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5 shocking myths about rich people debunked

Samantha Menzies
Senior editor – Finance
Millionaire myths revealed. Source: AAP/Yahoo Finance

With their designer handbags, luxury vehicles and extravagant houses, rich people and their assets are clear markers for wealth.

But not every wealthy person is a debt-free big spender with immaculate financial history.

Here are five myths about rich people which show that all is not always as it seems.

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1. THEY DON’T LIVE TO A BUDGET

With wealth comes the ability to live carefree on an infinite budget, right?

The likes of Bill Gates and Warren Buffett have so many billions to spend so you’d think these megarich don’t need a budget at all, especially since they’re not living paycheck-to-paycheck.

However, a wise person understands that just as quickly as money is earned, it can all be lost.

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So just as you have to budget for retirement, your mortgage and car payments, groceries and other expenses, wealthy people should and do apply the same guidelines for themselves; when they don’t, they’ll likely find themselves, well, no longer rich.

2. THEY’RE DEBT-FREE

The belief that wealth and debt cannot co-exist is turned on its head by a wide range of celebrities.

From Lohan’s credit card debt, to the $18 million professional boxer Mike Tyson owed the Internal Revenue Service, those who command big paychecks and endorsement deals also often have debt to match.

Even with a fortune of $300 million, Tyson’s debt reached $38 million in 2004, according to USA Today.

Other celebrities who struggled with debt include actors Nicholas Cage and Burt Reynolds, photographer Annie Leibovitz and former baseball player Jose Canseco.

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3. THEY’RE HOMEOWNERS

Believe it or not, not every celebrity is living like a Kardashian.

Yes, many rich people — celebrities or not — own their homes, but not all of them do.

In fact, several celebrities, including actresses Diane Keaton, Meg Ryan and Jane Fonda, have paid rent for their residences.

For celebrities and businessmen who change their residences regularly for work, renting might be a better financial option.

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4. THEY’RE BIG SPENDERS

It’s true that many rich people are ridiculously frugal, especially celebrities – with more money comes the ability to purchase luxury goods and pay for extravagant experiences.

The more money you have, the more affordable it is to buy a private yacht, or even an island.

But, just because you’re rich doesn’t mean you have to act like it. Zuckerberg is famous for his trademark gray T-shirt and hoodies, and he isn’t the only entrepreneur who exercises frugality.

Berkshire Hathaway CEO Warren Buffett is the third-richest man in the world, boasting a net worth of $87 billion, according to Business Insider.

But the ‘Oracle of Omaha’ is famously frugal and still resides in the home he purchased in 1958 for $31,500.

5. THEY’VE NEVER BEEN BANKRUPT

It’s widely known that Donald Trump has filed for multiple bankruptcies in the past, and he’s not the only one.

Much like debt, bankruptcy seems to be the antithesis of wealth. However, some of the most successful people lost everything at some point.

Some wealthy people who bounced back from bankruptcy include Henry Ford, Walt Disney, Milton Hershey and H.J. Heinz — all of whom went on to create brands we still see in our everyday lives.

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