When I hear about the latest guaranteed contract for an NFL player, the record setting earnings of an NBA all star, the millions made by a tech entrepreneur who sold his company in 5 years or the riches of an investment banker, the numbers used to be difficult for me to comprehend.
Here’s how I now put these numbers into perspective.
Here’s an example:
I worked a bunch of different jobs. My pay ranged from as low as $2.50/hour to a peak of $100.00/hr.
In contrast, NFL quarterback Dak Prescott makes ~ $40M/yr or the equivalent of $20K/hr. That’s 200X more than I made during my best earning year.
That’s so much money I cannot really imagine it. So let’s pretend he makes just 20X more than I did.
Now I imagine, what if, I had earned 20X more when I was working?
- In high school, instead of making $3.35 an hour and taking home less than $50/wk, I would have made $1000/week. I could have had a car. I could have saved enough to pay for college. Hell, I could have paid our rent and we wouldn’t have had to live in rat infested slummy apartments.
- After college, when I was struggling to support my family making making $7/hr, I would have been making $140/hr. At nearly $300K/year, we would have bought a house. We would not have had to pay for after school care, groceries and clothing with credit cards that had 19.99% interest rates.
- When I was mid career and my wife starting having serious health issues, we could have paid for medicines and treatments without fear of bankruptcy vs. running up hundreds of thousands of dollars in debt if I was making $6M a year vs. $60K a year.
What would you do with so much money?
Imagine having 20X your income:
- Instead of having one modest home, you could own 20 homes.
- Instead of owning an economy car, you could own a fleet of cars.
- Vacations would be to exotic destinations.
- You’d never have to do any chores yourself – shopping, cleaning, cooking, paying bills, dealing with bureaucracy, waiting in line, driving in traffic – it would all be handled by your staff.
- Would I be frugal and minimalistic? Would I be wasteful and haughty? Would I be generous?
Dak, of course, is an extreme example. Some millionaires only made $10M or $20M or $50M in their lifetimes.
Even then, it’s easy to run the quick math.
How would your life be different if you had made 5X or 10X?
The point of this exercise is not to complain or whine about my circumstances. I’m content with my circumstances and my reality.
The reason I occasionally do this mental exercise is to better understand why my perspective and way of life is so different from wealthy people. Whether they are celebrities, athletes, politicians or lucky heirs, our lives share nothing in common.
It helps me understand why our values are so different, our world views so divergent and our perspectives so alien to one another.
Of course they are. How could they be anything but?
Note – I don’t bother doing this exercise to compare my earning to billionaires. To me, that’s the equivalent of fantasizing about winning Powerball. The multiples are so high and the differences so vast, there’s no point.