7 Habits That Kill Wealth—Even If You’re Doing ‘Everything’ Right (Backed by Data)

Hey guys, what's up? I'm Erin and welcome back to the channel. What destroys wealth in America? Sometimes the answer isn't the obvious ones like credit card debt or bad investments or gambling. Sometimes it comes from decisions that might seem reasonable or even responsible. This video is for the high earners, the savers, the ones who've done most things right. You've built something real, but staying wealthy, really preserving and growing it requires more than checking boxes. Because even if you're doing everything right, there are seven wealth killers that can sneak in silently and most people don't even realize it until it's too late. So today we're counting them down. They're backed by data and we want to make sure that you can protect everything you've Let's start with something we don't talk about enough. Complacency. Maybe you're 10 or 15 years into your career. You've bought a home, you're contributing to your employers 401k, you've earned some breathing room and it feels good. You think to yourself, I'm on track, I'm saving, that's enough. But here's the thing. This is where you start to feel comfortable and this can turn into complacency. You look around you and everyone is upgrading their home and their car and taking nicer vacations and you think, I deserve to enjoy this too. And so you do. But according to the Charles Schwab 2023 modern wealth survey, the average American millionaire says they need 3 million or more just to feel financially secure, not rich, secure. So maybe you're sitting on 1 million or 1.5 million and you're thinking you've made it, but the numbers might tell a different story. And the real risk isn't that you stop working. It's that you stop optimizing, that you've stopped asking yourself, what does financial freedom look like to me? Now your number might be 3 million. It might be more, it might be less. The only way you truly find out what it is, is to do the work and figure it out. A guess doesn't count. And remember that wealth is a moving target. If you don't move with it, you could be left behind. So make sure to enjoy everything you've built, but don't stop building. Next, let's talk about lifestyle inflation, because it shows up quietly. As income increases, so do does spending. And that's not just anecdotal. Nearly 60% of Americans say they spend more as they earn more. And that happens at every single income level. And the upgrades make total sense. Maybe you want a nicer car or nicer vacations. There's absolutely nothing wrong with that. You should enjoy everything you've worked so hard for. But where things get a little sticky is if you increase your lifestyle without increasing your savings rate, well then your net worth sort of flatlines. That's why I recommend saving a percentage of income, not a fixed number. That way, as your income increases, so too does your savings. So when your income doubles, you're doubling the rate at which you're building wealth. So I think it's totally fine. Go ahead and enjoy those upgrades. Just make sure your future self is getting upgraded too. Building wealth isn't about saying no to everything. It's about saying yes to the things that truly matter. Next up, we have wealth drag from family support. And this one hits home for a lot of people, especially midlife. Maybe you're in your forties or your fifties and you're doing well, but you're also helping your adult children and your aging parents. Maybe you're helping with tuition and rent and a down payment on a home and medical bills. And let me say this very clearly. If you're in a position to help, that is a true blessing. I come from a family that is incredibly supportive. And now that I have my own son, I look forward to the day where I can give him a head start as well. But I have to say this, if you're not careful, all of this support can derail your own personal financial plans. According to Pew research, 50% of parents with adult children provide ongoing financial help. And 29% of Gen Xers are supporting both older and younger generations. That is a lot of heavy lifting even for high income earners. So here's my take, use the airplane oxygen mask theory. Take care of yourself first, your bills, your savings, your retirement. Because if you deplete your foundation, you can't support anyone, not long-term. Sustainable generosity comes from a position of stability. Number four is an overexposure to real estate. Now let's talk housing because it is not always the slam dunk that people think it is. Real estate can absolutely be one of the biggest wealth builders in America. And for many people, their equity in their home is their largest asset. But it only works if done wisely. And here's the thing, high earners are often in a rush to upgrade to get a bigger home in a better neighborhood. It is the marker of success. But Redfin reports that one in three buyers regret overspending on their home. And census data shows that housing consumes 33 to 38% of a typical person's income, even for affluent households. And don't forget the add-ons, insurance, maintenance, taxes, furnitures, repairs, it all adds up and it adds up really fast. Plus real estate is illiquid. If a big chunk of your net worth is locked in your home, that's money you can't easily access in a downturn or an emergency. So yes, real estate absolutely does help people build wealth, but it's a double-edged sword. If you overspend, you can absolutely be house rich and cash poor. So my advice is to not buy a house at the tippy top of your budget. Keep your cash flow flexible and make sure that your house serves your life and not the other way around. Number three is tax inefficiency. This is one of the sneakiest wealth killers because you don't feel it happening. Poor tax strategy doesn't make headlines, but over time it can absolutely be devastating. Here's what it might look like. Not converting to a Roth when assets in taxable accounts, ignoring HSAs, 529s, QCDs, or donor advised funds. Selling investments without capital gains planning. According to Vanguard and Morningstar, poor tax planning can cost between 0.7% and 1.3% of a portfolio's value per year in avoidable tax drag. That might sound small, but it's not. Let's say you've worked hard and built up a million dollar portfolio, but you lose around 1% annually in taxes. Over 25 years, you'll have $800,000 less than someone with a smart tax strategy. Same investments, just better planning. You don't need to be a CPA, but you do need to have a plan. Start early and be proactive because tax planning isn't just an April strategy, it's a lifetime strategy. Financial misalignment in relationships. This one is big and too often gets overlooked. Divorce is one of the most destructive wealth events that a person can go through. The St. Louis Fed reports that it reduces net worth by an average of 77%. But you don't have to get divorced for money to be a problem. Even for happy couples, if they're misaligned, their wealth can absolutely take a hit. Say one's a spender and one's a saver, or they disagree on risk, investing, and retirement time horizons. According to Fidelity, 48% of couples disagree on retirement timelines. And when your goals don't match, your progress slows. Maybe you delay making decisions or you make compromises that don't serve either of you. Here's my advice. Don't put off the hard conversations. Talk about money regularly. Discuss your vision, your fears, your future. Get clear on what matters to both of you and work toward it together. Because aligned couples build faster and they build stronger. And finally, the number one wealth killer is having no plan for the other side of wealth. We spend decades building, earning, saving, investing, and then we get to retirement with no idea what to do. No withdrawal strategy, no income strategy, no roadmap for RMDs or taxes or risk. So what do we do? We freeze. According to Vanguard, retirees without an income plan spend 25% less than they can afford. Not because they don't have the money, but because they're afraid to touch it. And here's another eye opener. JP Morgan found that the most common withdrawal rate in retirement today is just 2%, well below the old 4% rule. This means that many people are underspending, underliving, and essentially leaving joy on the table. And make no mistake about it, if you simply pass it all on to your heirs, they will likely have no problem spending it. So this all leads us to the question of what's the point of saving so hard if you don't make the time to enjoy it? And strategy truly is important because a poorly timed withdrawal during a market dip can shorten your portfolio's life by 20 or 30%. So with no plan at all, if a bad market hits, it can absolutely shrink your lifestyle before your retirement even begins. You need more than a number. You need a system so you can draw down in confidence and truly enjoy the life you spent your entire life building. Here's the thing. You don't have to make reckless decisions to jeopardize your wealth. It might just be disguised as being comfortable or having misalignments or just being unaware. Complacency, lifestyle creep, over-helping, over-buying, under-planning, it all adds up. And these mistakes don't feel like mistakes in the moment. That's what makes them so dangerous. But now that you know about them, you can watch out for these gaps, and you can close them, and you can get strategic about preserving and growing your wealth with a solid plan. And if there's any of these that you've dodged or any of these mistakes that you've fallen into, I would love to hear your story in the comments down below. Because remember, building wealth is not about perfection. No one is perfect. All that matters is that you're making progress. So what do you think of this? Share your thoughts in the comments down below. I post new videos every single week. If you got anything at all out of this one, please give it a like. If you're new here, please consider subscribing. Or if you know of someone who might get something out of this type of content, please consider sharing. I'll see you soon. Bye. Maybe you're 10 or 15 years into your career. You own your home. Oh, my hair is like in my lip. So today we're counting them down back to I come from not long term, sustainable generosity, preserving and growing your wealth with a solid plan. I'm gonna sneeze. Okay, I still got the taken.