How to feel rich . The first step to wealth.
Feeling rich is probably more important than being rich. Assuming you make enough money to live on and have some cash reserves in place to fend off problems.
As my business started to take off and I made more and more money, I started to purchase the most expensive things of what I wanted/needed. I'm more of a need based person. After a while I had purchased absolutely (the most expensive items) of everything that I've always needed. I went searching for the most expensive garden hose, for example. It was alot of work looking for the most expensive garden hose!
After a while, I started feeling like, "I don't really need much else." AND, "I don't really WANT much else either." At this point, I felt like I would if I had $10 million sitting in the bank. I didn't feel any cravings to purchase any more stuff. More money for me would just mean stashing it away.
HOW TO FEEL RICH EXERCISE
Here's an exercise that I have done by myself in the past. It's a simulation of what you would do if you had $10 million (or $100 million) dollars given to you, tax free.
HERE'S WHAT TO DO:
Take a pad of paper and write down
"I need to spend $10 million in the next 30 days"
Then you proceed to purchase $10 million worth of things that you've always wanted.
You must spend every penny of the money and not save anything. I do this because I'm assuming that I'll have future income to save etc.
The list might look like:
Pay off credit card debts: $32,000
Pay off house: $126,000
Pay off car: $19,500
Pay off lines of credit: $5,000
Now your debts are paid off.
You've only spent approx $175,000 on paying off debts.
Next you need to start purchasing the stuff you've always wanted.
Lamborghini: $350,000
New house: $1 million
Cadillac CTS Sports car $52,000
Boat
Seadoo
Cottage $250,000
RV $100,000
Most expensive garden hose!
etc
etc
etc
Total $10 million dollars of stuff purchased
Now your life style has changed quite a bit.
You own all of this stuff. You need to pay ongoing taxes and insurance on your new property and vehicles. You've got operating costs for all of your new possessions.
Oh yeah, I forgot to mention that you NEED TO calculate all of the ongoing time and money that it's going to take you to maintain all of these new properties and toys!!
Most people find it hard to spend the $10 million. Once they've taken 'ownership' of the new items, they all of a sudden don't really want them any more.
This is when you start to 'feel rich'.
The bottom line, being content with what you already have, is better for you mentally and financially, but also will save you tons of money in the future.
Being content with what you have means that you won't be constantly wanting to buy that new toy to make you feel better. That's a big part of financial maturity.
Thoughts?
posted by Monty Loree at 8:48 AM
Is it bad that it took me only 1/2 an hr to hypothetically spend that hypothetical $10 million? My passion is art. I have a few nice prints - Kandinsky, Monet, Dudovich - and I have always wanted the originals. It took me about half hr's online research to spend $5 million on art & a few other things. The other 1/2 I gave away to friends and family (hope that wasn't cheating). Not sure what this makes me though? I am content enough with what I have but I can easily visualize spending $10MM.
Hey MMB... that's cool that you did the exercise...
Question: Did you feel wealthy after doing the exercise, or did you feel like you just had 'a huge meal of chinese food' and will be starved in a few hours?
If all of your hypothetical purchases gave you a long term feeling of wealth then that is perfect!
If not, give yourself $50 million or $100 million until you are completely satisfied that you have everything you need in life to give you that feeling of being rich.
Cool,, thanks again.
I own a successful company, too. My income is not 10x of what it used to be when I was just an employee.
Now that I have this kind of cash, I buy the same stuff, only in versions that are a lot more expensive.
For exemple instead of the Renault Megane I used to drive, I bought a BMW Series 5 car. Does the BMW make me happy? In the beginning, yes, it made me happy, but it's just a car - a means from getting from here to there.
So.. as a guy making a lot of money, I'm not happier than before.
So I decided that my next care will be another Renault Megane, and that I will spend the rest of the money on activities I didn't do before, such as moutain trekking, etc.
yes.. lots of money tastes great for a while...
After a while it loses its flavor.
At that point it seems your true value systems come out.
When you're not worried about paying the bills and you purchased the things you've wanted, you get an understanding of what these items actually mean to you.
My Cadillac was fun for about 2 weeks. It's still nice to look at, and it gets the attention that I wanted at that point. It quickly losts its appeal in some cases.
thanks for the comment