Earning an above-average salary might seem like the ticket to , but many people still find themselves struggling with money. Unfortunately, it often comes down to common mistakes — lifestyle creep, poor investment choices or neglecting to save for the future — that turn a healthy income into not enough to get by. , so you can protect your own financial well-being and avoid ending up in the same sinking boat.
Earning passive income doesn't need to be difficult. Robert Johnson, Ph.D.
, chartered financial analyst (CFA), chartered alternative investment analyst (CAIA) and finance professor of Heider College of Business at , said that the primary reason people become poor while earning an above-average salary is that they fail to budget. “Even high-earning individuals have finite resources,” Johnson said. “One must create a budget and prioritize how to spend those finite resources.
” But what about spending on things that aren’t necessities? Johnson explained that what one person might see as wasteful, another may see it as perfectly rational. “For instance, many pundits — most notably Suze Orman — claim that individuals should eliminate their daily latte purchase,” he said. “But, for some people the daily coffee purchase provides them with a lot of utility.
For others, it can simply be a habit that can be eliminated. Individuals are unique and what brings one individual pleasure is different than what provides pleasure to another. The key to budgeting is to.