Would you rather die with $0 or $1M in the bank? It’s a loaded question and the answers will differ greatly based on how you anticipate living your life. Are you a spender or a saver?
If you died with $0, you could have spent money like there was no tomorrow, had a bunch and lost it all, had some and lost it all, or never had much at all.
If you died with $1M, you could have still spent money like there was no tomorrow, had a bunch and lost most of it, or had a bunch and never spent any.
For most parents, the default answer is to choose the $1M option because it would leave your families with financial independence, comfort, and opportunities after your passing. But $1M is probably too much to leave, right? You could set up a term life insurance policy that will cover that amount so why not just spend it? Also, don’t be that asshole who says $1M isn’t that much anymore.
“Leave your children enough money so they can do anything, but not enough that they don’t have to do anything.” -Warren Buffett
The problem with leaving an inheritance this large to your children will be overcoming the demotivational factor. Luckily, we can break down the payments over the years so that the large sum doesn’t hit all at once. I know if a large sum of money fell on my lap—$1M is a large sum to me—the first thing that would come to mind would be quitting my job—or at least taking a much-needed sabbatical. There would still be a strong desire to contribute to society, but I would have more freedom to do what I wanted—maybe I’d start a nonprofit organization for struggling influencers. The key here is comfort, but not being too comfortable that you stop learning or expanding your abilities.
People without kids or families may elect to choose the $0 option with fewer qualms. A former CEO of a company that I once worked for retired with nearly $100 million. He had no kids or grandkids. I always wonder what these people’s lives are like when they retire with that much money and no heirs to the throne. He could’ve given every employee a five or six figure bonus and still had enough to live on for the next 200 years. Maybe he will give it to charity. I can only hope he does something useful with it.
Whichever answer you choose, just know that money isn’t real and the Fed has your back.
This is post #46. You can follow me on Twitter or Instagram or sign up for my free newsletter here. Also please check out my Amazon page for a full reading list.