Smart Reasons to Save, Use and Invest Money

How Much Money Is a Lot of Money?

Money keeps outgrowing me

Money has changed meaning to me as I grow older…

Of course inflation has had an impact on the worth of money, but I even see my kids valuing money similarly to the way I did as a kid, so I think what I type still applies today!

When $20 was a lot of money!

I once found about ten $20 dollar bills stuffed up on top of the kitchen cabinet as a kid! I quite literally though I found some hidden treasure from the previous owners of the house and that I was rich!  At that point (I was 6 or 7), and I had never seen that much money.

At such a young age I thought I was rich! Heck, I even wanted to keep it a secret from my parents! My morals got the best of me though, and I told my mom about my discovery. She actually scolded me, telling me that I shouldn’t be getting into things. During the scolding, she told me she hides money for rainy days, and if I find other such hidden money… to leave it be.

When $100 was a lot of money!

Flash forward a few years (to the time when I was 10), and you’ll find that I’m impressed by the “Benjamins” at this age! While I didn’t own $100, occasionally I’d see them as my grandmother would count money from my grandparent’s businesses. While I didn’t think ten 100s would make me rich, I was still in awe of them!

When $100,000 was a lot of money!

During the age when I was 11 or 12 years old, I was playing video-games with my neighborhood buddies in one of their basement’s downstairs living room.   Just out of the blue, I started thinking about how much money I would need to live life without working. As I did the calculations in my head, I finally figured that $100,000 at 10% interest should be all I need!

Of course, I had no idea that the $10,000 I would make from my investments would be less that the poverty level for a family of 4 in the US nor did I consider taxes…

When $1,000,000 was a lot of money!

Before reading “The Millionaire Next Door”, I use to think 1 million would be the amount I should strive to achieve. I figured that if I made 10% on that amount, I would receive $100,000 annually. I thought I would be very rich at that point. I was 15 years old at this point in time.

When $2,000,000 is a lot of money!

After reading “The Millionaire Next Door”, I realized that I should up my target goal to $2,000,000! I’m not sure if I’ll ever reach that point, but it seems to the best answer. You see, if I had $2,000,000 I’d only have to achieve a 5% return annually to have the income from my investment earn my $100,000 annually.

Now I think 5 million or more would be a lot of money!

Yes, now I realize that not only do I have to have money from my investment earning to spend, but I would also need a part of it to invest back into investments, so the portfolio could keep up with inflation. I also realize the 5 million might not be enough, and 10 or 20 million may be a much better numbers!

What do you think a lot of money is?


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33 Responses to How Much Money Is a Lot of Money?

  1. I remember when my mom got her lump sum pension of $33,000 when she got laid off.

    She declared “I’m rich.” It’s the most money she ever had in the bank at any one time.

    I’m with you, I’d feel pretty good with $2MM. I can live off way less than $100K/year though, well maybe on any year except when the kids are hit college age.

    • I remember feeling like that too when we were saving up for our down payment on our house! It was a very unique feeling, and an even worse feeling when I wrote the check against the those savings…

    • I think financial independence is very personal and a range instead of a number. It all depends on your lifestyle, and how you have the money working for you…

  2. With 10 million we could quit our jobs and buy a small house with cash in Northern CA and enjoy a quiet lifestyle with lots of eating out.

    Anything less than that and we have to stay in the rat race.

    • Sounds like a good number, especially for that area!

      I think at certain levels before one become completely rich, a person/family can start the journey out of the rat race (at least I hope).

      • Depends on what one’s number for “enough” is. Our number for “enough” and not working involves money expenditures. Otherwise fulfilling market work is necessary for sanity. (That is, without work, we would get bored or frustrated with our lack of funds.)

  3. Great way to visualize how your ideas and outlook change over time.

    So many have no clue what they are facing when they retire, or want to and realize they can’t…

    • I think when I was younger, I underestimated the amount that I needed… Now that I’m older I’m hoping that I overestimate the amount that I’ll need!!! 🙂

  4. I believe a lot of money to be $20-30 million. We could definitely live off of less, like most people do. However, in today’s age, I do not think I would feel wealthy with a $10 million net worth.

  5. Straight out of B school, I wanted to be a billionaire. Over the years, I realized I don’t need anywhere near that to be successful or happy. I am at a point in my life when money is less of a priority, but it is still a scorecard. So to just give a number, $2-5 MM is my goal.

    • This is my goal too (2 – 5 million), I don’t think I’ll even have 10 million (although it would be nice). I hope to crack the 1st million in 9 years, it’s still a bumpy road for me.!

    • A billion would be phenomenal! I do not feel like I need that much to feel successful either. However, to live the kind of lifestyle many people dream of, I billion with do the trick admirably.

    • For me, I’d be very happy if I could get to $5 million in investment assets… at least until I got there, then 10 million would look nice, etc 🙂

      Right now, $2 million would be a more realistic goal for me.

  6. Great post–I totally agree with a money goal as a moving target. This is really important in the area of retirement planning. If we decide that we’ll need $5 million to retire (or what ever the number) will that be enough in 20 or 30 years?

    Probably not.

    It might be better to see money as a dynamic process, rather than as a goal. It is, in the end, a tool more than anything else. That being the case, cash flow might be the better metric.

    • Good point, cash flow would be a great metric!

      I do know that instead of having a static end number (like advertised on the tv commercials), I’d rather have a number than continually grows, even after I retire.

  7. My idea of “a lot of money” is constantly changing. I still think $100,000 is a lot of money, but not enough to retire on. If I can meet the $1 million mark for retirement, I’ll be impressed with myself. Heck, if I can reach $800K, I think I’ll be okay. Of course it could be that I’m just too darn realistic to strive for $2 million. I’ll leave those figures to my husband. 😉

    • I’d take $100,000 easy, but it’s no longer a lot of money. Many households earn that much in 1 year.

      I remember watching the movie “The Craft”, and the mother of the character name Nancy in the movie inherited $170,000 and they acted as if they were rich, moving into an expensive skyscraper apartment (from a trailer). I can imagine if they were real characters in life, they would blow through that money in less than 2 years…

  8. I can totally relate. I remember when getting a $20 bill in a birthday card was like hitting the jackpot growing up. Now I feel like I throw around $20 without even thinking. I still think 100,000k plus is a lot of money though. I’m careful about how I spend because my parents were/are terrible with money and I don’t want to end up like them!

    • Hi Sydney, welcome to my site!

      I remember watching TV games shows (The Millionaire) where the contestants would win $100,000 and I thought how great that would be, and wished I was in their shoes… but not I’m not so impressed. It’s still a lot of money, but I’m not jealous anymore 🙂

  9. excellent post. when i was young i thought earning 100k was impossible. long before i was 30 i was already making a lot more. it’s all about perspective i guess. the distance always depends where you currently stands. objective/purpose also has a lot to do with it. i think 100k is a lot of money, i think 1M too is a lot of money, but for what purpose? making 100k is a lot if you live a frugal life, where as 1M can be too little if you live like a superstah

  10. I fall into a completely different category it seems, but I can only assume this is because my income level is rock bottom. I earn roughly 1,080$ CAD per month after taxes and I live on my own. In the past year I’ve managed to buy a $1,500 computer for myself, give my mother $1,200 to help her get a car, and I still have $4,652 left. To me, that’s a monumental sum that has required enormous sacrifice. It feels odd knowing that to some people, even $10,000 is pocket change. At my absolute strictest way of living that would take me a bit less than two years to save for.

    However, the benefit to this lifestyle is the knowledge that I don’t need that much to be happy. I could, easily, retire on $1,100 per month. This would mean a reasonable apartment (a nice 3 1/2 apartment with heating and hot water included is $650-700 a month here in Montreal).

    Factor in food, internet, food for a dog and an alarm system and I’m set. I don’t have a car, I don’t smoke or drink or do drugs so I have no addicting habits. I play video games, but most of them are free.

    So to reasonably retire, factoring in interest, I’d only need about $350,000. To me, that’s more than a lot of money. That is the perfect amount. Anything more than that I would just give away because I don’t need it to be set for my own life.

    • Shoot, I missed this email, so the reply is really late.

      Here’s my take on why $350,000 isn’t enough money to retire on.
      1.) Medical, it’s expensive an who knows what one may or may not need in medical treatment.
      2.) Passing on inheritance, give your kids a lift in life…
      3.) Travel, Money would enable me to travel much more.
      4.) Helping loved ones. Why not have money to help your family, or wife’s family.

      I could go on and on why at least having a few million would be best at retirement 🙂