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With talk of money dominating the national conversation, and looming clouds of gloom seeming to threaten everyone with worst-case-scenarios ranging from selling pencils on the streetcorner to not being able to send the kids to college, it seems like this is the right time to reevaluate not only how we use money, but how we think about it. Screenwriter and blogger John August wrote about how “one million dollars” as an aspirational object in films is starting to sound a bit antiquated:
“In movies, TV, and actual conversation it’s by far the most frequently quoted dollar figure to mean “rich,” despite inflation. The top-shelf reality competition shows (Survivor, The Amazing Race) use that as the prize figure. But it’s not just a lot of money. It’s been mythologized as the transformative tipping point between the life we have and some mythological Good Life in which profound satisfaction is possible.”
Personally, I think this joke from Austin Powers sums it up:
But is a million bucks really the life-changing windfall it sounds like? If someone dropped a cool million on you right now, could you really quit your job and never work again? In an article titled “Is $1 million enough to retire on?” US News makes this point:
“If you drew down 4 percent of your $1 million nest egg every year, a share many financial advisers recommend as prudent, you would receive about $40,000 annually, before adjusting for inflation — a pretty comfortable salary outside major metropolitan areas, especially if your house is paid off. Of course, how far that $3,333 a month goes depends on your lifestyle, health, and inflation.”
If you had $1 million in the stock market, what’s it worth right now? (And the magic question: what will it be worth next week?)
In Manhattan’s real estate market, a million dollars might only buy you a loft. According to Zillow.com, right now there are five apartments for sale in my neighborhood for more than a million bucks. Apartments.
So why do we keep using $1 million as a frame of reference for rich? John August has a few ideas:
1. We have no personal frame of reference for “million.” Most Americans earn five figures ($10,000 to $99,999). If we buy a house, we’re likely dealing with six figures ($100,000 to $999,999). But few Americans will ever encounter seven figures in relation to their own finances. So it seems like a magical and unobtainable sum.
2. All rich people are millionaires, so all millionaires must be rich. This failure of the symmetric property has been pointed out in books like The Millionaire Next Door, which shows that cost-containment and steady investment is a more realistic lifestyle for the average millionaire. Along the same lines, having a million dollars isn’t the same as making a million dollars. It’s easy to confuse assets with income. When stocks and home prices were rising, an increasing number of Americans became millionaires on paper.1 But since that’s not spendable cash, it’s not what most people mean by millionaire.
3. What matters is the million, not the actual value. Americans would rather have the million dollars than 750,000 euros. And two million dollars doesn’t feel twice as good as one million.
So we’d love to hear what you think: if $1 million is a depressingly behind-the-times point of reference (or perhaps you disagree), what does rich mean to you?
Comments (17)
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Rich is a wife who loves you and children who want to be like you. Aww.
(Who here wants to shoot me?)
posted by Witty Nickname on 10-9-2008 at 8:41 am
Rich is a comfortable lifestyle. Being able to do what I want, without (too much) worrying about cost. It is also having a great network of family and friends who care about me. So I’m halfway there! (I have the latter, working on the former, but who isn’t?
posted by Amy D on 10-9-2008 at 8:58 am
I agree with Amy D. I would still work if someone gave me a million, but it would be nice to not worry about those vacations or a new furnace. I think, at least in my head, the difference is between wealthy and rich. Rich is 20 cars and a mansion… wealthy is comfortable without significant worries… a millionaire.
posted by Marty on 10-9-2008 at 9:06 am
I work at a bank, and we did a loan a while back for $1.5 million. I just kept saying the number 1.5 million. I remember telling the girls at work that I can’t even wrap my mind around that amount of money. It’s just a number on paper. It doesn’t mean anything to me.
Being a single mom of two, and owning my own home (via the bank) I make my payments every month only because my parents’ feed us every night. I can’t even fathom having so much money that you can afford to build a house worth $1.5 million.
I look at the $70,000.00 I owe on my house, and the $16,000.00 I owe on my car, and THAT seems like an unattainable sum. A million definitely blows my mind.
posted by Heather Dawn on 10-9-2008 at 9:09 am
I’ve heard that for pretty much every income group, people say they would be ok if they just had another 20% more than what they’re making.
I can attest to that, I make over double what I used to make, and we still find ways to spend it! :PPPP
Didn’t McCain say that a person was only rich if they had at least 5 million?
posted by Dave on 10-9-2008 at 9:22 am
Here’s what blows my mind. grand theft is usually theft of goods worth more than 200 dollars. (sometimes the line is lower but 200 is the minimum) that means if someone steals your Playstation it’s grand theft, however now if someone steals your Xbox 360 it’s petty theft (it’s now under 200 dollars).
As for a million I still think it’s a lofty goal. Most people who are aiming to be rich aim for that first, before another goal.
posted by Kinglink on 10-9-2008 at 9:41 am
The first million is the hardest to make and, as Dave said, you will always find ways to spend it. One million is still a good point of reference because, as the article said, most of us will never have to deal with seven figure numbers in our own finances.
Also, think of how many lottery winners take a lump sum payment on a $4 million pot, run up more debt and don’t pay the taxes, and file bankruptcy with in five years later. Even Warren Buffet has said the most-likely and best way to become rich is to work for it, save as much as you can, and be cheap; Cut out the frivolous things.
I would say rich is a comfortable lifestyle, working, but not having to worry too much. Wealthy is never working, never thinking of working, and living off of dividends, trust funds, or your parents.
posted by J on 10-9-2008 at 10:02 am
A million still sounds pretty impressive to me…considering less than half of that would pay off my student loans, house AND car :).
Rich to me would mean not having to worry about money…that’s not a specific amount, but I’d love to be able to buy the things I’d like/need and not have to worry about whether it’s in my budget!
posted by Fruppi on 10-9-2008 at 10:06 am
Honest to goodness, $150,000 is rich to me at this point. With that much money, I could pay off my student loans and credit cards, get a nice new car, get the carpets in my apartment really, really clean, have someone teach me how to be a really good pet owner, be able to pay for grad school without debt, and splurge on an iPod for myself, something for my boyfriend, and treats for my immediate family. Mostly? I just don’t want to be in such awful debt anymore!
posted by Angie on 10-9-2008 at 10:20 am
If you are as old as I am, you remember the TV show “The Millionaire”. It first aired in 1955.
According to the CPI calculator on the Bureau of Labor Statistic, to have the buying power of that $1 million 1955 dollars, you would need $8.1 million.
posted by Ken on 10-9-2008 at 11:04 am
I was just thinking this morning what I would do if I won a million bucks on a scratch ticket. Pay off my mortgage, help my family, redo my kitchen and bathroom, and buy a decent car. Other than that, I would keep working, but it would be nice not to worry about money anymore.
posted by crovenpaver on 10-9-2008 at 11:25 am
I agree with crovenpaver. $1 million would pay off debts and get you set up for a comfortable retirement, but you would still have to work for health insurance. Plus you have to always pay real estate taxes, etc.
I would definitely have my wife quit working though.
posted by bucsfan on 10-9-2008 at 12:43 pm
Amen, Angie; amen.
posted by Megan on 10-9-2008 at 2:20 pm
I have the same opinions as the rest of the post here.
I have often thought of winnignthe lottery, or aquiring just 1/10 of what, say trump, makes.
I would pay off the house, fix it up and buy a better home, buy a car for myself and my husband, pay off all debt and cut up all credit cards and then put the rest in accounts for childs college, marrage, and our retirment…..
i wouls still work, i have to….when i was with out a job it was cool the first few days to sleep in, but after that i was desperate to work on something……
posted by Jennifer on 10-9-2008 at 3:29 pm
Rich, to me, is having enough money that you can make important decisions without money being the biggest factor: where to live, what to do with your life. So it’s a rubber ruler, with “rich” defined by what’s important to each person.
reCaptcha = small Edith, whoever she is.
posted by Liza Jane on 10-9-2008 at 4:45 pm
@ LIZA JANE: Well said!
Rich is a point of view. However much money you have you always look at the next step up and want that amount of money! Once you own a house, you wish you lived somewhere better or bigger. Once you have a car, you wish it was a better brand, bigger, or whatever.
No matter who you are, the grass is always greener……
posted by GTT on 10-9-2008 at 5:02 pm
Hmm…I don’t think of a million as a lot of money at all. And I think MOST of us will deal with a million with our own personal finances. Just think of how much money you make over your lifetime.
One million dollars wouldn’t let my husband quit working. $40k isn’t even a generous income. I think most people making $40k a year are still struggling to make ends meet especially if you are trying to raise a family on that amount and I live in one of the least expensive areas of the country.
I’ve often said that I wonder why people put themselves through the bug bites and the nasty food on Survivor for a million dollars. That show is a ratings bonanza for them and incredibly cheap to produce. They should be offering a 10 million dollar prise MINIMUM!
And if I won the lottery, I suspect a million dollars would make my life pretty miserable. It isn’t enough to spread around and I think there would be a whole lot of people that would be disappointed. My husband and I joke that we only play if it is $19 million or more becuase that is what it would take for us to enjoy our lifestyle and to deal with the family members that would want their piece (and that I’d desire to give them).
I also don’t agree that you always want more and bigger. I’ve reached a point in my life where I want one step up house, but not more than that. What I want most is time. And I want enough money to afford me to time to do the things I enjoy doing (mostly travel). Life is far more about experiences than things, and I’d like enough to have and expose my children to as many experiences as possible. And it would take much more than a million dollars.
posted by Karen on 10-9-2008 at 5:51 pm