you (theoretically) are loaded with money does not necessarily mean that you will know how to spend it smartly. In fact, it’s quite possible that you could waste it on trivial things and pointless services, just as some other wealthy people do.

“What’s a ‘waste of money’ to one person may not be a waste to others,” said Erika Kullberg, a financial expert with Erika.com . “With that perspective in mind, if someone in the upper class wants to save money, there are likely a few ways they can cut back on spending that can save them a pretty penny.”

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While it’s impossible to generalize for everyone, Kullberg stated that there are some common lifestyle creep expenses that people tend to start splurging on when their income goes up.

GOBankingRates asked Kullberg and some other financial experts for their opinions about the things that the upper class wastes money on. A few might seem typical, and others might come as a shock.

Also see things the wealthy elite do with their money that you should do too.

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Big Homes

It’s common to see wealthy people splurge on big homes — and there are a lot of costs that come with it. “You won’t just end up with a pricier mortgage loan, but your homeowners insurance and property taxes will also cost more than they would with a less expensive home,” Kullberg said.

“The biggest waste of money from wealthy people comes from things that are never or rarely used,” said Jon Ekoniak, CFP, managing partner at Bordeaux Wealth Advisors . He cited the example of how people travel to a certain location they really love and decide to buy a home there.

With that comes a lot of additional costs. “They spend money to furnish it, buy an extra car to keep there for convenience and maybe even buy a boat if the home is on the water. They proceed to use the home at most one week per year, and it remains vacant the rest of the time. The other 51 weeks a year becomes a waste of a perfectly good house,” Ekoniak said.

It also costs more to heat and cool larger homes, Kullberg pointed out. “Cleaning — whether you do it yourself or hire a housekeeper — will also take much longer,” she said.

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Beauty Services

The steep cost of manicures, pedicures, professional hair care, eyebrow shaping, eyelash extensions and skincare treatments can add up so fast, according to Kullberg.

“Not only do you have to pay for the service, but you need to tip,” Kullberg explained. “Learning how to master some of these treatments at home saves a lot of money, especially since they are repeat services that go on for years.”

Social Clubs

Ekoniak described how lots of rich people want to be part of the “in crowd,” so they end up joining a country club knowing that they will rarely use the facilities.

“This happens most frequently when the club they join is not close to their main residence,” Ekoniak said. “They decide to join for the prestige of being part of the club and the bragging rights they get at social events. Maybe for some that is not a waste, but if they are rarely using the club yet still paying all of the dues, it is certainly not as cost-effective as someone who uses the club regularly.”

Luxury Cars

With luxury cars, it’s not just the cost of the initial purchase, Kullberg said, but everything that comes after the upper crust drive their fancy cars off the lot.

“You will also need to pay a higher amount of interest on an auto loan, plus you’ll end up with more expensive vehicle registration, car insurance premiums and maintenance costs for as long as you drive that car,” Kullberg explained.

Life Insurance

Another expense the wealthy frequently spend money on, according to Ekoniak, is life insurance. “I am not saying that life insurance is bad, but for those who can self-insure, life insurance is most often not needed,” Ekoniak said.

“There are estate planning strategies that make good use of life insurance, but that’s not what I am talking about,” Ekoniak said. “I am referring to the standard whole life insurance policy that pays out a lump sum to the beneficiary upon passing but also has a cash value throughout one’s lifetime.”

According to Ekoniak, these costs are not needed. “The cost of the insurance is just not necessary,” he said. “We run into this situation very frequently as life insurance is more often sold not bought.”

Trendy Goods

“While investing in a high-quality designer item you’ll use for years isn’t necessarily a waste of money, if you are always tempted to buy the latest, trendiest item, you’ll spend a lot and bring tons of clutter into your home,” Kullberg said.

Kullberg suggested trying to invest only in pieces you know you will wear time and time again.

This article originally appeared on GOBankingRates.com : 6 Things the Upper Class Wastes Money On, According to Financial Experts