How Much is 1 Million Dollars and How Can You Spend It?
When thinking about the value of one million dollars today, my mind always wanders back to the original Austin Powers one million dollars movie scene in 1997. The infamous villain, Dr Evil, is woken from a cryogenic sleep after 30 years and decides that he wants to hold the world for ransom for a sum of one million dollars. This monetary figure came as a real shock to his henchman. His 2IC immediately suggests that he asks for more money because one million dollars is not worth much anymore. While the conversation is comical, it’s a real reflection of what 30 years of inflation can do to the value of money.
Men like Conor McGregor, Kevin Hart, and Joe Rogan are considered rich, and they sport a net worth of over $200 million each. The richest man in the world, Elon Musk, is worth around $275 billion, which means he could have paid the ransom from the pocket change in his wallet.
Fun Fact: One Million Dollars weighs around 10 kilograms/22 pounds when packed out in one-hundred-dollar bills. Packing it out in single dollar bills would raise its weight to a metric ton/2,2204.623 pounds.
While a one million dollars net worth still technically makes you a millionaire, it certainly does not class you among the super-rich. In fact, modern statistics show that you need to have a net worth of around $2 million at least before you can claim you are wealthy in the United States. As the years go by, this number will increase due to the rise in inflation year on year.
So, How Can We Spend One Million Dollars?
As a child, I always daydreamed about how much a million bucks could buy me. How I could spend it on a mansion and a car and all sorts of spoils. The simple reality is that even a small modern mansion will set you back over that amount these days. You could buy two or three fast and furious sportscars and be leftover with only $100K or $200K. In fact, there are not a whole lot of expensive things you could buy without depleting your cash quickly.
So, the best thing to do is to spend the one million dollars to make your life easier and more comfortable. It’s certainly enough money to build a new foundation for your life and can be a life-changing sum if you handle it wisely. Here are 5 ways experts believe you should spend a one-million-dollar windfall.
1. INVESTMENTS or A BUSINESS
The first thing you should do is stick it away in savings. Consult a financial advisor about the best solutions in your country and let it grow a little before you start using the cash. Fixed deposits, unit trusts, and other high interest-bearing accounts are a great start.
You could also think of putting the money to good use by starting a business that is modeled after an air-tight business plan. You can’t grow the money if it sits idle for too long.
2. DEBT RELIEF
If you have any debt, pay it off and chuck the credit cards away. This should already free your monthly income up, creating a far more comfortable life for you. All of a sudden, you’ll realise that you have money to save and spend.
Life is never a sure thing. As such, preparing for the worst is never a bad thing. Take a chunk of your money and leave it in a savings account that you can access quickly if life throws one of its curveballs your way. This way, you won’t have to turn to your salary to solve any conundrums.
Be sure to up your retirement annuities. Perhaps use the interest you make off the investments you make to fund these. In the long term, this will secure your future and grow your net worth when you need it most.
If you have no major debt, purchasing property is never a bad way to invest your one million dollars. It’s a great way to build equity. It will also ensure that one of your biggest monthly expenses (rent) is taken care of for good. As your property value goes up, so does your net worth.
How to Make One Million Dollars
Look, it’s highly unlikely that one million dollars or more just drops in your lap. Those who receive inheritance payouts like that are fortunate. As you can see from above, a million dollars can make life a lot easier. However, making your first million is the hardest part of becoming rich. Once you’ve hit this milestone, making the next million becomes a lot easier.
So, what do the experts say about how you can generate one million dollars? Well, aside from shifting to a millionaire mindset, here are a few valuable tips to bear in mind.
1. Stop Senseless Spending
Oftentimes people have a very short-sighted view of the world and want to live a life of luxury from the get-go. This leads to senseless spending on expensive items which actually rob you of your ability to save and invest diligently. Warren Buffet is clear on his mantra for making money: He says, “Don’t save what is left after spending; spend what is left after saving.” Who are we to argue with one of the richest billionaires on the planet?
A big part of cutting down on spending is becoming tax-wise. Too many individuals pay the revenue services far more than they should because they do not claim back what they could. This is money wastage that can be very easily avoided.
2. Fund Retirement Plans Early
Starting a retirement fund or annuity early is the best way to ensure that you can retire with more than one million dollars in the bank. While it’s a long-term strategy, nobody ever said making wealth was easy. If you start with and stick to a decent RA, you will become a millionaire later in life.
3. Buy Your Own Home
This ties in perfectly with the point above about buying a property if you had a million dollars lying around. Property is usually an appreciating asset. There is a good chance that you will be able to sell your home for a decent profit in the future. Do this a few times in your life and you could be a millionaire in a few years.
4. Take A Risk
You cannot expect to get rich working a 9 am to 5 pm day job for a boss. Unless that job as a stockbroker, CEO for a big firm, or something similar, you won’t make one million dollars sitting in your seat each day. You will need to take a risk and start up something on the side, or a whole new business of your own altogether.
5. Work, Work, and More Work
Don’t rely on luck for your one million dollars or more. The odds-on easy money is slim to none. In most instances, making millions comes through hard work and determination. The payoff, in the end, becomes far more satisfactory too. As the adage says, “All good things come to those who wait.” So, it’s reasonable to assume that a million bucks comes through investing money, time, and effort into your goal.
While one million dollars is not what it was a few decades ago, it’s not money to be sneezed at. It can change your life for good if you spend it wisely. You can look at that amount as the foundation building block from which major riches can be built.