In my industry there’s often talk of a “magic number.” It’s the amount of money you need to have saved and invested in order to retire the way you want.
But as we know, magic isn’t real. What is real though is the fact that many people don’t retire the way they want (or at all), even as their income rises over the course of a career.
It’s because we buy bigger houses, afford ourselves more luxuries and are told that’s how it is to be wealthy. For some, the spending is simply chasing happiness.
However, that kind of spending is akin to a drug addict – over time, bigger hits are needed to get the same thrill.
One prominent example of unhealthy spending is former boxer Mike Tyson, who earned $400 million in his career, though ended up more than $27 million in debt.
Another is Terrell Owens, who made more than $80 million in the NFL, but is now nearly broke. Joining him is former NFL quarterback Vince Young, who squandered a $26 million signing bonus, some of that allegedly on a $22,000 flight where be bought every seat on a commercial flight.
Such money mismanagement isn’t exclusive to professional athletes. In fact, in 2015 the average American had more than $130,000 in total debt and little in savings.
Somewhat understandably, the usual tendency is to spend more when you make more. But that can be extremely dangerous. The above examples are a testament.
To avoid such a fate, realize that wealth is achieved by those who understand and avoid the temptation to spend frivolously. It’s not magic – it’s save more, spend less.