5 Reasons Why Some High-Earners are in Debt

Sep 12

Wearing high fashion clothes, dining at the hippest restos, and taking vacations in Europe, high-earning executives – those earning between $5,000–10,000 a month – seem to have it made. Yet, some of these art directors, lawyers, and publishing executives may actually be tens of thousands in debt. Below are the common financial pitfalls for people with huge wages.

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1.       Inability to delay gratification

Compared to that of our parents’, our generation lived in comparably comfortable times. Singapore was already what it is now by the time we had any financial awareness, and so many of us really didn’t learn how it is to save money for the future: when we want something, we want to have it now. And so we pay for today’s pleasures with next month’s salary.

2.       Overuse of credit cards

What with low interest rates and aggressive lending policies by banks, it’s become common for people to have two, three, or even four credit cards. And for many of us, these credit cards create the illusion that we have a lot of money left to spend even as we acknowledge that we’re already owe thousands to each of these cards.

3.       Paying for past extravagances

It may come as no surprise that weddings are a prime suspect to why many couples are in debt. A lot of us spend so much for this event that they still have to pay for it even way past their honeymoon phase. Other culprits include getting a house or car that we couldn’t really sustainably pay for.

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4.       Social “necessities”

When we earn a lot, we feel somewhat obligated to treat our friends who earn less than we do by giving gifts or paying for dinner. Then at home, those of us who aren’t married yet also have to give spending allowances to our parents, siblings, and even some distant relatives.

5.       Overestimating one’s salary

An account executive earning $7,000 a month may think it’s easy to justify a $500 luxury bag. But if she already has a debt in the thousands and it’s not the first bag she’s bought on a whim this month, it gives a much different picture. We should buy something in view of our financial standing, not our salaries.

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