September 8


Being Rich is Overrated


You can see what happens in the picture above when my wife and I leave the house.

Over Labor Day weekend, a cousin and one of Jesse's school buddies slept over.  I told them to go to bed at 10:30 and even checked in around that time. They appeared to be going to bed, but I don't think they did.

In the morning, my two youngest, Jesse and Alex, looked absolutely exhausted.  They were having so much fun they didn't realize how tired they were.  After their friends left, my 11-year-old Jesse fell fast asleep in his room. 

At around 8:00 that evening, Jesse groggily emerged from his room. He was wearing his school uniform, his hair a mess, and he went to get breakfast cereal.  "Jesse," I said, "it is still Saturday night.  It's not morning yet." He turned around and groggily trudged back to his bed.

Over the past twenty years, I’ve met many people with different savings amounts. I’ve met many people with nothing. I’ve met millionaires. I’ve met lucky dogs who have tens of millions of dollars. I have never met a billionaire.

It sure would be nice to be rich, wouldn’t it?

Maybe not.

I have noticed a striking phenomenon throughout the years. The amount of money you possess has a diminishing return on your happiness and enjoyment of life.

What does that mean? Let me show you through a few illustrative anecdotes.

Meet George.

George is close to broke. He owns a small home without a mortgage, but he and his wife must survive on Social Security benefits of $2,700 monthly. That’s pretty tight.

I’ve done hundreds of budgets with clients and found that — in Sarasota, one of the leading retirement spots in the country — if you have no mortgage, you can get by on $4,000-$5,000 a month.

But, at $2,700 a month, George and his wife need to be careful. They can probably only own one car. They probably can’t go out to eat much and need to clip every coupon. They will get by, but a broken air conditioner puts real pressure on their lives. In fact, I am willing to bet George and his wife live with a lot of daily stress over finances.

I don’t want to live like George.

Meet Nancy.

In addition to her social security, Nancy and her husband have cobbled together about $400,000 in savings. They own their home, and their Social Security totals $3,200 monthly.

Nancy invested her $400,000 in a balanced and diversified portfolio of stocks and bonds, with more than half the money in stocks. It is reasonable for her to withdraw $1,600 a month from the account without putting herself in danger of running out of money.

This now equals $4,800 a month, which is much more doable. They eat a few times a month at moderately priced restaurants. They make a game of finding the best dinner specials in town. She and her husband play golf on the municipal courses, keeping them socially active and healthy. They even take a small but nice vacation once a year. Nothing fancy, but great memories nonetheless.

While this is not a lavish lifestyle, I’ve found the Nancys of the world can be perfectly content with her $5,000 a month. Of course, there are things she wishes she could do, but the European river cruise and new kitchen aren’t in the cards. It doesn’t bother Nancy all that much. She has a roof over her head and can buy what she needs.

Meet Bob.

Bob was an executive at a small company in Tampa. His salary was in the six figures, and, together with his wife, they saved 1.2 million dollars. I can’t believe we’re millionaires, Bob often thought.

With their house paid off, between Social Security and investment dividends, Bob and his wife bring in $9,000 monthly. After taxes, $8,000 a month in cash is deposited straight into their bank account.

Now, this is some pretty serious money. Their budget is only $5,000 per month, which gives the couple $36,000 a year of "play money."

Bob and his wife love to travel: Alaska, Europe, and New Zealand. They replaced the floors and added a patio on the back deck. Bob plays golf at some of the nicer public courses. They go out to eat basically whenever they want. Every once in a while, they really splurge on a good steakhouse dinner.

While Bob and his wife enjoy the money, they find that, after a few years, spending $36,000 of play money is unnecessary. They find a new source of joy in giving generously to their church and spoiling their grandchildren.

Bob and his wife end up well-traveled with an upgraded home, living a quiet life they enjoy.

Lastly, meet Charlene.

Charlene is rich. She realizes about $20,000 a month in retirement income between her Social Security and investments. This gives her nearly $100,000 of play money annually while living a very nice lifestyle.
Charlene’s husband is a member of an exclusive country club and plays golf at their world-famous course now and then. Even though it is only the two of them, they live in a 4,000 sq/ft house, which they can easily afford.

They travel whenever and wherever they choose. African safaris, cruises to far-off exotic lands — always in the upgraded suite, of course — and other adventures. They eat at the finest restaurants, own the finest clothes, and have the best of just about everything. Charlene and her husband quickly run out of ideas on how to spend the money. They have everything they want.

What is the point, Dave?

George (the broke one) desperately needs more money. His current income puts him under incredible stress. He has to watch every penny.

Nancy is your standard professional woman. She saved some money, which allows her to do some of what she wants, but the cheap version.

Bob, with his one million dollars, has a lot of opportunities. He and his wife travel, and they find other fulfilling ways to spend their money.

Charlene can do whatever she wants. She and her husband belong to a fancy country club, eat wherever they want, and take exotic, exclusive vacations worldwide.

The difference between poor George and Nancy is significant. But the difference between Nancy and Bob is actually pretty small. They both play golf. Maybe the greens were not quite as nice at Nancy's municipal course, but the game is just as fun.

The difference between Bob and Charlene is smaller than you would think. I can tell you, from personal experience, that a five-star French restaurant’s food doesn’t taste all that much better than the nice Mom and Pop place down the street. Nancy and Bob were basically eating at the same places. Both got to travel.

Here’s an important point: Nancy, Bob, and Charlene all had the same fun on their trips. Maybe Bob and Charlene got to take more trips to more exotic locations. But is that really that big of a deal?

Charlene’s Mercedes gave her no more joy than Nancy’s used 2018 Honda CRV.

Nancy, Bob, and Charlene all ate at the same restaurants.

They all got to enjoy being terrible golfers.

I don’t want to be George. You don't want to be George, either. (Sorry, George!). Not having enough in retirement is a very tough situation. But, as for Nancy, Bob, and Charlene — they all live a relatively similar retirement.

Being "rich" does not give you all that better of a life compared to the "kinda-rich" compared to the "middle class." Sure, the levels of fanciness are different, but does it really matter if your hotel room was refurbished ten years ago instead of two?

Don’t assume that more money means a totally different retirement lifestyle. It doesn’t.

As long as you have enough to not worry about paying the bills, like George.

We have been put on this Earth for relationships. The relationships you have in your lives are far more critical than your monthly income. The cliché is true — I’ve met very wealthy, lonely people, and I’ve met people without a penny to their name with lives full of love.

Be Blessed,


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