What would you do if you have 1 million dollars? As in, someone knocks on your front door and hands you a bag of 1 million dollars in cash. Now I assume you’ll spend the first little bit on your favourite restaurant, new shoes, throw a party and celebrate. So forget that part. Right now, you’ve been working so hard at your summer or part-time job… to be on track towards your million dollar in cash moment. So let’s say, for sake of argument, you were lucky and it came to you.
Let’s think about what you would really do…
I’ve created a little chart to show the instinctual thing that comes to mind and then the complicated questions that follow…
| You would: | Challenge You Begin to Face: |
| Buy A house | Where? With Cash? What are the interest rates now impacting home prices? How are prices relative to their historic average? household income? Credit issuance? What are real prices after inflation? Is this to live or for an investment? How long will you live there? Will you use a loan? What’s the big economy saying to do? What country? |
| Start Business | What will you do? What types of income will you receive? Where will it be domiciled? Where will big decisions take place? Where will you bank? What are your company tax rates? personal tax rates? What regulations or permits do you need (if any)? What type of corporate structure is best for me? Is there market demand for my idea? Will you hire someone (if so, who?)? How much will my annual costs be? What am I liable for if it doesn’t work? |
| Buy a Car | What kind? Will I be planning to live here (or nearby for >3 years)? Do I need a car? What is the yearly cost of a car? How will decide what I want in a vehicle? How many cars will I buy? Do I plan to resell it? What will I use it for? |
| Buy Gold | What will you do with it? Where will you keep it? How much in this area? Will you wish to sell some? How will you transport it across borders? How much will you buy? Will you use cash to buy it? |
| Blow it | On what? Would you live the high-life for a year? two years? Where would you go? What crazy item would you buy? What would you do when you ran out? |
| Buy Bitcoin | From whom? Would you try to use cash? Would you remain anonymous? What would you do with it? Where would you store it? Would you spend the Bitcoin (if so, on what?)? How would you protect yourself from cyber attacks? |
| Invest it | In what? For how long do you aim to invest? What is your appetite for risk? What would you invest in? How will you manage that asset? What will be the taxes that result from this investment? Who will you trust for help (if needed)? |
| Buy a Farm | Where? What animals will be on the farm? What crops? How will your maintain them? Who will do this maintenance? Who will you sell the goods to? Will you sell it to a market or personally consume it? Will you move onto the farm? What’s the best spot to buy? |
| Travel | To where? For what purpose? What will you get out of it? Will you be safe? Will you change your behaviour? For how long will you travel? Will you stay on resorts or “live” like locals? How will you keep yourself busy when not on a tour, safari or airplane? Will you travel with a bag of cash? |
| Give it Away | To who? For what purpose? Will they do a better job than what you could do with the money? Can they be trusted? Will giving money to someone help their situation? What will you do after you donate the money? |
Perhaps you may think it’s not worth planning for something you don’t have, but if this is the existing attitude, you’re never going to be prepared for great or terrible events. You are already setting yourself up for failure. Approximately 65% of professional basketball players (NBA) are broke only 5 years after retirement, perhaps due to this very reason. They enjoyed playing ball, but had no plan on how to manage their tremendous purse thereafter.
Reflect about what your long-term goals are in life. Are you simply working hour after hour for more money for pizza and your phone bill? Or do you have an objective? Have you given yourself purpose? Are you doing one thing to get to something greater?
If you have that objective already, than you already know what to do when you come across some money or success in your life. Without these preconceived goals, you are clueless how to respond to something that could be heavily in your favour (in this case, a million dollars). The person who makes 1000 dollars a month with an objective will be far more successful in the long-term than one who makes 4000 dollars a month who is aimless and spends hastily on instantly gratifying things. This is why I call this the Millionaire Mindset. It is a self-fulfilling prophecy. Don’t wait for a knock on the door and a bag of money– start your planning now–regardless of your starting point!
#StayOnTheBall
