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Earning more than $230,000 a year, as of 2023, is enough to put you in the top 10% of earners in the United States. Yet for some, that’s still not enough money.Thanks to a mix of rising expenses and lifestyle pressures, that big paycheck doesn’t go as far as you think.
But the real issue isn’t just the high cost of living—it’s also how easily that money can slip through your fingers with the wrong financial habits.
Financial advisors say these are some of the costly mistakes that high earners make with their money.
Key Takeaways
- The top 10% of earners, those making $230,000 or more as of 2023, may not feel financially secure.
- Many high earners make costly money mistakes that can undermine their financial stability and long-term security.
- A high income can create the illusion of financial security, but without a clear plan for your money, it can often lead to financial stress.
Having False Financial Confidence
A common mistake among high earners is the belief that a big paycheck automatically means their finances are under control. It’s easy to assume that making six figures guarantees financial security, but income alone doesn’t tell the whole story.
“The biggest misconception is that making six figures means you have your personal finances ‘figured out,’” said Priya Malani, founder and CEO of Stash Wealth. “High earners often assume they’re doing fine just because they make more than average, but they rarely know if they’re actually on track for the life they want.”
Not Setting Clear Financial Goals
It can be easy to get caught up in the lifestyle that comes with a high income, causing you to forget the importance of long-term goals.
“We’ve had clients with $300K+ household incomes and nothing to show for it—no clear goals, no plan, and barely any savings,” said Malani.
And while most would assume that high earners make enough money to cover their essential expenses and more, many high earners still struggle with their finances. In 2024, 20% of households with an income of $150,000 and up reported they were living paycheck to paycheck.
“In my experience, most people who are living paycheck to paycheck do not have an income problem. What they lack is more structure when it comes to prioritizing where their money goes,” said Luis Rosa, certified financial planner and founder of Build a Better Financial Future.
Malani suggests taking the time to understand your income, expenses, and financial goals.
“When you know your numbers, you stop feeling guilty every time you book a trip or order takeout,” she said.
Lifestyle Creep
As you earn more, you may be tempted to spend more, upgrading your home or car, taking more frequent vacations, and dining out more. This lifestyle creep can leave little left over for saving or investing.
“As income rises, so does spending—on nicer apartments, bougie vacations, and yes, the $400 masticating juicer,” Malani said. “Without clear financial priorities, lifestyle creep eats what should be your progress (and savings).”
Overcommitting to Your Children’s Education
Making sure your child receives a quality education may be important to you, but it shouldn’t harm your long-term financial goals, like retirement.
Some high earners may be risking their financial stability and security by paying for a private school education for their children.
For one child to attend private school from kindergarten through college, the total average cost is a whopping $300,000.
In order to fund your child’s education, consider saving ASAP.
“I recommend starting early to save for private school or college and not waiting until the kids are ready to go to school. If they can start a 529 plan right after birth, even better,” Rosa said.
She also recommends making sure you and your child are aligned on what their college education goals are.
“Another strategy is to incentivize the children to do better in school by having skin in the game,” said Rosa. “You can create your own tuition reimbursement program by telling the kids that you’ll pay certain school loans off if they meet certain requirements. This way, you make sure they have a vested interest in doing well, and you can pay off a portion or all of their loans if they meet your guidelines.”
Oversaving for Retirement
Most people have a magic number in their heads for how much they want to save for retirement. Unfortunately, that number can create a lot of pressure to save aggressively, sometimes too aggressively.
“Yes, it’s a thing. Many of our clients are paranoid about not having ‘enough’ and end up maxing retirement accounts even when it doesn’t align with their actual goals. If you’re stashing every extra dollar in your 401(k), you might be robbing your future self of a wedding, a renovation, or that dream vacation—Cannes, anyone?,” said Malani.
Poor Tax Planning
Taxes can be complex for high earners, so tax planning and preparation are necessary. With an increased income, there are higher tax liabilities, and if you’re not careful, you could miss out on valuable deductions, credits, and strategies that could significantly reduce what you owe.
“I’ve seen a lot of missed opportunities when high earners simply provide a stack of papers to their tax preparer during tax season instead of actively doing tax planning during the year,” Rosa said. “Tax preparation is like looking in the rearview mirror, while tax planning looks at the road ahead.”
The Bottom Line
Having a high income doesn’t guarantee financial security or stability. The very lifestyle that defines success can drain it if you aren’t mindful. While it may be easy to assume you’re finances are fine because you’re high earner, it’s important to have a clear image of what your earning and spending and to not overextend yourself when it comes to saving for retirement and funding your children’s education.
