Blog | Personal Finance

It’s All About Having the Right Mindset

Why you deserve more than the poor mindset of a million, and how to get there.

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For many decades, the million-dollar mark has been the proverbial measure of success. Yet, for most people, the idea of becoming a millionaire seems like a pipe dream.

We often hear terms like this:

“If I could only make a million dollars, I could retire securely.”

“When I grow up, I want to be a millionaire!”

“I feel like a million bucks.”

Culturally, we are obsessed with the idea of a million dollars. And for those who want to be millionaires, there’s good news…and there’s bad news.

The good news about a cool million

The USA Today reports that at least 37% of Americans believe they’ll need at least $1 million saved up in order to retire safely. And though for many that feels like a stretch goal, the reality is that saving up a million bucks isn’t really that hard to do—especially if you start saving early.

Based on the median incomes provided by the Bureau of Labor Statistics, if at the age of 20, you start saving 13% of your income and assume a 7% return per year over a lifetime until age 63, you’ll be able to bank that million dollars.

Is this realistic?

But that is a lot of assumptions coming in at quite a lot of sacrifice.

For one, savings rates are at all time lows and not even near the 7% needed to achieve these savings goals. And two, the income/expense models used are simply not realistic.

As author Christy Bieber writes:

In fact, 46% of Americans save less than 5% of what they earn, according to a March 2017 survey commissioned by Bankrate of more than 1,000 households. Nineteen percent of survey respondents said they save none of their annual income, and only 25% of respondents said they save 11% or more.

But is it possible for the average person to actually meet the savings goals necessary to become a millionaire? Consider the spending of a frugal 20-year-old who needs to save 13.35% of a $2,288 median monthly income.

If that 20-year-old paid the median rent in one of the 10 cheapest U.S. cities, their monthly housing cost would be $632. Add on around $300 monthly in federal taxes, an average student loan payment of $242, a low-cost grocery bill of $206, average Internet and utility bills of $364, and average commuting costs of $216 -- and they’d be spending $1,960 monthly just for necessities.

If we reserved $305 for savings, it would leave our 20-year-old with just $22 in spending cash. And that doesn’t include a cellphone, clothing, or entertainment expenses.

Basically, it comes down to this: if from the age of twenty you live as cheaply as possible in one of the 10 cheapest cities in America, are more disciplined than 99% of the people in your age group, and don’t have any extra financial expenses like health issues or your car breaking down…you may get the point—after 43 years of toiling—where you’ll have finally saved enough to be a millionaire.

Congrats? No, sorry. I have some bad news for you.

The bad news about a cool million

Besides the fact that as you start saving for your million dollars later in life, the scenarios above get increasingly more fantasy-like, there is another reason why you may read this article and weep.

In some parts of the US, that $1 million nest egg will last barely a decade. This according to another article in the USA Today.

Map showing how many months $1M would last in each state

Unless you’re planning to live in the Southeastern part of the US, your money won’t last long.

As USA Today reports, “the top 5 states where your dollar will last the shortest” are:

  1. Hawaii: $1 million will last: 11 years, 11 months

  2. California: $1 million will last: 16 years, 5 months

  3. Alaska: $1 million will last: 17 years, 0 months

  4. New York: $1 million will last: 17 years, 1 month

  5. Massachusetts: $1 million will last: 17 years, 4 months

If you want that million bucks to last until you statistically might finally pass on, you’ll need to live in places like Mississippi, Arkansas, Oklahoma, Michigan, or Tennessee.

Now, there’s nothing wrong with those places, but that leaves out a big part of the country, and the reality is that most people don’t want to move away from the places where they’ve built their lives just so they can retire comfortably.

Mindset: the key to success

All this goes to show a universal truth, money does not make you rich. Mindset does.

In fact, mindset most often is the dividing line between those who are successful in life and those who are not.

If you’re a big NFL football fan, this week will be a big one for you. The NFL draft takes place in Las Vegas.

For those not into the NFL, the draft is the time when professional football teams draft young players from college and pay them extraordinary amounts of money to play a game.

In 2014, Johnny Manziel, or “Johnny Football,” as he was called, was drafted by the Cleveland Browns as the 22nd pick in the first round. The resulting contract was around $8.3 million with a $4.3 million signing bonus. Overnight, Johnny Football was a millionaire.

But by 2016, after a string of off-field issues, the Browns cut Johnny Football and during that year’s draft, Manziel watched the NFL draft as a free agent alone in a bar.

In the NFL there are many players who do not have the natural skills and talents that Manziel does, but they thrive. They show up, put in the work, and continually learn and grow. They listen to their coaches. They surround themselves with smart people who lift them up instead of pull them down. They have a mindset of success—the mindset of a pro, not of an entitled amateur.

I don’t personally know Johnny Football, but I can say that his quick downfall stems from many things, not the least of which stems from a poor mindset.

Where to start

Start by looking at how you use your time. Do you waste it in unhealthy ways? Are there places you can take back your time to grow rather than be stagnant?

Then, take a look at the people you hang out with. Do they have loser mindsets that hold you back? Do you need to trade in your old “friends” for new ones that help you become better than you are and give you a new mindset?

Finally, take a look at what you read and listen to. Do you fill your mind with things that reinforce the status quo? Or do you fill your mind with things that challenge you and ask you to grow to be more than you are?

Change your mindset to change your future

When it comes to money, the best way to change your mindset is to start with this fundamental truth: the fastest way to grow rich is to invest in assets that produce consistent cash flow.

If you can build upon that foundation, you’ll outpace 99% of all your peers when it comes to building and keeping wealth.

And you’ll have a lot more than $1 million by the time you retire.

Today, if you’re running into a wall and not experiencing the success you were hoping to, I ask you to take a look at your mindset. How are you viewing the world? Are you falling into old habits and ways of doing things that resulted in the same lack of success in the past?

If so, it’s time to stop being the same person and doing the same things. It’s time to change.

Ready to start? Try Rich Dad Coaching or attend a workshop.

Original publish date: September 19, 2017

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