To many, managing your money evokes the image of penny pinching and squirreling enough out of a meager small business budget to save for retirement of send the kids to college. Preparing yourself for sudden wealth probably isn’t the first thing on your mind.
But, in so many cases, the average millionaire started out an ordinary working person and acquired wealth through building their small business. To avoid, or at least be prepared for, some of the problems that come with sudden wealth, it is necessary to plan. Hear are just a few real life examples:
Nancy had been a social worker for most of her adult life. Her standard of living was modest but she made a good salary for a single woman. She even qualified to buy a house. At age 32, she met Mark, a software designer who made a million overnight.
Frank was a poor kid who grew up in an inner city neighborhood. After a stint in the Navy, Frank decided to try his hand at mining, then real estate, then almost any other business opportunity that turned a profit. By age 40 he was a multi-millionaire.
Really, the only thing these people have in common is that they have wealth. Most people would not consider that a problem, nor even worthy of a column in this newspaper. However, another thing these people have in common is that they have to learn to manage their wealth. Like any other lesson in life, if you have no previous experience, there may be bumps in the road.
Frank never really thought he experienced any setbacks as a result of his wealth. As he puts it, he “loves making money!” On the other hand, he is estranged from his grown children and is divorcing his third wife.
Again, if you do not think any of this applies to you, think again. The average millionaire started out an ordinary working person and acquired wealth through building their small business. To avoid or at least be prepared for some of the problems that plague Frank and Nancy, it is necessary to plan ahead for the day when you may have wealth. If you are in business, that is probably one of your goals anyway, so why not think positively?
The New York Times published some data on the “average American millionaire.” Surprisingly, most millionaires do not lead glamorous lives. They own bowling alleys, funeral homes and small manufacturing plants.
In fact, the average millionaire is a 57-year-old man, married with three children. He is self-employed in a practical business such as farming, pest control or paving contracting. He works between 45-55 hours a week. He has a median household income of $131,000 and lives in a house valued at $320,000. He drives an older model car. Although he attended public school he is likely to send his children to private school. Finally, he is first generation affluent.
It sounds to me like the American Dream is alive and well. However, many of these millionaires are not doing that well in the areas of personal relationships, health and emotional well-being. Some, like Frank, neglected their marital partners and their children because they were so focused on the thrill of making money. At mid-life now, Frank is trying desperately to re-establish these relationships, but his children feel that his addiction to money is greater than his love for them. Frank waited too long to strike the balance between love and work.
Nancy’s problem is more common than you think. Ordinarily, this type of mindset prevents the acquisition of wealth altogether. But Nancy was faced with the painful situation of having to re-evaluate her social values. This pain nearly put her in the hospital with a severe depression. She felt “dirty” having money, yet she felt guilty for wanting to keep it. Nancy had to do a lot of soul searching to realize that she was just as important as those disenfranchised folk she had helped as a social worker. When she began to view the money as a gift, as love, as energy from the universe, she started using it not only to help others, but to benefit herself and those she loved.
What Frank and Nancy have in common is the awareness that wealth brings with it responsibility. Planning for this new responsibility will put you ahead of the game when the time arrives.
Stewardship is another name for this responsibility. Once all of the bills are paid, once the new house is purchased, once you have exhausted all of your fantasies for travel, jewelry, cars and horses, the “average millionaire” still has to ask himself or herself, “What am I contributing to my community?” This is the bump in the road that takes the most maneuvering.
As long as you barely make enough money to pay the rent, or you work night and day to get your start-up business off the ground, or your days are filled with managing small children, there is precious little time to ask yourself “what will I be remembered for?” But the acquisition of wealth puts people in this spot, sometimes overnight.
Charlene took care of her basic needs after she and her husband struck it rich with their manufacturing business. She built a new house, decorated it, bought a condo at the beach, traveled to Europe, and sent her children to private schools. Then one day she woke up deeply depressed because her life had no meaning. She tried therapy. She volunteered for worthy causes. She joined social clubs. She took up sculpting. Nothing worked, however, until she read about foundations. This idea took hold of Charlene and she began the process of funding a foundation that would sponsor young women interested in entrepreneurship.
If you want to be prepared for wealth start thinking now about what you really want to do with that money. Ask yourself, what is really important to me in my life? If I could change the world to make it a better place what would I do? If you can answer questions such as these, you will have principles to guide you as you acquire wealth.