$100 > $1,000,000 (not a typo…)

I fully intend to have $1,000,000 in the bank one day. Not literally in one bank, spread across many types of investments and accounts, but you get the point. One day, I will be a millionaire.

So many people spend a lifetime chasing what seems to be the elusive goal of becoming a millionaire, only to fail in the end. The thought process usually becomes “if I only made more money” and while making more money certainly helps achieve the goal, it is only half (or less) of the equation. The other half, which is usually widely neglected, is your personal spending habits.

Now, this isn’t going to turn into some published for the thousandth time article that tells you to cut down on the frappucinos, which I’m sure you have read more than once. Instead I am going to share with you one of my personal philosophies on how I think about money.

Regard $100 more than you do $1,000,000

That’s right; treat one hundred dollars today as more than one million in the future. Many people tend to spend $100 without much thought, and a good portion of those will drop $1,000 without much more. And let’s face it, one million is kind of an arbitrary goal to have and probably won’t be enough for you to retire with anyway. Don’t treat saving $1,000,000 like it is impossible and something you will never achieve, think of it in terms of a lifetime and it is actually pretty small.

Millions of people will bring home probably twice that amount during their working lifetime. Think about it, if you bring home a net income of $50,000 a year working for 20 years, you will have made one million dollars. Most people work more than 20 years before they retire and eventually end up bringing home more than $50,000 net per year. Couple this with any income provided by a spouse, and suddenly your earning power doesn’t seem to be the problem.

Read the 1st two paragraphs of this article as some food for thought: http://usgovinfo.about.com/od/moneymatters/a/edandearnings.htm

I could probably make the argument that spending habits actually matter more than income when used to measure a person’s wealth. However, I don’t have any academic studies to reference proving my point…all I need to do is look at the many celebrity actors and music stars who once had millions and are now broke.

Remember when you were a little kid and thought $100 was almost an unimaginable amount of money, what happened to that feeling as we got older? Somewhere along the line it was lost, and the ability to spend freely took over. The next time you are about to make a purchase over $100, do your best to remember that feeling and give the purchase a little extra thought. Is it an item you really need, or really really want*? If you do this, I bet you will see that ever elusive $1,000,000 much sooner.


*Quick Tip: Before buying something you want, wait a week. Or better yet, wait a month before actually buying it. Most of the time the feeling will wear off and you will either not want the item anymore, or want it much less. If you still want it after that time frame and you can justify it, go ahead and buy it. Using this little trick will help you save and cut down on impulse purchases.

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2 thoughts on “$100 > $1,000,000 (not a typo…)

  1. Love this article Cole–just did a quick re-read to inspire myself. I think the root problem is that we find ourselves inflicted by the relative value of money. As you said, while we’re young we can’t even fathom $100. Do you know how many baseball cards I would have bought?! As we get older, we see that the things we want(and need) cost more and more. We can certainly afford to live comfortably but we still have that lizard brain desire that makes us forget to act rationally. We end up spending our paycheck consistently buying $5 cups of coffee and $8 beers instead of thinking like a normal human being and saving a chunk of change.

    I love coffee but not as much as my wallet has indicated. Good stuff.

    • Thanks man, I appreciate the positive feed back! $8 beers and $5 lattes certainly don’t help the problem but I think a core issue for many people is their high fixed expenses. Big house, nice car, cable with all the movie channels, etc…keep those high priced monthly payments in check and the $8 beers every now and again become much less of an issue in the long run.

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