I love (not!) these “secrets of how a millionaire thinks” types of articles, like this one called 10 Things A Millionaire Won’t Tell You [AJC: actually, this one really is quite interesting] …
… the problem is that they mix the poor millionaires in with the rich ones!
I’m not sure that I can define a ‘rich millionaire’ for you (seems like a tautology, but isn’t), but it’s something GREATER than $7 million, because I don’t ‘feel’ rich yet. Wealthy, yes. Wealthy enough to live my Life’s Purpose without ever needing to work again … just.
Extravagant, no … but, it would seem extravagant to you, wherein lies one of the problems: you may consider house with swimming pool and tennis court extravagant now. You may consider private schooling for your kids extravagant now. You may consider a BMW M3 Convertible and a Lexus Hybrid extravagant now.
But, when you become a ‘millionaire’ you won’t: you’ll expect the house + a second home in the country. You’ll expect the BMW and Lexus on the street + the ‘exotic’ in the garage. And, you will only want the best for your kids (unless you already live in a top public school district … then, watch your land taxes!).
You need to pin this down … now … when you are working on your required annual living expenses. Inflate this by 4% per year until you expect to retire (a.k.a. begin Life After Work). Multiply by 20. Add in your one-time costs (e.g. house/s). There’s your Number.
Which brings me back to my point; as the article says:
Some 10 million households have a net worth above $1 million, excluding home equity, almost double the number in 2002. Moreover, a recent survey by Fidelity found just 8 percent of millionaires think they’re “very” or “extremely” wealthy, while 19 percent don’t feel rich at all.
A millionaire, these days, can ‘safely’ spin off about $30k to $50k a year. That’s it.
If that makes me rich, then I was rich when I was still working my first job in my mid-twenties.
So, what does it take to truly feel rich, these days. Somewhere north of $7 million …
… Fidelity says the ‘magic number’ is about $23 million [AJC: citation needed; can anyone find the original Fidelity source for this?] before fat boy gets thong girl.
I won’t argue with that! 😉
. You may consider private schooling for your kids extravagant now. You may consider a BMW M3 Convertible and a Lexus Hybrid extravagant now.
But, when you become a ‘millionaire’ you won’t: you’ll expect the house + a second home in the country. You’ll expect the BMW and Lexus on the street + the ‘exotic’ in the garage. And, you will only want the best for your kids (unless you already live in a top public school district … then, watch your land taxes!).
Sorry Adrian, don’t mean to be argumentative here, but I cannot agree with these statements.I would never expect an expensive auto no matter how much I earn or have in the bank. As for the Big expensive house,never liked big houses. I am a practical thinker I don’t want the job of taking care of something that large when I grow old,and wouldn’t wish to hire someone to do it for me.I just simply prefer smaller,less maintenance hungry homes.BMW’s are not(in my personal opinion) that great looking ,and cost a lot to insure,and even more to maintain.Give me a Mini Cooper over a BMW.
@Steve
“Give me a Mini Cooper over a BMW.”
Umm…. a Mini Cooper is a BMW.
We don’t consider ourselves rich, but we will look at private schooling for our kids and potentially a nanny.
No second house though (unless it is a rental), but that is our choice. I would prefer a slightly smaller house that we have, but I don’t think that it would cost any less.
One thing about the article, I don’t think he has taken inflation into consideration (and the prices in cities where you tend to get higher salaries).
“Of course, it may not help if their lifestyle is so lavish that they’re barely squeaking by on $400,000 a year.”
That is about my target income when I reach my number (at the current value and before taxes) and I don’t consider the lifestyle we have to be “lavish”. Full of travel. flexible, and comfortable? Yes. But with rising health care costs and other expenses (and still no Ferrari for me) that money won’t go as far as people expect as long as I live in the urban part of the Pacific Northwest.
@ Neil – You have your sights set higher than mine was; but I guess $250k in 1998 dollars is nudging $400k now.
Come to think of it, at $250k (which is roughly what I ‘allow’ myself now) perhaps, I’m falling behind?
Time to stop blogging and so some REAL work?! 😉
you have me on a technicality. they are sold by BMW now a days ,but didn’t start out that way.Maintenance is still way cheaper, Insurance also way cheaper,and miles ahead on fuel economy,and way cuter than a Beamer.
There’s still a better way though, buy used! I drive a jet black E46 BMW M3 convertible(previous body style, so you can get them on the cheap), that’s in pristine condition, just like it was the day it rolled off the lot, but I bought it for only 14k and paid for it with cash. It is fully loaded with every option available, SMG, Harman Kardon stereo, black with red leather interior and a hardtop! I figure, I saved about 60k on it by not buying it brand new and waving cash into the face of a guy with poor financial acumen and in a bind(who just wanted to get out of his mortgage-like payment on it and keep from loosing his house). So we can have our cake and it eat too if we plan accordingly! lol