I actually feel sorry for most millionaires. I don't pity them because of the horror stories of lottery winners whose sudden fortunes become curses. I feel sorry for the 70 percent of those with more than $1 million who don't think they are rich unless they hit the $5 million mark. According to a recent CNN Money article, many of the affluent investors surveyed by UBS defined wealthy as feeling as though money is no object. Apparently they need to reach a level at which they have "no constraints on activities." I'm not sure what kind of activities cost so much money, but I don't need $5 million to live an abundant life.
Putting my situation in perspective
Whenever I begin to worry about my financial situation, I put it in perspective. I compare where I am not to where I was 10 years ago. I went from being a renter to being a homeowner, which means I have $50,000 of home equity that I can add to my overall net worth. I also have 10 times more money saved for retirement. Although I may feel as though I have more expenses, I just have different ones.
Sticking to a formula that works
Instead of trying different get-rich quick schemes, I stick to some basic rules for getting rich slowly such as living below my means. I have 10 percent of my income automatically deducted from my paycheck and saved for retirement. I diversify my investments so that I don't get burned by putting my "eggs all in one basket." I can't control the stock market, but I can be a disciplined investor who doesn't try to "out-think" the market. I can add $100,000 to the "asset" side of my net worth statement because I almost always save 10 percent for the future.
Being prepared for the unexpected
I wish that my net worth increased every year like clockwork. However, I expect there will be some years when I have to spend some of my savings on emergencies and unexpected expenses. Other years, I may be able to save more money. I prepare for the unexpected by choosing a lifestyle that is easy for me to afford. I don't live in a fancy house or drive a fancy car. I wouldn't change my lifestyle just because I had a million in the bank because I'm content with less.
In order for me to feel wealthy, I don't need even close to $5 million. I have simple goals such as paying off my home and having $500,000 saved for retirement in another 20 years when I'm 62. I think the biggest thing for me is to have no debt. I feel poor when I owe other people money. Getting out of credit card debt 10 years ago was my first step on the path to wealth. Now that I'm on the path to wealth, I plan to stay on it so I can leave an inheritance to my children, which I know they will appreciate no matter how great or small.
*Note: This was written by a Yahoo! contributor. Do you have a personal finance story that you'd like to share? Sign up with the Yahoo! Contributor Network to start publishing your own finance articles.
More from this contributor:
- Banking & Budgeting