Can You Ever Really Be ‘Too Rich’?
While many people strive to make more money and grow their net worth, does the quest for wealth ever reach the point where someone becomes too rich?
A recent Eater article suggested that if you can afford to spend around $500,000 for a special dinner that will take place in outer space — yes, this is real — then you’re too rich. While the proceeds from the dinner will support a foundation that helps young women work in the space industry, the article suggests this isn’t the best approach, given all that’s required to make the space dinner possible.
Read More: Graham Stephan: Here’s How To Become a Millionaire in 2024 Using ChatGPT
See Next: 6 Genius Things All Wealthy People Do With Their Money
But even with this type of out-of-this-world spending, it can be hard to say that there should be a limit.
“I think as long as you make your money ethically, there isn’t a ‘too rich.’ The challenge is unless everyone has the same amount of assets, the better-off could always do more for the less well-off. Where do we draw the line and who gets to decide?” said Mike Hunsberger, owner of Next Mission Financial Planning, LLC.
If someone does have the type of wealth that can afford them the opportunity to dine in space, that’s arguably their prerogative.
“I don’t get a vote on how they spend their money. They don’t get a vote on how I spend my money,” said Jay Zigmont, Ph.D., founder of Childfree Wealth.
That’s not to say there aren’t societal issues to consider, like how wealth should or shouldn’t be taxed to address issues like poverty. But if someone is playing within the rules of society, perhaps a better way to look at the issue is not whether someone is too rich, but are they using their wealth wisely?
“I do agree with the premise that how you use your money is important. Just having billions of dollars on a ‘score card’ doesn’t make much sense, but using your money like Bill Gates or Warren Buffett to make the world a better place is admirable. You also don’t have to be a billionaire to do that,” said Gary Watts, VP and financial advisor at Wealth Enhancement Group.
However, some people stray too far in the other direction.
“For some people, more money will never be enough. There have been plenty of examples of people like Bernie Madoff who were already very wealthy but still wanted more. They had no sense of enough. Ultimately, they took risks or committed crimes to get more and it cost them everything,” Watts said.
Making a Plan
While it’s hard to put a number on what too much wealth means, it could be worth considering what you want to do with your wealth, rather than just watching it grow for the sake of it.
“You can do whatever you want with your money, but you need to have a plan for it. Just running up the counter doesn’t add happiness,” Zigmont said.
Instead, he said, the question should be about what someone wants their legacy or impact to be.
For some, the goal is to pass as much money as possible onto the next generation, such as their children or other family members, but taking a mindless, never-enough approach to accumulation for the sake of inheritance isn’t always the best use of one’s resources.
“The challenge I always ask people is when can they use the money best?” Zigmont said.
For some, they can make more of their desired impact during their lifetime, such as by supporting family members or other charitable causes while still alive.
In addition to potential benefits like avoiding estate taxes, using wealth during one’s lifetime provides more control and can help ensure that the money is spent according to their wishes.
“One of the things I often encourage people to do for family members is buy them education or coaching, or other things that can help them” make the most of wealth and their lives, Zigmont said.
For some, he said, that might mean buying time with a financial planner for family members so they can sustain their inheritance, while others might set up a college fund and others might buy sessions with a personal trainer.
The giving can take many forms, but the point is that “you can make an impact without directly giving cash, and you know it’s going [to be used] the way you want it to be spent,” Zigmont said.
Trending Now: How To Become a Millionaire in Your 60s
Spending Down Your Wealth
Zigmont also pointed to the book “Die With Zero” by Bill Perkins, which is about spending down your assets and enjoying life, rather than accumulating wealth for the sake of it.
Some people are mindless spenders, but you also have “mindless savers,” Zigmont said.
But if you know how you want to use your assets during your lifetime, then there might not be such a thing as being too rich.
In Zigmont’s case, his plan is to leave money for his nephews, but the goal is to do so when they need it, rather than waiting until Zigmont’s eventual passing. For example, he puts money into 529 plans for them to pay for college expenses, “cause that’s when they’re going to need it,” he said.
They’ll also get what’s left over when he and his wife eventually pass. “If they get 10 grand or 100 grand, that’s fine. If they get a million, I probably made a mistake” in terms of not making the most of his money during his lifetime, he said.
“It’s a question of how can you use your money during your lifetime to improve the lives of those you care about?” Zigmont said.
And while some may say that having enough money to dine in space, even with a charitable component, isn’t an efficient way to improve the lives of others, wealth can be highly personal and it’s hard to say how others should use it.
“If there’s a plan, then there is no such thing as too much,” Zigmont said.
More From GOBankingRates
This article originally appeared on GOBankingRates.com: Can You Ever Really Be ‘Too Rich’?
