Is it a basketball player showing off his house on Cribs? Some stuffy old guy being chauffeured from country club to yachting event in a limousine, stopping to ask someone for Grey Poupon? Oprah?
Me, I still conjure up pictures of the Monopoly man in his tux, top hat, cigar, and fancy mustache. Smug jerk.
Whatever picture pops in your head, you’re probably thinking of a person that’s pretty well off. And that they could never blow that kind of money unless they were so unfortunate as to be named Michael Gerard Tyson.
Start changing your perceptions now. 7-figure earnings will soon be the difference between middle and upper middle class. Don’t believe me? Chew on this (btw, I think there used to be a candy bar that used that as a commercial slogan – please email me if you know what it was):
A college professor spoke to a class I attended last week. He mentioned that when his parents were a young couple, they thought they’d be on easy street if they ever made $100…a month. After he got married, he thought he’d be living in the lap of luxury if he could ever get to $1,000 a month. And when I first started out, I thought $10,000 a month would allow one to do anything within reason except buy a house in Los Angeles.
So take whatever number you think is a lot right now and add a zero to the end of it to figure out what you’ll need to make near retirement, or what your kids will want to make to feel reasonably financially secure. For my kids, I think that figure will be $100,000 a month ($1.2 million a year).
They’ll be able to make less than that without living in the streets, but they’ll (hopefully) be millionaires and most people won’t think much driving by their houses. People might think that they’re doing pretty well for themselves, but they won’t think they’re oil tycoons, either.
Over the last generation, the government says prices have moved somewhere between tripling and quadrupling rather than rising 10-fold. Check out their inflation calculator. Plug in a few numbers and try to keep from laughing or throwing the receipt from your last car purchase at the screen.
I also strongly encourage you to check out Richard Russell’s Dow Theory Letters. His Rich Man, Poor Man article shows how you can use compounding interest to work for you to keep ahead of inflation. I plan to go over these figures with my children every year as soon as they can comprehend basic sentences, even before they can appreciate or truly grasp the information. It’s that important. It’s also one of the first articles I spoke to high school students about when I volunteered with Operation Hope’s Banking on our Future – a great organization!
So even assuming things that I don’t like social security being around when you retire, you need to plan on either having a lot more money than you have today to keep pace with your lifestyle or drastically reducing your wants and maybe needs.
Start thinking now about your investments, spending habits, and multiple revenue streams. If you own a business, think, too, about how your company can earn more. One of the ways could be through increased sales from internet marketing. Maybe it’s better lead generation for your sales team. Whatever you do, don’t get complacent.