Yahoo Finance 6 Financial Resolutions for the Ultra-Wealthy, According to Experts
No matter how much money you make, one thing remains the same for everyone: the need for financial planning.
Coming up with resolutions for managing money this year is always a good idea — whether you make an average salary or are part of the ultra-wealthy.
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According to Mafe Aclado, general manager of Coupon Snake, at every stage of our finances, there is always room for improvements and chances to fall back even after progress.
“Let’s face it, even for the ultra-wealthy, without adequate care, chances are that their finances would suffer, and they would find themselves a few steps lower on the ladder that leads to financial security and stability.”
Here are some financial resolutions experts recommend for the ultra-rich.
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Monitor Personal Spending
“The truth is, the more money an individual earns, the more likely it is for them to up their spending, and form unhealthy spending habits,” Aclado said. “Also, It is a known fact that extravagant spending can sometimes be the fastest way to run into debt.”
She observes that this reality is even more so for individuals like the ultra-rich who have a steady access to cash to support or encourage the human tendency to splurge on fancy and luxuries.
“As an expert, I believe even the ultra-rich should make a financial New Year’s resolution to monitor their personal spendings, especially considering how inflation causes prices to go higher,” Aclado said. “Truth is, with your credit card handy, it may be difficult to know the exact amount you spend, or by how much your spending has increased over a certain period, especially when you do not monitor your total spending.”
However, she said it helps to remember that an excessive spending habit, if not curtailed, is sure to have an impact on your finances in the long run.
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Focus On Investing
“I would say my top recommendation for the ultra-wealthy when it comes to financial resolutions would be to focus on investments,” said Carter Seuthe, CEO of Credit Summit Debt Consolidation. “When you have enough money to rank among the ‘ultra-wealthy,’ your money often isn’t doing you much good unless it’s being utilized properly in assets and trusts.”
He added that Investing in good long-term prospects like real estate is a great way to keep your money safe and earning more.
David Rafalovsky, CEO of Oxygen, shares the same opinion on investing as a resolution.
“Consider diversifying investments beyond the traditional stock market,” he said. “The ultra-wealthy should explore alternative investments like private equity, venture capital, or even art and real estate.”
That said, he noted that diversification isn’t just about spreading risk but instead about tapping into different growth potentials.
“For instance, investing in startups can be more than just financially rewarding, it can also be a way to be part of innovative solutions to global challenges.”
He also recommended focusing on sustainable and ethical investing.
“This isn’t just a trend but a shift in how we think about the impact of our wealth,” Rafalovsky said. “Environmental, Social, and Governance (ESG) investing isn’t just good PR, it’s about ensuring that your wealth contributes to a positive impact on the world. It’s aligning your financial goals with your values.”
Prioritize Financial Literacy and Education
Experts say you should do this not just for yourself but for your family.
“Wealth preservation across generations is a significant challenge,” Rafalovsky said. “Educating the next generation about financial management, investments, and the responsibilities that come with wealth is crucial. It’s about creating a legacy of not just wealth, but of knowledge and responsibility.”
At the same time, he recommended never underestimating the importance of financial health checks alongside your financial literacy.
“Regularly reviewing your financial portfolio with experts can provide new insights and help you stay ahead in the ever-changing financial landscape. It’s not just about reviewing what you have, but about strategizing for future goals and potential challenges.”
Optimize Your Portfolios for Taxes
According to Andy Chang, founder and CEO of The Credit Review, one key resolution for the ultra-rich is to optimize investment portfolios for tax efficiency.
“Consider swapping out high-tax investments for lower-tax alternatives while maintaining a balanced portfolio.”
Alternatively, he said ultra-wealthy individuals could look toward philanthropy.
“By establishing or contributing more toward charitable organizations, not only does one give back to the community, but it also opens opportunities for substantial tax deductions.”
Chang also recommended considering the “wealth transfer” as a pivotal resolution.
“In the face of constantly changing tax laws, creating or updating an estate plan can ensure wealth preservation for future generations.”
He said incorporating this resolution into financial planning can act as a beneficial road map that steers the ultra-wealthy toward even greater financial success in the coming year.
Hire a Finance Professional
“My New Year’s resolution advice for the ultra-wealthy is to stop thinking about money, and instead pay a professional to do it for you,” said Sam Hodgson, pensions expert at SIPP Advice.
“There comes a point where your time is far more valuable than your money,” he explained, “so thinking about your finances effectively drains value in your life, even if it saves you money.”
Hodgson recommended speaking to your wealth manager and telling them you want to be as “hands-off” with your finances as possible.
“That includes setting a budget for your lifestyle, investing tax-efficiently and in the right assets and investment vehicles, and building a generational wealth transfer plan for you and your family’s future.”
He also noted that there are private banks and holistic wealth managers out there who are extremely good at this — no matter how complex your wealth structure.
“It means you can focus on enjoying your wealth with the peace of mind that it’s sustainable, without you needing to think about it.”
Adopt a More Frugal Lifestyle
“One of my financial resolutions for this year is to adopt a more frugal lifestyle,” said Harrison Tang, co-founder and CEO of Spokeo. “To do this, I want to limit my visits to malls, as they frequently result in impulsive purchases.”
Furthermore, he said he intends to focus on purchasing clothes at clearance sales, emphasizing cost-effective options in his wardrobe.
“Another of my commitments is to cut back on travel and holidays due to the high expenditures connected with them.”
Recognizing the current economic crisis, Tang believes it’s prudent, even for wealthy people, to reduce wasteful spending.
“Many wealthy people are becoming increasingly anxious about the potential for financial ruin if they continue to spend extravagantly.”
As a result, Tang said altering spending habits becomes critical to navigating the current economic problems and protecting long-term financial well-being.
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