In his bestseller, The Number (2006), Lee Eisenberg relates the story of a man who outlined for him what somebody else told him [AJC: already, this sounds like an Urban Myth] about what it takes to be rich:
This is really interesting, because it matches what I was told when I began my Journey (to $7 million in 7 years) by a well-known finance guru; at the time, he said [AJC: paraphrasing; my memory’s not THAT good!]:
In order to live a ‘rich’ lifestyle (i.e. you can drive the cars you want, live where you want, travel whenever and wherever you want) you need an income of at least $250,000 per year.
Now, that was back in 1998 … so, when I bumped into him a year or two ago, I reminded him of what he told me then, and asked him what he thought the ‘number’ was now: he said “$500,000” [AJC: that’s per year].
In fact, that $250k (times the 20 multiple that he also told me that I needed) was the exact basis for my $5 million Number, because I didn’t know how to calculate it any better (then) … and, along with discovering my Life’s Purpose, started the journey that totally changed my life.
Seeing this table, excerpted from Lee Eisenberg’s book [AJC: which, he admits ripping from somebody else … apparently, that’s how these ‘rules’ get written!] only reinforces that … so, just decide whether you want to be “comfortable” (or, “comfortable+”), “kind of rich”, or plain ol’ “rich” and your Number is virtually set!
Which brings me back to the question of whether CEO’s are rich, in the first place?
[AJC: we already know the Fortune 500 CEO’s are, but what about the ‘ordinary’ CEO’s of all of those small-to-medium-size businesses out there?]
Really, it’s only the CEO’s of those businesses (and, their highly-deserving legal advisors) who can even claim to be “comfortable+”.
Most senior management in these businesses can only claim to be ‘comfortable”, at best …
… so, the real reason why most CEO’s aren’t rich is that they simply don’t earn enough!
My question to you is:
If you know your Life’s Purpose, and if you know your Number (particularly if it’s a Large Number / Soon Date) why are you wasting your time:
– kissing up to your boss,
– back stabbing your work mates, and
– running ragged for your company’s customers?
… just to have the slightest-possible-chance of getting to the ONE job in the WHOLE company that ONLY makes you “comfortable+” AT BEST?
Seems silly to me …
When I crunched those odds (way back in 1990), I very quickly made a rush for the Exit Door at my high-flying corporate job 🙂
Great post- as a CEO of a small company I can say that I feel comfortable+ to Kind of Rich- but it’s because I live in a very low cost living part of the world. For example in May I spent 3 weekends at nice hotel / island resorts, for about $2K for the month.
In the US I’d be comfortable only so you are right in shooting for a higher level of wealth.
And you’re right- there is only a few people at the top and they aren’t necessarily making all that much!
i think i’ll keep my job for the interim. how much cash do you need to buy a property and rent it?
Ill Liquidity – How long is a piece of string? 😉
The pat answer to your question used to be NOTHING i.e. no money down. But, those types of deals are harder to find with the bank’s effectively out of the picture (you’ll be lucky to get away with less than 20% – 25% down these days).
Fortunately, there is still plenty of stock around at cheaper prices than a couple of years ago.
Wow, I can see how inflation sure digs into those numbers. Having 250,000 in 1998 does not get you as far it would now.
Salaries have certainly not increased at the same rate (except for sports figures and Fortune 500 CEOs), so gaining wealth though a job can’t be the answer.
But, if you are able to save enough money with your “day job”, it can be a good way to leverage other projects, right?
I keep running the numbers on the amount that my wife and I deposit into our 401K (retirement plans) and additional savings. We can just exceed the “comfortable+” level, but in 20 years that certainly will just become “comfortable-“.
I guess that’s why I’m still working through your course (just slowly).
This was a great post Adrian,But I think the income your quoting is the salaries right? it does not include any income they might be bringing in from other places ,I.E. Real Estate holdings, or bonds or others.
So, some of these C.E.O’s might be a bit more than comfortable,if they were able to make a few good investments through the years.
“if you are able to save enough money with your “day job”, it can be a good way to leverage other projects, right?”
@ Neil – Right on! [yes, I am that old] …
In fact, I see only two reasons to have a day job:
1. To save up enough to buy your first house, and
2. To save up your first investing and/or business ‘war chest’.
@ Steve – my follow up post assumes at least $500k of ‘savings’ with 20 years of ‘normal’ working life to go … stay tuned!
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Base on your reasons of having a day job, are you suggesting that one should look for those that render the high earning potential, like commission sales job, regardless of the relevant experience to the business venture?
I stopped kiss up to my boss a long time ago. I’ve turned down promotions and projects because the salary increases did not justify the added stress and responsibility – yep I used those exact words.
Only getting 0-3% yearly increase – no problem.
My current job goal is save enough money to buy a four-plex rental. 🙂
I think it really depends on your job whether you should quit or not. There are jobs out there – outside of being a top dog at a Fortune 500 – that pay well north of that SMB CEO list and allow you to hit a number in the Comfortable + / Kinda Rich bracket before you turn 45.
Not many, but they exist: certain legal jobs, various bankers, consultants, …
According to the chart- I need about 5 million
“In fact, I see only two reasons to have a day job:
1. To save up enough to buy your first house, and
2. To save up your first investing and/or business ‘war chest’.”
I have #1 out the way and working on #2
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