The 2025 Goldman Sachs Retirement Survey and Insights Report found that around 40% of Americans making more than $300,000 per year were living from paycheck to paycheck. While this might sound surprising, making a high salary doesn’t guarantee that you’ll use it wisely to build wealth or afford the lifestyle you want without debt.
In a YouTube video, money expert and author Rachel Cruze discussed six financial mistakes that high earners often make. Plus, find out which smart alternatives she recommended.
You might assume a higher income equals more cash for key goals, but some high earners become comfortable overspending to upgrade their lives. A 2025 Harris Poll survey even found that around one in three Americans with six-figure incomes experienced financial distress.
Cruze explained that upgrading your lifestyle a little as your income grows isn’t always bad, but encouraged having a monthly budget based on your old income. That way, you can cover the essentials and designate some of your extra money for both luxuries and financial goals, like investing and becoming debt-free.
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Having extra margin can tempt you to make risky decisions, such as investing in crypto, taking out a loan to buy a rental property or investing in a novel startup. While the potential returns sound great, you can also end up broke quickly.
“When you go and you take on, especially debt, but you take on things that are not proven with that extra margin that you’re making and then what happens is that snowball effect can happen,” Cruze explained.
She encouraged sticking to more boring, lower-risk options, such as mutual funds in a Roth IRA or a 401(k). Once you’re more established and can afford to lose money without it being detrimental to your finances, you might revisit the riskier investments.
People of all income levels might make plans for money they haven’t received yet, whether that’s a big bonus check or an expected raise. You might prematurely make a large purchase, such as a new car, not thinking that something could go wrong. Maybe you get laid off or the company skips bonuses this year.
Cruze recommended spending the money wisely once it does arrive and avoiding debt in the process. For example, you might use your big check for an affordable used car instead of trapping yourself with expensive monthly payments on a new one.
