Just because there are stupid consumers that don't know how to manage money, doesn't mean being rich is a problem in itself. That's like saying rain creates a downside to life.
If you've never had millions of dollars worth of cash and assets, you have more than likely adopted the habits of most consumers. Live on personal credit, get a job and let your employer “invest” your money into other people's debt (e.g. 401K). It's not my intention that you are offended by my label here, but I have a purpose. I call this typical example the “stupid consumer”. I'm included in this, most of us started out this way, it's the design of the system, or our culture, public education, subtle messages in popular movies, political themes, we just accept the premises as if there is nothing else.
Rich people on the other hand, those who have learned to manage millions of dollars of net worth, have different habits. I also have a label for them, “rich people” (how creative). In fact rich people have dramatically changed our legal system to accommodate their needs and not the needs of the ”stupid consumer”. My purpose in writing this is to identify the differences between the two groups.
There is no need to be discouraged from becoming rich, but it is important to realize that rich people are not devoid of any problems just because they have lots of money, in fact they simply have a different set of problems and responsibilities other than the “stupid consumer”. However, consumers of course have their own set of problems. And each group of course has its own benefits.
Here are a few differences. Rich people might spend more money on products, shoes, furniture, cars, but they buy quality that lasts many years. Consumers buy cheap and have to continually buy the same products to replace the worn out, poor quality ones they bought cheaply. Consumers buy liabilities with their personal credit and wages or after-tax money, such as cars, a home, recreational vehicles, vacations, clothing, jewelry and so forth.
Rich people buy assets with business credit and other people's labor (profit) and then use their pre-tax money to buy liabilities such as cars, homes, vacations, jewelry, etc. Rich people sell the labor of others and profit by the labor of others. This doesn't mean rich people always exploit the wage earners, sometimes, but not always. While rich people can also be “wage earners”, wages are not their only source of income.
The fact that consumers pay taxes first before they get to use their money is a huge disadvantage in life. Having the ability to spend your money before it's taxed will make you rich and richer. The tax system is divided into four categories, there is the investor and business that pays taxes after income is spent. Then there is the self-employed and wage earner that are taxed before income can be spent.
If you can spend your income before it's taxed, you can invest more principal and defer taxation and grow your investments much faster than if your principal were taxed before you were able to invest it. So if you continue to look at taxes as you did before being rich, you missed the point, taxes are different for rich people. The taxation system is designed to punish the poor wage earner and reward the rich person. Rich people use the tax system to pass off their risk onto the stupid consumer who doesn't have a clue. The rich are able to legally avoid the taxes that stupid consumers believe they have to pay because they don't know any better.