You can never achieve the ultimate financial freedom in life unless you make an effort on growing and maintaining the wealth you’ve accumulated so far. There are many rich people who lost the majority or almost all of their wealth after certain decisions or events.
In this article, we are going to list the things that could turn a rich person into a broke person:
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Divorce
Current divorce rates in the world are estimated now to be over 50%, that means 1 in every 2 couples are most likely to end up in divorce. When you are starting a marriage, everything is all rainbows and sunshine, but people can grow in different directions over time. You need to consider there is a financial aspect to this union that you call marriage. The moment you marry someone, your finances get bundled together. They take over your debt as well as everything you’ve worked for, unless you have a prenuptial agreement, popularly know as a prenup. Divorce laws are simply a theft from the rich and need to be adjusted.
To understand the kind of impact a divorce can have, a good example is when Jeff Bezos, the founder of Amazon, decided to divorce his wife had to split his $140 billion in half, because he did not have a prenup, she’s entitled to almost half of what he owns. She became wealthier than the founders of Google and the fifth richest person in the world.
Jeff Bezos, can afford it, but think of yourself. Lets say in 10 years you build a great company and you’re worth $20 million dollars, your partner will take 10, your lawyer will take a bite and you’ll still have to pay child support until all your kids are 18.
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Lawsuits
When you’re rich, people sue you for everything. You’ll be paying money for the dumbest things.
A class action lawsuit filed against your company for any form of wrong doing can result in a catastrophic financial loss. Not only you if you lose will have to pay large settlements, but your company probably has debt. You can go from being worth millions to filling for bankruptcy in less than a year.
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Illness
Being sick had become incredibly expensive, especially if you don’t have a good health insurance. The cost of treatment for some diseases can dry up almost anybody. It’s understandable to you would pay almost anything for a chance to live. Blood disorders and Cancer are currently the most expensive to treat, the total estimated annual cost for someone with a blood disorder can amount to $2 M annually.
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Government Intervention
Do you know that a single legislative change can put your entire industry out of business ? In more corrupt countries, the government can literally take over your business and force you to
Accidental deaths can happen to anyone. Death is tragic and you need to be prepared for it. There are numerous examples in history where one death was the first domino in a chain reaction that led to dynasties going bankrupt. The best thing you can do is to be ready for this moment. Have your affairs in order to make sure there is a strategy in place for your money. It is important to invest in your children. The more educated your children are about money, the better chances they have of making it last.
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Getting Scammed
No matter how smart you are, you’re still prone to getting scammed. Richard Branson say people are constantly trying to scam money out of him. A few years ago, someone actually managed to get $2 million dollars from one of Richards friends. The conman pretended to be Richard and asked for a quick $2 million in the aftermath of hurricane Irma which hit his island.
You micht not realist this, but people will go to great lengths to get their hands on your hard earned cash.
A Nigerian scammer Emmanuel Nwude, once sold a fake airport to a major international bank for $242 million dollars. The scam wasn’t discovered until 3 years later. History is filled with stories, just like this one.
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Natural Disasters
Hurricanes, fires, floods can crumble everything you’ve worked so hard to build. The amount of monetary value lost in the aftermath of these types of events is outrageous. Thre amount of wealth which can be wiped out in a short period of time can be worth over trillions if not secured well.
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Too many children
People often under estimate just how expensive raising a child can be, especially in the more developed countries.
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Blackmail
Extortion is a very lucrative business and no one is safe from it. Private conversations with mistresses, using exes nudes for revenge. Imagine getting some action on the side and that persone betrays your trust and documents your activities and threatens to send the information to your partner. A divorce which can cost you millions and you will probably lose your children as well, so you go along with the payment. The sad thing about this is it can be a continuous cycle which you can never get out of. Blackmailers will forge a “subscription service” to not completely mess up your life. These days, people use the internet to do so, that is why the privacy is so big. There are people mining your data online to use it for identity theft, blackmail if they get something good. A VPN can hide your online activity. They hide your online activity and are very easy to use.
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Spending it all
Lastly on our list of how rich people go broke, is by spending more that you earn. You see this a lot with professional athletes. They get a big contract, blow it all away and end up with nothing. The numbers show that 78% of the national football league are either bankrupt or under financial stress within 2 years of financial retirement. These folks go from earning 7 figures a year to bankruptcy. This happens because they are wasteful in their spending, they purchase liabilities instead of assets. They also get ripped off by people who are taking advantage their position and lack of financial literacy. Shaquille O'Neal 48hrs to blow his first $1 million dollar pay check before realising he’s already in debt. I personally respect Shakil because he understood that he needed to be financially educated in order to understand this new found wealth. He has grown to become one of the most prolific investors and is now worth over $400 million, most of it made after he retired from the MBL.
10. Thinking money will always keep coming
Very popular cases are Floyd Mayweather and Johnny Depp, both incredibly successful individuals with big payouts every time they put their efforts to good use. They are not very productive investors. Depp went from getting paid 35 million dollars per movie, to having to sell some of his properties in order to pay for his other ones. Floyd gets pai $100 million dollars for a fight and blows if all away on cars and parties. It’s easy to spend money while its coming, but your lifestyle is fixed while your income is dependant on your ability to perform.
In the case of a professional athlete, an injury could bring everything down.
