How even the rich manage to go bankrupt:
Financial success can breed its own peculiar set of vulnerabilities. “People who are very successful develop elevated sensibilities about their skills, and when things turn on them they won’t admit they’re wrong because their self-confidence has held them up so long,” says Arnold S. Wood, chief executive of Martingale Asset Management in Boston. “In the face of evidence, even subjective evidence, that suggests that something bad is about to happen to someone, a funny thing happens: They reject the evidence.
“These kinds of people just continue spending because they think the money will keep coming in because they’re so successful,” adds Mr. Wood, who says he is fascinated by the possible neurological and social underpinnings of financial delusion and decision-making.
I’ve seen this sort of thing happen again and again, and to be honest, it grows incredibly tiresome. Listening to the same stupid justifications and rationalizations for self-destructive actions ceases to become tragic and devolves into a boring farce. The main problem that I see among those who have earned their own wealth is an inability to stop taking the kind of risks that led to their initial success in the past.
The key to securing financial stability is no more secret than the key to losing weight. In fact, the two are almost precisely the same. Always
eatspend less foodmoney than you burnearn.