When examining the journeys of self-made millionaires and billionaires, it often appears that their triumph stems from sheer determination and astute choices. However, some of their decisions can lean more towards imprudence, making it unwise for most individuals to replicate such actions in their lives.
While narratives of individuals rising from poverty to wealth can be motivational, practicality is essential for many. Hence, it’s crucial to steer clear of emulating these four questionable life choices made by affluent individuals. (Refer also to: 5 Bedtime Routines of Famous Financial Gurus)
Leaving high school early
Numerous highly accomplished figures did not finish high school, yet this did not impede their ascent to success. Notable examples include Wendy’s founder Dave Thomas, Tumblr creator David Karp, filmmaker Quentin Tarantino, and Sir Richard Branson of Virgin Atlantic. Each of these individuals dropped out and still amassed considerable fortunes.
Though these success stories showcase careers flourishing without a high school diploma, one should not assume that their unique paths can be easily replicated.
The reality is stark; individuals lacking a high school diploma earn an average of about $520 weekly, as reported by the Bureau of Labor Statistics. Assuming a steady earning year (which is often not the case due to fluctuating job prospects), this totals approximately $27,040 per annum. In contrast, those with a high school diploma earn a median salary of $712 weekly, equating to $37,024 each year.
Furthermore, high school dropouts face a 6.5 percent unemployment rate, the highest in the nation. Comparatively, those possessing at least a diploma enjoy a 4.6 percent unemployment rate, while the national average hovers around 3.8 percent. Clearly, finishing high school is a strong indicator of financial security.
This is why Wendy’s founder, Dave Thomas, earned his GED at 61; he later described leaving high school as one of his life’s greatest errors and did not want his success to serve as a motivation for young people to abandon their education. (See also: 10 Surprising Ways a College Education Will Improve Your Life)
Investing your entire savings in a business
From Elon Musk, who reinvested his PayPal earnings into Tesla and SpaceX, to Sara Blakely, who embarked on her Spanx journey using $5,000 saved from her sales role, many prosperous entrepreneurs have risked their savings on business ventures. These captivating tales and their frequent portrayal in films might suggest that personal financial investment is the key to business success.
This assumption overlooks the multitude of aspiring entrepreneurs whose efforts do not yield fruit. Statistics show that half of new enterprises falter within five years, with only a third surviving after a decade. For every success story like Musk or Blakely, countless others risk capital only to see their businesses fail. (See also: 3 Ways to Fund Your Business Without Touching Savings)
Many of these entrepreneurs might possess compelling ideas and passion, yet without a measure of luck or the right circumstances, they could find themselves facing bankruptcy after risking their own funds.
Relying heavily on credit cards
Author Lisa Scottoline found herself navigating single motherhood after a divorce shortly after her daughter was born. A former trial lawyer, the demands of that job were incompatible with her desire to stay home. She decided to pursue a career as a writer of legal thrillers, which led her to make a significant financial decision:
I relied on credit. I held five credit cards each with about $10,000 in credit. I thought to myself, ‘You have $50,000 to get your work published.’ Eventually, I accrued $38,500 in debt. I took a part-time law clerk job for income, and shortly after, my first novel was sold.
Scottoline’s choice to finance her dreams with credit cards ultimately bore fruit, resulting in a successful writing career that spans nearly 40 books, many of which have graced the New York Times best-seller list.
Nonetheless, for aspiring artists, musicians, writers, and performers, the allure of sustaining oneself on credit until their careers flourish could lead to reckless financial decisions. It’s pivotal to consider that Scottoline had a successful law career as a safety net. If her writing endeavor had not come through, she would not have been faced with overwhelming debt. Most aspiring artists lack similar security. (See also: 6 Scary Facts About Credit Card Debt)
Taking risks in gambling
Fred Smith, the minds behind Federal Express (currently FedEx), would not be celebrating $4.4 billion in profits were it not for a fortunate turn at blackjack.
Smith founded the company in 1971, backing it with a $4 million inheritance, alongside $80 million from loans and equity investments. However, by 1973, the company found itself in financial crisis. With only $5,000 left, there wasn’t enough capital to fuel the planes for the week ahead. Thus, Smith decided to wager that amount at a Vegas blackjack table.
Fortuitously, he won, transforming $5,000 into $27,000, sufficient to cover the imminent fuel expenses. Although it didn’t resolve all of FedEx’s financial challenges, this stroke of luck propelled Smith to seek additional funding.
It’s essential to recognize that this is not a sound business management strategy. Smith’s experience hinges on fortunate winnings, and he could have easily lost everything. (See also: 6 Ways Greed Is Keeping You Poor)
