Connect with us

Personal Finance

Why overspending is one of the biggest financial mistakes you can make

Published

2 years ago

on

Images By Tang Ming Tung | Digitalvision | Getty Images

When it comes to money mistakes, financial advisors see them all.

One key theme, overspending, tends to crop up, whether it be on homes, a college education or even fine jewelry.

For one pair of clients, realizing how much they had spent in the past 18 months on jewelry — $1.4 million — was a shock, said Barry Glassman, a certified financial planner and founder and president of Glassman Wealth Services in Vienna, Virginia.

The following year, after meeting with Glassman, they pared those outlays down to about $8,800, which went mostly to jewelry repairs.

“When people see where their money is going, their behavior changes,” said Glassman, who is a member of CNBC’s Financial Advisor Council.

The ultra-high-net worth clients’ spending is out of reach for most consumers. But the temptation to overspend can affect everyone, no matter their income.

As part of its National Financial Literacy Month efforts, CNBC will be featuring stories throughout the month dedicated to helping people manage, grow and protect their money so they can truly live ambitiously.

“At the extreme, this is why most lottery winners go bankrupt,” Glassman said.

“They feel like they’ve made it, they feel wealthy,” he said. “But they don’t realize the difference between wealth and income.”

Not all discretionary spending is negative, particularly if it is intentional and aligns with your goals, notes Preston Cherry, a CFP, founder and president of Concurrent Financial Planning in Green Bay, Wisconsin.

“There shouldn’t be social shame in spending to fund your well-being, present or future,” said Cherry, who is also a CNBC FA Council member.

But Glassman, Cherry and other experts on the council say there are certain risks that can damage your bottom line and put your ability to achieve other goals at risk.

Big-ticket purchases can lead to setbacks

Jeff Greenberg | Universal Images Group | Getty Images

When it comes to splurges on big-ticket items, Louis Barajas, a CFP, enrolled agent and CEO of International Private Wealth Advisors in Irvine, California, said he likes to visually show clients how their spending may interfere with their financial independence.

“This is a work on mindset over budget,” said Barajas, a CNBC FA Council member.

One big-ticket purchase, buying a home, can set people back if they take on too much house or too big of a mortgage, notes CNBC FA Council member Cathy Curtis, a CFP and the founder and CEO of Curtis Financial Planning, an Oakland, California-based fee-only financial planning and investment advisory firm for women.

One family Curtis worked with missed out on a few houses by bidding too low. To correct that, they took their realtor’s advice to bid high on the next house they found. Curtis’ spreadsheets and advice on how much they could afford “went right out the window,” she said.

The family’s house payment, combined with property taxes and insurance, put them at risk for a cash crunch. They reached a low point when the husband lost his job, which prompted the wife to spend down her inheritance.

Spring season will see a significant increase in real estate inventory: Compass CEO Robert Reffkin

Taking such risks on real estate can be a gamble. While homebuyers may grow into their payments with salary increases, that doesn’t always work out, Curtis said. The silver lining is that most real estate tends to appreciate over time, and therefore can be a good investment, she said.

When shopping for a home, it is better to treat it as a business decision rather than a personal one, Curtis advised.

“Buying a house can be a very emotional experience,” Curtis said. “I advise clients to keep their emotions in check and know that there will always be another house that is a better fit.”

Another big-ticket purchase, a college education, may also require keeping emotions in check, particularly if a child’s dream school will break the bank.

“Your kids can always borrow money for their college degree, but you can’t borrow for your retirement,” said CNBC FA Council member Ted Jenkin, a CFP and the CEO and founder of oXYGen Financial, a financial advisory and wealth management firm based in Atlanta.

Jenkin said he tells clients to prioritize their retirement savings first, and to cut college savings if they are behind on that goal.

Small habits can add up over time

Caia Image | Collection Mix: Subjects | Getty Images

Smaller purchases can have a sneaky way of adding up over time.

When Glassman has his clients do an analysis of their spending, many find they are shocked how their dining-out habits add up. The same may apply to other categories, such as gifts or travel, he said.

“From there, 99% of the time, behavior changes,” Glassman said, prompted by the realization that small adjustments, such as eating in one time per month or per week, can make a big difference.

Assessing just how much is reasonable to spend is a lifelong endeavor, and often a tricky one in retirement.

Some retirees may spend too much when they first retire, and be tempted to provide other family members with financial support, notes CNBC FA Council member Ivory Johnson, a CFP and the founder of Delancey Wealth Management in Washington, D.C. 

“I have had to tell clients to put their family on a budget because I understand the impact it’ll have on their retirement,” Johnson said.

Not everyone is susceptible to overspending.

For those who are instead prone to saving, drawing from their nest egg can feel uncomfortable once they reach retirement.

“It is challenging to shift from the good saving and investing habits that lead to a secure retirement to spending down assets,” said CNBC FA Council member Blair duQuesnay, a chartered financial analyst and CFP, who is also an investment advisor at Ritholtz Wealth Management.

For investors who can afford to spend more, that can be a missed opportunity to enjoy the fruits of their labor, through gifts to family, travel or donations to causes important to them, she said.

Working with a financial advisor can help individuals assess whether their spending is too much, too little or just right. You can also do a gut check on your own by gauging your mindfulness with your money, Cherry suggests.

“Intentional spending within a plan that invests in your wellbeing is perfectly OK,” Cherry said.

Related Topics:
Continue Reading

Personal Finance

$20,000 Caution Bond Requirement for US Visa Applications imposed on 50 Countries

Published

6 days ago

on

August 8, 2026

By

The United States Department of State has officially implemented a revised visa policy introducing a mandatory posting requirement for caution payments of up to $20,000 on select foreign travel applications. Under the updated regulatory framework, consular officials are authorized to require temporary nonimmigrant visa applicants from targeted foreign countries to post a refundable financial bond of $20,000 as a condition for visa issuance. The policy mechanism is designed to address diplomatic concerns regarding high overstay rates among temporary visitor, business, and educational visa categories.

The caution bond pilot program applies selectively to foreign nationals from designated countries whose diplomatic entities record historical visa overstay rates exceeding established federal thresholds. Under administrative guidelines published by the State Department, the full financial deposit is posted directly to a dedicated federal escrow account prior to final visa issuance. The entire caution payment is automatically refunded to the applicant upon verified proof of timely departure from the United States in strict compliance with the authorized duration of stay. Conversely, failure to depart within the legal timeframe results in full forfeiture of the posted financial bond to the United States government.

Diplomatic representatives and travel policy experts have expressed varying perspectives regarding the operational implementation of the caution bond system. Administration officials emphasize that the measure serves as an effective, market-based incentive to enforce international travel compliance and preserve domestic immigration security standards. However, international trade organizations and foreign diplomatic missions have raised concerns regarding the financial burden imposed on legitimate business travelers, foreign students, and commercial partners from developing nations.

The United States finalized the rule to make the temporary visa bond program permanent, taking effect on August 3, 2026. The updated permanent regulation replaces the prior 12-month pilot, eliminates the lowest $5,000 tier, and raises the maximum required bond amount to $20,000 for specific B-1/B-2 business and tourist visa applicants.

Here is the list of the 50 countries on the list as o August 3, 2026

African Nations (31 Countries)

  • Algeria
  • Angola
  • Benin
  • Botswana
  • Burundi
  • Cabo Verde (Cape Verde)
  • Central African Republic
  • Côte d’Ivoire (Ivory Coast)
  • Djibouti
  • Ethiopia
  • Gabon
  • The Gambia
  • Ghana
  • Guinea
  • Guinea-Bissau
  • Lesotho
  • Malawi
  • Mauritania
  • Mauritius
  • Mozambique
  • Namibia
  • Nigeria
  • São Tomé and Príncipe
  • Senegal
  • Seychelles
  • Tanzania
  • Togo
  • Tunisia
  • Uganda
  • Zambia
  • Zimbabwe

Asian & Eastern European Nations (11 Countries)

  • Bangladesh
  • Bhutan
  • Cambodia
  • Georgia
  • Kyrgyzstan
  • Mongolia
  • Nepal
  • Papua New Guinea
  • Tajikistan
  • Turkmenistan
  • Uzbekistan

Caribbean & Latin American Nations (5 Countries)

  • Antigua and Barbuda
  • Cuba
  • Dominica
  • Grenada
  • Venezuela

Oceanian Nations (3 Countries)

  • Fiji
  • Tonga
  • Vanuatu

Continue Reading

Personal Finance

Next-Generation Retirement Planning: Managing Longevity Risk and Variable Income Streams

Published

1 week ago

on

August 7, 2026

By

Retirement planning strategies are evolving in 2026 to address increased life expectancies, shifting dynamic market conditions, and the transition away from traditional defined-benefit pensions. Individual investors and financial advisors are abandoning rigid retirement models in favor of flexible, multi-asset strategies designed to mitigate longevity risk and preserve purchasing power over multi-decade retirement horizons.

Mitigating Longevity Risk with Dynamic Asset Allocation
As average life expectancies extend past eighty-five years, one of the primary financial risks facing retirees is outliving their accumulated wealth. Traditional fixed income allocations—such as the standard 60/40 equity-to-bond portfolio—are being reevaluated to ensure portfolios generate sufficient capital growth alongside reliable income.

Financial planners recommend maintaining a meaningful equity allocation throughout retirement to offset long-term inflation erosion. High-dividend equity funds, global real estate investment trusts (REITs), and inflation-indexed Treasuries are combined to create diversified portfolios that deliver both growth and income stability.

The Transition to Dynamic Withdrawal Strategies
The classic “4% safe withdrawal rule” is increasingly replaced by dynamic withdrawal strategies that adapt annually based on market performance. Under a dynamic withdrawal framework, retirees adjust their annual distribution rates within pre-set caps and floors:
– Market Upside: During strong market returns, retirees can increase discretionary spending or fund family legacy gifts.
– Market Downturns: During market pullbacks, spending distributions are temporarily reduced to prevent sequence-of-returns risk and preserve core investment principal.

Guaranteed Lifetime Income Options and Deferred Annuities
To establish a guaranteed baseline for essential living expenses, individuals are incorporating modern fixed-indexed and deferred longevity annuities into their broader retirement architectures. Modern annuity structures offer competitive return caps, transparent fee schedules, and inflation-adjustment options.

By funding essential expenses—such as housing, healthcare, and insurance—with guaranteed income streams from Social Security, pensions, and annuities, retirees can manage discretionary investment portfolios with greater flexibility and lower emotional stress during market volatility.

Actionable Steps for Future Retirees
1. Calculate Baseline Retirement Expenses: Determine fixed living costs and map guaranteed income sources to cover essential expenditures.
2. Adopt Flexible Withdrawal Rules: Implement dynamic spending rules to protect investment principal against market downturns.
3. Incorporate Inflation-Protected Assets: Maintain exposure to dividend-growing equities and inflation-indexed bonds to safeguard long-term purchasing power.

Continue Reading

Personal Finance

Building Generational Wealth: Family Governance, Estate Tax Optimization, and Asset Protection

Published

2 weeks ago

on

August 1, 2026

By

As the largest intergenerational transfer of wealth in history accelerates, high-net-worth families, entrepreneurs, and individual investors are placing heightened emphasis on comprehensive estate planning, family governance, and asset protection. Preserving capital across generations requires a balanced approach combining tax-efficient legal structures with open family communication and financial literacy education.

Optimizing Estate Tax Exemptions and Trust Structures
With potential modifications to federal estate tax exemption thresholds on the horizon, proactive estate planning is essential for high-net-worth households. Estate planning attorneys and wealth advisors are establishing multi-generational trust structures to transfer wealth efficiently while minimizing estate and gift tax exposure.

Popular structural strategies include:
– Irrevocable Life Insurance Trusts (ILITs): Utilizing life insurance proceeds to provide liquidity for estate tax obligations without expanding the taxable estate.
– Grantor Retained Annuity Trusts (GRATs): Transferring rapidly appreciating assets to beneficiaries with minimal gift tax consequences.
– Dynasty Trusts: Preserving wealth across multiple generations while providing long-term asset protection from creditor claims and legal liabilities.

Establishing Family Governance and Financial Education
Legal and financial structures alone cannot guarantee long-term wealth preservation without effective family governance. Financial advisors report that a significant percentage of multi-generational wealth dissipation stems from lack of communication and inadequate financial preparation among heir generations.

Families are establishing formal family governance frameworks, including periodic family meetings, written mission statements, and structured philanthropic foundations. Involving younger family members in charitable grant-making and investment discussions fosters financial stewardship and prepares heirs to manage family assets responsibly.

Digital Asset Custody and Legacy Planning
In today’s modern economy, estate planning must extend beyond physical real estate and traditional brokerage accounts to encompass digital assets. Comprehensive estate plans now include detailed inventories and legal access protocols for corporate domain names, intellectual property, digital media rights, and cryptocurrency holdings.

Fiduciaries and estate executors should be provided with secure, encrypted access mechanisms and clear legal authority to manage and transfer digital holdings in accordance with the owner’s estate directions.

Practical Steps for Legacy Planning
1. Review and Update Estate Documents: Ensure wills, revocable trusts, and power-of-attorney designations accurately reflect current family structures.
2. Establish Structured Trusts: Utilize irrevocable trusts to protect assets from creditors and minimize future estate tax liabilities.
3. Create a Digital Estate Inventory: Document access protocols and legal permissions for all online accounts, intellectual property, and digital assets.

Continue Reading

Trending