“If you are a single-digit millionaire, you are not wealthy… you are worried.”
–Grant Cardone
A friend of mine forwarded an article to me with the quote above. You can read it here.
The basic idea is that you are middle class–or worse if you don’t have an eight-figure net worth.
Since that includes about 99 percent of the population, it must mean we are all middle class or less—if we are lucky. That means most of us are financial peons.
That is irritating. The rest of this post aims to dispel that idea and offer another more positive way of viewing your finances.
After all, not everything is about your net worth, and not all judgments by media pundits on money issues are fair or objective. They have their own reasons for describing others the way they do.
MOST OF US SHOULD COUNT OUR BLESSINGS
You are in rare company if you are fortunate enough to be a millionaire–or even close. The total population of millionaires in the world is only 1.1 percent. So, consider yourself in good company if you are anywhere near that standard. And if you are not, it is not necessarily cause for worry.
But for many reasons, people don’t always feel well off, even if they are by any objective measure.
FINANCIAL MEDIA TRENDS
Part of the feeling of unease is because of what we are being told. I’m not too fond of some things I see in the financial media lately–particularly absolute pronouncements by experts. They seem aimed at making people feel insecure.
But these statements are good for grabbing attention and publicity. And sometimes, they are even suitable as general guidance. But they often substitute for actual thinking and generate more fear than they should. Let me give some examples.
First, Suze Orman declared that we should all have $5,000,000 in the bank to retire–a sure-fire recipe for working until you drop for most people. I did not agree with that.
And Dave Ramsey has tried to discourage ALL debt and has equated it with ill-considered and even foolish behavior.
I generally discourage debt too. But there are exceptions to that rule, and I have explained what those are, particularly in connection with real estate.
And now, single-digit millionaires get sand kicked in their faces too. I cannot imagine what people under that threshold think or feel.
The rest of this post should help you get a better, more objective lens through which to evaluate whether these opinions and statements are helpful to you.
There are three things you should ask yourself to get a proper context. Here are some important questions.
QUESTION 1: WHAT ARE YOU COMPARING YOUR SITUATION TO? IS IT REALISTIC?
This is where an objective financial fiduciary comes in. It may not be that your situation is out of whack–but that your expectations are. Fiduciaries can objectively help you find out what you spend and earn and how you need to change. And then, you can plan accordingly.
An objective analysis includes what your government benefits are or will be. In the US, we have Social Security and Medicare—benefits you earn, which the government should spend on you. As a result, they often play an outsized role in any retirement plan you develop.
QUESTION 2: WHEN DO YOU EXPECT TO NEED MONEY IN YOUR LIFE, AND FOR HOW LONG?
The article I quoted correctly points out that a young person who lived off a million dollars would run out of money in a few years. But who expects to be in their mid-20s and not working? (OK, there are some guys, but no one knows how they do that).
The point: expect to work a long time to fund a retirement. And understand that at about age 50, you may hit a change point and need to work part-time. Plan and prepare accordingly if that happens.
QUESTION 3: HOW MUCH SAFETY DO YOU NEED? WHAT DO YOUR GOALS LOOK LIKE WHEN COMPARED TO YOUR WORST CASE?
In a previous post, we discussed the wisdom of looking at the worst case and developing a plan to deal with it. Once you confront the fear of that worst case, you are more than halfway to solving an issue.
You can see some unexpected expenses that can cause a worst case here.
The article also describes how to deal with unexpected expenses if they happen to you. And if you have seen and planned for these issues, it helps to reduce worry.
But, of course, actions often come down to either reducing expenses and gaining more income or both. Savings reductions can come from common ideas like changing personal habits to more radical ones like changing locations and even countries of residence.
YES, YOU SHOULD EXPECT TO WORK LONGER: WE ARE LIVING LONGER
None of this means that you should not expect to revise your expectations from time to time. For instance, we are all living longer. And that increased lifespan implies that many of us must work longer. This trend may eventually force a change to some of our social programs.
WATCH OUT WHO YOU LISTEN TO, AND KNOW WHAT THE MOTIVES OF MEDIA PUNDITS ARE
Knowing the motives of those who communicate with the public is vital. Are they reassuring? Or do they help you clarify your goals? And do they give hope or sow fear?
Just be aware of what lies behind the message.
For the record, I don’t receive compensation for these posts. If that changes, I will let you know.
Disclaimer: consult with a financial fiduciary before taking any steps outlined here. Not all advice may be suitable for your circumstances or investment style.
Photo Credit: Mathieu Stern
License: Unsplash