When I’m Rich

An idea that I think may be uniquely American is that almost everyone has a belief that they will be rich someday. Ask any kid in 7th grade to describe their future and more often than not it’s not “be a fireman” anymore but “when I’m rich I’ll…”. Even 40 year old adults I talk to still say “when I’m rich”… I think this attitude is what makes our country have so many entrepreneurs and innovators, but is the goal even worth it?

TV glorifies the rich lifestyle constantly, if you were to go by MTV, one would think that more people are rich than not. According to TV being rich is about having a giant house, tons of flashy cars, and a private jet. So many people aspire to this ideal of never working again, that millions of dollars are thrown away on lottery tickets, but let’s think about the reality for a moment.Image via http://www.flickr.com/photos/28125001@N04/4325471130/in/photolist-7AeaSs-h99jB3-7NKNTv-7NKNai-fiHBM4-8vdYkK-7JecM7-7Jaekn-7Jeavf-7Jeb99-7JeaPu-7JebK9-7JafsF-7AmqeV-chgMiL-7AmaTZ-7AmqCP-7AdXN1-8vdY1k-8vdYEH-7NPKBw-dVzkx1-a6V2FN-9NUy4i-eMwmr4-a7ziNQ-cQQzTu-853NNp-dVtAET-dVtCUa-8vdZQn-8vdZs8-e4rggz-f4br29-dzdTY6-f4a1QZ-f3W1CX-f4bvT7-7AafZ2-7Ae9Zs-ax6fa6-7Ae2gC-7AapHF-8vh2LW-f3W28D-f4nZZb-7AqbLb-7Aq1Vo-7AmpMB-98CV3p-7Ameo8

Let’s say your wish is granted and you are rich (forgetting the long odds on this actually happening). Describe what you’ll do. Some will say “Oh I’ll travel the world”. Great, when you get home then what? Others will say “I’ll buy the cars of my dreams”, great you bought the cars, now what? Who will you drive them with when all your other friends are at work? After you travel the world what will you do with your day? “Well, I’ll never work again!”, The reality is most people who become rich eventually end up working a 9-5 (or usually more) job again. The difference is that they can choose to work wherever they want.

So if we think of the primary benefits of being rich, it really comes down to:

  1. Being able to do what you choose
  2. Being able to afford to do whatever you want

When broken down like that, isn’t it possible to achieve these goals without hundreds of millions of dollars? What if I told you that you could live like a rich person while still working a normal job.

The key is understanding your needs, and understanding what you really want. What are things most people need?

  1. Shelter (and heat, electricity, etc…) (~$1500 per month)
  2. Food (~$400 per month)
  3. Transportation (~$200 per month)
  4. Communication (~$100 per month)
  5. Clothing (~$50 per month)

Would you agree if you could meet at least those basic needs you would have a minimal standard of living? It doesn’t take much to achieve these five things in America. It’s hard for me to envision a budget for these items even in an expensive city like New York being more than $2,500 per month for a family of two. In a city like Pittsburgh where BudgetSimple is based, it could be done for less. But $2,500 per month is only something like $30,000 a year? Why do people struggle on $60,000 a year? And households making $100,000 a year certainly don’t feel rich.

It’s partly because we as a society have established a new baseline of “needs”. Here’s what your typical family assumes they need to have:

  1. 2 (or more) new cars (and the gas to fill them)
  2. HD Cable w/ DVR
  3. Housing in a “nice” area
  4. Clothing updated each season
  5. The latest smart phones for every family member
  6. The latest electronics and gadgets
  7. Expensive personal care (hair, makeup, pedicures, etc…)
  8. Student loans from fancy school
  9. Entertainment (Dining out, movies, music, etc…)

And in many cases we need this stuff now. You just moved into a nice neighborhood, so you need to buy a nicer car and nicer furniture, etc… So you put it on credit and then a major expense is our debt. And as you make more money, instead of being happy with the surplus, you typically convert it into nicer stuff. So instead of a new Ford, you now have a new BMW. Has your happiness increased?
Image via http://www.flickr.com/photos/93448689@N02/9684265949/in/photolist-fKLoSz-7QwnBY-8Mc8wj-8jMmWG-8jMnuN-8M95iz-8M8ESF-8M8Gwe-8Mced9-8MbJbj-8Mc9LN-8McceY-8M97KH-8M8Ma8-8M8Jfz-8M8H6K-8Mc6CY-8M9aVF-d6YnFL-d6YodC-cKFo1L-8MbPeo-8M8WT2-8MceG5-8MbF8f-9gzwku-8M8ZYp-az2PQ6-az5un7-8M8Q1p-8M9R6R-8MbTjs-8MbQgC-8M8Rev-8MbQKW-8M98VR-8M8JQH-8M8EdK-8M9aet-az2Q86-az2PsK-az5u2u-8M8Xrc-8Mc7ey-8Mc58u-8Mc4gA-8M8ZaF-8Mc1VY-8MbNCY-8MbVqf-8MbXT3
But what if we could learn to live closer to our basic needs? If you’re able to find happiness with a $30k expense budget, as you get raises, you’ll have more money to invest (instead of spend). And the more money invested, the more able you are to tell your boss to “take a hike”, giving you more choices in what you do. As a side effect, you now also have enough money that you don’t need to think so hard about purchases. What’s this, you’re living like a rich person without being rich?

So what’s my point? Stop dreaming of being rich. Glorifying the rich lifestyle makes you poor because you try to get some piece of the rich today in the form of a new car or nice clothes. If you accept that even the rich choose to work, and your goal is to have more choices in life, what does it take for that to happen? Ask yourself what really makes you happy in life and what you are getting just to feel better about yourself temporarily or keep up with the Joneses. Once you get to that level, don’t add new things or higher quality things as you get a raise, instead invest the extra money and retire way early.

It’s easy to convince ourselves that acquiring goods or impressing our friends is the key to happiness, but this is almost always temporary, imagine the true joy you’ll have in being able to do whatever you want.