When you read about self-made millionaires and billionaires, it can often seem as if their success was an inevitable result of their tenacity and savvy decisions. But sometimes those choices are less savvy and more borderline irresponsible — and it would be foolhardy for most of us to try some of these stunts in our own lives.
The stories of people going from rags to riches may be inspiring, but most of us need to remain practical. That’s why you should avoid copying these four life decisions successful millionaires have made. (See also: 5 Bedtime Routines of Famous Financial Gurus)
Dropping out of high school
There are a number of hugely successful individuals who did not complete their high school educations, and it did nothing to stop them from reaching the top of their fields. For instance, Wendy’s founder Dave Thomas, Tumblr developer David Karp, director Quentin Tarantino, and Virgin Atlantic founder Richard Branson all dropped out of high school and still went on to become multi-millionaires.
Yes, these millionaires were able to build wildly successful careers without completing their formal educations, but it’s a mistake to assume that most people can emulate their irregular paths.
To begin with, a worker without a high school diploma earns an average of $520 per week, according to the Bureau of Labor Statistics. Assuming a year of constant earning (which is not necessarily the case, as many workers without a diploma cannot count on steady employment), this works out to $27,040 annually. Just completing high school means a bigger paycheck, as workers with a diploma earn a median weekly income of $712, or $37,024 per year.
In addition, high school dropouts have the highest rate of unemployment in America at 6.5 percent. Workers with at least a high school diploma have an unemployment rate of 4.6 percent, while the national unemployment rate is 3.8 percent overall. Clearly, completing your high school education is one of the surest ways to ensure financial stability.
This is why Dave Thomas, the founder of Wendy’s, earned his GED in 1993 at the age of 61. He described dropping out of high school as one of the worst mistakes of his life, and he did not want his subsequent success to encourage young people to quit school. (See also: 10 Surprising Ways a College Education Will Improve Your Life)
Putting your life savings into your business
From Elon Musk, who funneled the money that he earned from the sale of PayPal into Tesla and SpaceX, to Sara Blakely who put the $5,000 she had managed to save from her sales job into the business venture that became Spanx, there are a number of successful entrepreneurs who gambled their own funds on their business ideas. Between these inspiring stories and the prevalence of such gambits working out in movies, it would be easy to assume that being willing to put your own money into a business venture is the secret to entrepreneurial success.
The problem with this assumption is that it ignores the scores of would-be entrepreneurs who don’t succeed. Half of all new businesses fail within five years, and only a third are around after 10 years. For every Elon Musk and Sara Blakely out there, there are several business owners who put their own money into a venture that flopped. (See also: 3 Ways to Fund Your Business Without Touching Savings)
Such business owners may have solid business ideas and just as much drive — but without a healthy dash of luck or opportunity, they may be stuck declaring bankruptcy after putting all of their own money into the business.
Living on credit cards
Novelist Lisa Scottoline got divorced soon after her daughter was born, and she wanted to be able to stay home with her child. She had previously been a trial lawyer, and the long hours made it a difficult job to continue as a single mother. Instead, she wanted to become a writer of legal thrillers. So Scottoline took a major gamble:
I supported myself on credit. I had five credit cards with about $10,000 each available. I said to myself, ‘You have $50,000 to get published.’ I got to $38,500 in debt. I went back to being a law clerk for money and a week later my first novel was sold.
Scottoline’s decision to live off her credit cards paid off. She is now the successful author of nearly 40 books, many of them of New York Times best-sellers.
However, as tempting as it may be for starving artists, musicians, writers, actors, and other creative types to follow Scottoline’s example by living on plastic until the artistic career takes off, it would be irresponsible to do so. It’s important to remember that Scottoline was a successful attorney before taking her big risk. Had her plan to become an author not panned out, she had a high-income career to fall back on, which meant she was never in serious danger of running up a debt she couldn’t pay off. Most budding creatives cannot say the same. (See also: 6 Scary Facts About Credit Card Debt)
Gambling in Vegas
Fred Smith, the founder of Federal Express (now known as FedEx), would not currently be bringing in profits of $4.4 billion if it weren’t for a remarkably lucky game of blackjack.
Smith started the company in 1971 with a $4 million inheritance, as well as $80 million in loans and equity investments. But by 1973, the company was struggling. When the company’s funds diminished to a mere $5,000, it meant that there was not enough money to fuel the planes for the coming week. So Smith took that money to Vegas and used it to play blackjack.
Miraculously, he won. His lucky blackjack game turned that $5,000 to $27,000, which would cover the coming week’s fuel needs. Though it did not solve all of FedEx’s cash flow problems, Smith saw his lucky break as motivation to seek more funding.
Smith was sanguine about his decision to gamble the last of the company’s money. He knew that they would not be able to fly the following week without more money for fuel, so leaving the money in FedEx’s coffers would have spelled the end anyway.
Needless to say, this is an irresponsible way to run a business. Smith is lucky that his literal gamble succeeded, but he easily could have lost everything. (See also: 6 Ways Greed Is Keeping You Poor)