Pretend for a moment you’ve won the lottery. What would you do with the money?
Most of us tell ourselves we wouldn’t waste it…like all those other lottery winners. We would invest that money and put it to work. Right?
Guess what — If you’re reading this, you’ve already won the lottery.
Odds are good that you were born in a wealthy country. The odds are also good that you have food, and shelter. You probably even have access to great education and health care.
If your income is greater than $10,000, you already have an income greater than half of the world’s 7 billion people. You’ve already won the wealth jackpot. If you make over $50,000 annually, then you are the 1%.
Don’t complain you don’t have enough — Be thankful for what you have! You already have more than most. You got the golden ticket in life. What you do with that wealth is entirely up to you.
Do you really think you won’t waste it?
Could you use your amazing wealthy status to buy financial independence? Yes, you could! Unfortunately, financial independence is very rare.
The reality is, excess wealth leads to arrogant wasteful behavior. I see it all the time. Waste is everywhere.
As I write this on the 4th of July (U.S. Independence Day), all my neighbors are setting off fireworks. I can’t help but think what a waste it is. Fireworks — lighting money on fire for a quick flash of light, and a little bang.
What does a pack of fireworks cost these days? Maybe $5? (I haven’t purchased any in decades) Most people would probably say it’s not expensive, and think it’s good to celebrate a little.
Try thinking about it this way though — $5 is roughly what half the world’s population makes per day…and we just light it on fire. How dumb is that?
Dumb enough to head back to work on Tuesday.
So much of our wealth is wasted. Wasted on luxury, convenience, and excess. Do people forget that millionaires are made five dollars at a time?
Maybe you’ve seen this kind of waste too. How about in your next door neighbors? You know the ones I’m talking about…
The people with new luxury SUV’s parked in the driveway of that giant McMansion home. The ones that have high incomes and act like it. They spend every dollar they can on the appearance of wealth — New clothes every year, new cars, cable tv, giant flat screen TV’s, expensive cell phones, dinners out, expensive wine, and useless hobbies. The list of excess and waste goes on and on…and yet they’re still working class wage-slaves.
“It’s Not Luck”
One problem with wealth is that it breeds arrogance — Wealthy people frequently believe they are solely responsible for their personal success. Sure, hard work and education are definitely contributing factors….but I believe it’s more likely they were just lucky.
Lucky to pick the right field. Lucky to have been born in the right place, to the right parents, and have the right skin color.
Most successful people don’t believe their success is luck. Go ahead, and ask them…they’ll never say it was luck. They’ll attribute success to long hours at the office and a superior skill-set.
If that same person was born into a third-world country, could they replicate that same level of success? It is highly unlikely!
Whether we realize it or not, most of us 1st-worlders have had incredible luck in life. We got to start-out way ahead of everyone else. Our success was practically inevitable.
Remember that next time you want to go blow your annual bonus.
Wealthy people think they’re smarter than everyone else too!
Surprisingly, wealth is not directly correlated with intelligence. Many of the world’s smartest scientists are not wealthy people. Success in one field does not necessarily mean success in personal finance.
Most readers of this blog come from countries that are supposed to be merit based. In merit based societies, hard work and intelligence are supposed to be rewarded. People with greater intelligence should see greater rewards, right?
Sometimes it works that way, but it’s just as frequently false…the wrong people get rewarded all the time. Plenty of stupid people manage to worm their way into high-paying jobs.
Wealthy people can be stupid just like the rest of us.
Believe it or not, maintaining a high income for a long time is a hard thing to do. The wealthiest income earners in the U.S. rarely maintain a top level income for very long. Top incomes are fleeting…yet individuals behave as if their incomes and lifestyles are sustainable over the long term. They usually are not. This is what I call the “Fallacy of Permanence”.
Jobs are no longer permanent. Jobs come and go. Incomes swing up and down with the economic cycle. I’ve had several opportunities to experience this myself over the years.
Given a successful high-paying job, most reasonable people believe that success and income will continue until age 65. Unfortunately, it isn’t true — Income tends to peak in middle-age (45-54) and begins to decline thereafter. Why does income begin to drop? Possibly because workers begin to retire at that age. It could also be age discrimination, or another reason.
Either way, you’re going to have to live on less (almost 50% less!) at some point in your life. Start getting used to that level of spending now.
If you learn to live (happily) on less, there’s a smaller chance you’ll experience disappointment in your retirement years! You’ll also end up saving more!
The Tako Experience
I live in the Pacific Northwest, not far from the city of Seattle. It’s a pretty wealthy place. There’s lots of technology companies with offices in the area — like Microsoft, Adobe, Amazon, Facebook, and Google.
These tech companies employ a lot of highly paid workers. That in turn, pushes up all salaries in the area.
Sound like a recipe for real wealth creation? In many cases, people are worse-off here. I’ve found that all this success leads to arrogance, waste, and short term thinking.
For example: My neighbors drive a Porsche Cayenne, and live in a four bedroom home (only two people). They work completely normal jobs outside the tech-sector. If they lived in a humble city, they might only drive a Toyota and have a two bedroom condo. But humble isn’t how things work here.
The workers in this area waste their golden ticket on ostentatious displays of wealth. The appearance of wealth, is a waste of wealth. Waste is everywhere. Expensive cars, and fancy houses seem to be favorites.
So, I’m writing this post as a reminder. A reminder to myself, my family, and my readers to stay humble. Don’t get arrogant. Remember the little people. Keep your head out of the clouds. Don’t show off. You’ve been lucky so far, but success is often fleeting.
That gravy train of wealth doesn’t last forever. Are you prepared for when it ends?