Most individuals and entrepreneurs start a business with the excitement of financial freedom and being their own boss to build something meaningful. Everyone knows the obvious business costs, such as rent, payroll and marketing.

However, there are hidden business costs that can erode profit margins, strain cash flow and catch even the most experienced founders off guard.

Related: 4 Expenses You Can Avoid When You First Start Your Company

1. Employee turnover and hiring costs

According to studies, replacing an employee can cost 50% to 200% of their annual salary. This factor is underestimated by many people who face further cost, workflow and productivity loss. Recruitment fees, training, lost productivity and cultural impact all add up.

The reasons why employee turnover is expensive:

• This includes the fees to post a job on LinkedIn and Indeed

• The commission of a recruitment agency (mostly 20-30% of a new hire’s salary)

• Time spent on interviewing and onboarding

• It reduces efficiency as new employees ramp up

To reduce these costs, businesses must invest in retention strategies. You must offer competitive salaries, create a strong company culture and make employees feel valued.

2. Office space and utility costs

Securing office space is a crucial decision for any business, but it’s essential to assess your needs before committing to a lease or purchase. Consider how much space you require now and how it may change as your business grows.

If you’re a startup with an uncertain future, opting for flexible office solutions like Regus, ShareDesk or LiquidSpace can be a cost-effective alternative to long-term leases. These shared workspaces provide scalability without the financial burden of a permanent office.

Beyond rent, there are additional expenses to factor in, including office furniture, equipment, utility bills, receptionist services and meeting spaces.

3. Equipment maintenance and upgrading

As an entrepreneur, you likely know the essential equipment required to provide a service or for item production. But mostly, smaller equipment is ignored. Basic office equipment includes computers, papers, desks, chairs, scanners and copiers.

From office furniture to computers, wear and tear is inevitable. Most companies neglect to replace or upgrade their office equipment, which is a bad idea. Typical maintenance costs include:

• Upgrading outdated computers and software

• Vehicle maintenance for delivery or service-based businesses

• Repairing office equipment like printers, HVAC systems or kitchen appliances

Regular maintenance can extend the life of business assets and prevent costly breakdowns.

4. Software and subscription creep

Most businesses need software to automate communication, project management, accounting and marketing tasks. A few essential subscriptions can quickly spiral into hundreds or thousands of dollars in recurring costs.

Hidden costs include:

To save these unessential hidden costs, conduct regular audits of your software stack to eliminate redundant or unutilized subscriptions.

Related: 8 Unconventional Ways to Cut Costs in Your Business

5. Payment processing fees

Whether you realize it or not, you are paying transaction fees if your business accepts credit card payments. Payment processors like Stripe, PayPal, and Square typically charge 2.9% + 30¢ per transaction, which can eat into profits, especially for high-volume businesses.

Other payment-related costs include:

To minimize fees, consider negotiating rates with processors. You can offer customers ACH, wire payments or pass fees when possible.

6. Regulatory compliance and legal fees

You need to stay compliant to do business in your community. Laws and regulations vary by industry. Mostly, businesses pay for:

• Business licenses and permits

• GDPR or CCPA compliance tools (to handle customer data)

• Employee labor law compliance (HR policies, mandatory training)

• Annual tax filing and bookkeeping

If you ignore compliance, this can result in hefty fines or lawsuits. It can be a cost that should never be overlooked. You must consult with legal experts and keep up with regulatory changes to prevent costly mistakes. Another way is to opt for strategies to reduce your legal liability.

7. Cybersecurity and data protection

You can’t hope that your systems are safe. Cyber threats can be expensive. A single cyber attack can cost a small business hundreds of thousands of dollars in recovery, legal fees and lost customer trust.

Hidden costs of cybersecurity come in the form of:

• Installing a firewall and antivirus software, and doing security audits

• Costs for employee training on phishing and scams

• Ransomware recovery and lost business due to downtime

• Legal liabilities if customer data is compromised

Small businesses are easy targets for cyber threats, so it’s non-negotiable to invest in cybersecurity.

8. Shrinkage and inventory loss

Retail and ecommerce businesses lose revenue due to theft, damaged goods and errors. Known as “shrinkage,” this hidden cost is overlooked but can account for up to 2% of total sales.

What causes shrinkage?

• Shoplifting or employee theft

• Damaged or expired inventory

• Administrative errors in tracking and fulfillment

You can use a strong inventory management system software and opt for loss prevention strategies to mitigate these costs.

9. Marketing and customer acquisition costs (CAC)

To attract new customers, many businesses rely on paid ads, SEO, social media and influencer partnerships. However, the return on investment isn’t always immediate.

Hidden costs in marketing:

• Rising costs of PPC (pay-per-click) ads due to competition

• If the campaign is poorly targeted, it can waste the budget

To lower CAC, focus on organic growth strategies like content marketing, email marketing and referrals.

Related: 9 Business Expenses You Can Reduce or Eliminate to Save Thousands

10. Time

Time is the most undervalued resource. Entrepreneurs spend countless hours on admin tasks, customer support and problem-solving instead of revenue-generating activities.

You can reclaim time by:

• Automating repetitive tasks with software

• Delegating or outsourcing an employee for non-core activities

• Setting boundaries for yourself to prevent burnout

Your time is an investment; spend it wisely to maximize efficiency and profitability.

I recommend setting aside 20% of your revenue for unexpected expenses to prevent financial leaks before they become serious problems. Budget for the real costs, not just the obvious ones.

To celebrate the launch of my new book, Millionaire Milestones: Simple Steps To Seven Figures, on May 6, 2025, I thought it’d be fun to explore various millionaire topics leading up to the release.

For most millionaires, owning the nicest house they can afford is a top priority. Given that many of us are still spending more time at home post-pandemic, the intrinsic value of a home has gone up. And for millionaires with kids or a lot of furry friends, a spacious house on a large lot can feel like a necessity.

So in this post, let’s explore a fun question: How much income and net worth do you need to afford a $10 million home?

This topic is particularly interesting to me because I love real estate. When I purchased my current home in Q4 2023, I told myself I’d reached the top of my property ladder and didn’t want to climb higher. But there’s no harm in running the numbers just in case the economy roars back or I get lucky with an investment.

Minimum Income Necessary To Afford a $10 Million Home

When it comes to buying property responsibly, I like to follow the 30/30/3 home buying rule:

Rule #1: Spend no more than 30% of your gross income on your monthly mortgage payment.

If you’re financing the home, make sure the monthly mortgage doesn’t exceed 30% of your gross income. If you’re paying all cash, you should easily fall below this threshold.

Rule #2: Have at least 30% of the home’s value in cash (20% for the down payment, 10% as a buffer).

For a $10 million house, that means:

• $2 million for a 20% down payment
• $1 million as a cash reserve or liquid investments

This buffer is your safety net in case of job loss, an unexpected expense, or a major home repair.

Rule #3: Spend no more than 3–5 times your gross annual income on the purchase price.

Ideally, you’d earn at least $3.33 million a year to buy a $10 million home responsibly. That’s the 3X rule in action. You might stretch it and buy the home on a $2 million income if you have strong income stability and growth potential,but that’s a calculated risk.

Stretching to 5X your income means you’ll likely feel financially tight for at least the first year. If you go this route, here’s how to survive the most dangerous period after buying a home.

Minimum Net Worth Required To Afford a $10 Million House

After owning multiple homes over the past 22 years, I’ve found the sweet spot for your primary residence as a share of your net worth is no more than 30%. Ideally, it’s closer to 20%.

If you’re shopping for a $10 million home, this likely isn’t your first rodeo. You probably already have significant wealth and other investments. In contrast, the average American has over 70% of their net worth tied up in their primary residence.

A $10 million buyer might be:

• A successful entrepreneur
• A senior executive at a financial institution
• A partner at a top law firm
• A celebrity or professional athlete
• A well-connected or corrupt government official who can trade with insider information

If your house represents more than 30% of your net worth, you’re at greater risk of financial stress during downturns, just like what happened during the 2008 Global Financial Crisis.

If your primary residence represents less than 10% of your net worth, you may be under-living relative to your financial capacity. That could be a sign to spend a little more on yourself or consider giving more away.

Ideal Net Worth Range

To feel financially secure with a $10 million home purchase:

• Minimum net worth: ~$33 million (30% allocation)
• Ideal net worth: ~$50 million (20% allocation)

With a $50 million net worth, you could comfortably pay cash or take on a smaller mortgage. Even if you take on an $8 million mortgage at 6%, your monthly payment would be about $48,000—easily manageable at this level.

Combining Ideal Income and Net Worth

Here’s a quick reference guide to safely buying a $10 million home:

If you only meet the minimum income requirement, make sure you have at least the recommended net worth. Conversely, if your net worth is on the low end, you’ll want your income to be on the higher side. Here’s a more comprehensive chart that highlights more homes at different price points.

Put Down More Than 20% If You Want To Buy A $10 Million House

If you’re planning to buy a $10 million home, it’s wise to put down more than just 20%. Most people I know buying homes in this price range are putting down 50%+, often paying all cash.

Why? Because many high earners making over $1 million a year don’t have high base salaries. Instead, their base is typically in the $250,000–$500,000 range, with the rest coming from stock grants and year-end bonuses. Banks may not fully recognize these forms of income when underwriting large mortgages given they are highly discretionary.

In today’s still-high interest rate environment, all-cash offers are also more attractive to sellers and more practical for buyers. Here’s what a mortgage would look like at 6%:

• $8 million loan = ~$47,000/month
• $7 million loan = ~$42,000/month
• $6 million loan = ~$36,000/month
• $5 million loan = ~$30,000/month

While these payments may be affordable if you’re making at least $2 million a year ($166,667/month), sticking to the rule of spending no more than 30% of your gross income on housing suggests a monthly cap of $50,000. That’s cutting it close with an $8 million loan.

The Ongoing Cost To Own A $10 Million Home

Owning a $10 million house doesn’t just mean a big upfront purchase, it means consistently large ongoing costs as well. Property taxes alone can range from $40,000 to over $300,000 a year, depending on your state. Hawaii offers the lowest property tax rates, while states like Illinois, New Jersey, and Texas are among the highest.

Beyond taxes, the cost to maintain a $10 million home adds up fast:

• Higher heating and utility bills
• More expensive homeowner’s insurance
• Increased maintenance and repair costs
• Costly landscaping and cleaning services
• A larger mortgage payment (unless paid in cash)

And let’s not forget furnishing the place. It could cost well over $200,000. The bigger the house, the more expensive it is to make it feel like home. When something goes wrong—like a roof leak during a “Bomb Cyclone” as I experienced—it becomes much harder (and more expensive) to fix.

When evaluating a $10 million home, don’t just focus on the sticker price. Consider the cost of maintaining a $10 million house every year. Then factor in the opportunity cost of tying up so much capital in a primary residence that’s not generating income.

These ongoing costs are why you must follow my income and net worth guidelines by home price. If you don’t, your home could take you under.

Related: What’s It Like Living In An $18 Million Mega-Mansion?

$2.5 Million Income Family Budget Owning A $10 Million Home

Here’s a realistic breakdown of a family of four living in a high-cost area, earning $2.5 million a year:

• Home: They put $3 million down on a $10 million dream home, taking out a $7 million mortgage at 6%, which costs them $504,000/year. Add ~$149,000/year for maintenance, taxes, insurance, and landscaping, and the total housing cost is around $653,000/year.
• Kids: Their two children attend private grade school for $130,000/year, plus $5,000 in donations.
• 529 Contributions: They contribute $19,000/year for each child.
• 401(k) Savings: Each parent maxes out their 401(k) at $23,500/year (2025 limit), working toward millionaire status.

Despite the high expenses, they manage to save $373,140/year in their taxable brokerage accounts and have a $1M+ buffer in cash and liquid stocks for emergencies.

But here’s the risk: If one parent loses their job and household income drops by 50%, the family could be in serious trouble. Bear markets don’t just bring down investment portfolios—they also increase the risk of job loss.

Even a $5 million net worth, the absolute minimum I recommend to own a $10 million home, may not be enough. It all depends on how that net worth is structured. For instance, if $3 million is tied up in home equity and $1.8 million is in illiquid company stock that vests over three years, then having just $200,000 in cash won’t go far given their high burn rate.

Realistically, to own a $10 million home with minimal financial stress, a net worth closer to $33 million is more appropriate. At that level, you can weather market volatility, job loss, and unforeseen expenses. If you can’t sleep peacefully at night in your mansion, then what’s the point?

Should You Buy a $10 Million Home?

The best time to own the nicest house you can afford is when your kids are still living at home. So, I get why some of you might be browsing $10 million+ listings online. It’s fun to dream, and maybe you’re even serious about upgrading.

But even if you earn $2 million or more a year, I’m not convinced it’s worth buying such an expensive property. The upkeep alone can be a major downside, especially if the home wasn’t well built. I know a couple of people who bought $10+ million homes and ended up spending years trying to fix persistent leaks. What a nightmare.

Consistently making over $2 million a year is also no easy feat. You can ride a hot streak for a while, but the economy moves in boom-bust cycles. I saw this firsthand during my banking days, and I see it now as a small business owner. One year you’re up, the next you’re trying to stay afloat.

That’s why I believe you need a net worth of at least $33.3 million before buying a $10 million home. Your net worth is more reliable than your income, but even then, it’s not bulletproof. Just look at 2025, when tech stocks dropped more than 20%. If $30 million of your $33.3 million net worth was tied up in the Magnificent 7 companies, you’d be staring at a $6 million loss. Ouch.

Another factor: what are you upgrading from? If you’re jumping from a one-bedroom apartment to a 6,000-square-foot, six-bedroom mansion because your AI company IPO’d, that’s probably overkill. But if you’re trading up from a $5 million, 3,900-square-foot home with four bedrooms, the jump may be more reasonable. Further, you’ll have the experience to actually make use of the extra space.

For the sake of adaptability and long-term appreciation, a good rule of thumb is not to upgrade your primary residence by more than 100% in price. Beyond that, the risks and complexities start to outweigh the rewards.

A Better Way To Live In A $10 Million Home

While you’re working on building your income and saving up a down payment for that dream $10 million house, consider a smarter approach: invest in real estate to keep up with the market, without overextending yourself.

You might want to follow my BURL strategy, which stands for Buy Utility, Rent Luxury. The idea is simple: invest in properties that generate high rental income, and rent the luxury lifestyle instead of buying it.

If you follow this strategy, you could generate enough passive income to rent a $10 million home—and still have money left over.

For example, instead of buying a $10 million house at a 3% cap rate, which would generate just $300,000 a year in rental income, you could rent that same house for $300,000 a year. Then, invest the $10 million in higher-yielding multifamily properties at a 7% cap rate, and earn $700,000 a year in passive income.

After covering your rent, you’d still have $400,000 before taxes to spend or reinvest. Plus, your investment properties could appreciate over time, especially if they’re located in fast-growing, more affordable 18-hour cities.

By using the BURL strategy, you’re optimizing your capital and your lifestyle.

Order My New Book: Millionaire Milestones

If you’re ready to build more wealth than 93% of the population, grab a copy of my new book, Millionaire Milestones: Simple Steps to Seven Figures. With over 30 years of experience working in, studying, and writing about finance, I’ve distilled everything I know into this practical guide to help you achieve financial success.

The reality is, life gets better when you have a lot of money. Financial security gives you the freedom to live on your terms and the peace of mind that your children and loved ones are taken care of. You might even consider buying your $10 million water-view mansion on a large plot of land after reading my book.

Before you get to a $10 million net worth, you first have to reach the $1 million milestone. Millionaire Milestones is your roadmap to building the wealth you need to live the life you’ve always dreamed of. Order your copy today on Amazon and take the first step toward the financial future you deserve!

Earn More Passive Real Estate Income

Check out Fundrise, one of the leading real estate crowdfunding platforms with over 380,000 investors and approximately $3 billion in assets under management. With the economy in turmoil and stock market volatility running high, there’s a growing flight to more stable assets like real estate to help weather the storm.

Since 2016, I’ve invested about $1 million across various private real estate funds and deals to diversify away from my costly San Francisco real estate holdings. My goal has been to generate more passive income and capitalize on long-term demographic shifts toward the Sunbelt, where Fundrise concentrates much of its portfolio.

Fundrise is a long-time sponsor of Financial Samurai, and I’ve personally invested over $300,000 on the platform to date.

The Minimum Income And Net Worth Needed To Buy A $10 Million Home is a Financial Samurai original post. All rights reserved. Join 60,000 others and sign up for my free weekly newsletter here.

As Earth Day kicks off, it’s a great reminder for small and medium-sized businesses (SMBs) to rethink how to approach their ESG (Environmental, Social and Governance) practices when it comes to the tech they use. SMBs are the backbone of the global economy, making up approximately 90% of businesses worldwide and are responsible for 60-70% of global industrial emissions. That’s a huge environmental footprint, but it also means SMBs are uniquely positioned to drive real change.

With the global creation of e-waste projected to reach 82 million tonnes by 2030 and the demand for AI-powered computing on the rise, SMBs have a powerful opportunity — and responsibility — to lead in energy efficiency best practices, leveraging long-lasting, mindful materials and ethical sourcing. By making smarter, more energy-efficient decisions today, businesses of all sizes — especially SMBs — can help reduce e-waste, lessen their environmental impact and help build a more environmentally responsible, innovative digital future for generations to come.

Here’s how small businesses can start making a lasting impact — one smart decision at a time.

Related: 6 Ways to Profitably Integrate Eco-Friendly Practices into Your Business

Cut energy costs with AI — without sacrificing performance

SMBs often face hurdles like limited resources and the high upfront costs associated with more sustainable technologies. However, innovations are now helping level the playing field.

The rise of AI-powered computing can support broader ESG and sustainability ambitions through smarter energy use. For example, AI-enabled laptops today feature intelligent power optimization algorithms that dynamically adjust energy consumption based on workload, helping systems run more efficiently without drawing unnecessary power. Many SMBs are also exploring into AI to streamline operations — 89% are already using AI tools to automate tasks. This isn’t just about saving time, it’s about reducing energy and resource waste across workflows.

Beyond end-user devices, AI is driving greater efficiency across infrastructure. AI-powered enterprise solutions can help data centers manage workloads more intelligently and reduce energy use. And with the edge computing market expected to grow nearly 37% annually through 2030, there’s a growing emphasis on localized processing that limits energy-intensive data transfers. Meanwhile, improvements in liquid cooling, airflow design and modularity are extending device lifespans and supporting more circular approaches to IT. We’re also seeing more tech manufacturers incorporate plastic-free packaging and energy-efficient designs, aligning innovation with evolving sustainability goals.

By integrating AI into energy and infrastructure management, businesses have more tools to drive efficiency and help reduce waste.

Related: How AI Is Leveling the Playing Field For Small Businesses to Compete With Industry Giants

Advance circular economy practices

Sustainability isn’t just about how tech is used — it’s about how it’s made, used and reused. For SMBs, embracing circular economy practices can be one of the most impactful ways to improve resource efficiency, reduce both cost and environmental impact.

One of the most straightforward steps is investing in technology that incorporates recycled materials. Choosing laptops and desktops that include post-consumer content (PCC) plastics or recycled metals can help reduce reliance on virgin materials and supports more responsible sourcing practices. As of 2025, a growing number of Fortune 500 companies have made public commitments related to climate action. A World Economic Forum report cites that specifically, 78% of Fortune 500s have set climate-related targets, though only 12% have established objectives tied to biodiversity loss. This gap presents both a challenge and an opportunity for businesses — especially small and midsize ones — to lead by example. By choosing smarter technology solutions and services, SMBs can align with their broader sustainability goals while distinguishing themselves in a competitive market increasingly driven by conscious consumerism.

Beyond PCC plastics, some tech products now integrate ocean-bound plastics (OBP) — plastic waste collected from areas near coastlines and waterways where it is at risk of entering the ocean. By selecting devices and accessories that utilize OBP, SMBs can help address marine pollution while minimizing reliance on virgin plastic sources. Responsible sourcing and design choices like these are part of building more sustainable technology ecosystems.

Modular and repairable technology also plays a key role. Devices that are easier to upgrade or fix extend their usable life, helping reduce the need for early replacement. This is especially important because less than 12% of e-waste is currently recycled, while more than 85% is incinerated — often with environmental consequences. This waste stream makes durability and repairability more crucial than ever.

Finally, SMBs can also consider buy-back, refurbishment and device take-back programs to ensure tech stays in circulation longer. This approach not only can help reduce landfill waste but often unlock financial savings and potential incentives.

Related: 5 Trends Small Business Owners Need to Watch in 2025

A greener future starts with smarter choices

SMBs have a unique opportunity and influential role in shaping a more sustainable future. By embracing energy-efficient technologies, integrating artificial intelligence to optimize operations and adopting circular economy practices, SMBs can make strides towards significantly reducing their environmental footprint while simultaneously enhancing operational efficiency. These strategic choices not only contribute to global sustainability goals but also position SMBs competitively in a market increasingly driven by environmental consciousness.

This Earth Month, let’s reaffirm our commitment to being smarter, greener and more responsible when it comes to choosing our technology solutions — because the future of computing must be both responsible and innovative.

The next step starts today. How will your business lead the way?