Wealth

How do you stay rich after you get rich? Spend less than you make. How’s that sound? Yep, genius.

But pretty obvious and easy to do if you earn enough money to do so. So if you’re watching this vid, you’re either rich...or you plan to be, and want to stay that way pretty much forever, until you’re doing the backstroke six feet under.

Well, the way in which you got rich in the first place here...matters a lot. For many, a long, successful corporate career got them to the nice house(s), the convertible red Ferrari, private school for the kids, the custom golf club set and the wine collection. Their wealth just accumulated over time, but likely in two forms. In America, most senior executives receive nice cash salaries: half a million, a million, a few million bucks a year. They live off of that pay and save some of it.

But their real wealth usually comes from partial ownership in the big companies they run in the form of stock options. At the end of a career, the options might have compounded for decades, and be worth tens or hundreds of millions or more.

Typically, the executive slowly sells off those options in retirement, and looks back on an awesome corporate life optimizing the sale of soap or lawn fertilizer or car tires or whatever. Not a bad way to go if the corporate gig is for you. And you don’t read about these people going bankrupt very often, because A) let's face it: they’re probably pretty boring, or at least their career selling soap was; and B) they got rich slowly, accumulating wealth quietly, almost hidden to them, over long periods of time.

They were technically probably rich in their mid-40s or so, and they just continued to dance the dance that brought them to the party in the first place. So that’s the get-rich-slow plan, and it is time tested. It works.

But what about the get-rich-quick plan?

You’re a 260-pound runner with a 4.4-second 40. You can read, so you are accepted to Alabama, where you don’t gradee-ate. You’re drafted by the Jaguars and get a million dollar signing bonus. Your buddies ask you, “What time is it?” You look confused. They say, “Ferrari time!”

And ah, here’s where our story gets sad.

You forget a whole bunch of things, mainly, that it’s likely your NFL career will be short; and when it’s done, you will likely have the earnings power of a high school football coach: 50-60 grand a year. Something like that. Not terrible, just not rich. Oh, and there’s this other thing called taxes. That million dollar signing bonus was really 950k after agent and lawyer fees, travel, and other stuff. Then you paid taxes of 350k and netted 600k in your pocket.

But you just went out to spend 450k to buy that Ferrari. So now you have just 150 grand left in your pocket to buy that home. A shoebox. So you wait. Hope your rookie season is a hit. And as you drive around in your Ferrari, you wonder if people will laugh at you if you happen to flame out...and you realize too quickly that if you go to sell the car in two years, it’ll maybe bring you 200 grand. Yeah, Ferraris depreciate fast.

Sad story. But way more interesting than the soap seller. In fact, most NFL players...like 80 percent of them...go bankrupt. Which means that another 10-15 percent of them end up just really really...not wealthy.

How can this be?

If they played in the NFL, at least at one point, wouldn’t you have considered them to be rich? Or at least rich-ish? But something bad clearly happened here. Well, in almost every case, at least one of three things happened:

A) they spent too much money…spent on junk they didn’t need or couldn’t afford;

B) they invested their savings in restaurants, bars, and/or other things where the odds of success were vastly stacked against them winning;

Or C) they got divorced. Always a financial killer.

Want the “too long, didn’t listen” version? Don’t spend your money like you’re going to make your current salary for the rest of your existence. Stuff…happens. Enjoy life. But protect yourself by holding onto enough savings should things take an ugly turn.

Invest.

And, uh…maybe see a marriage counselor.

If you want to know what it all boils down to...Keep Making Money.

You never have “enough,” because you never know what’s going to happen. That doesn’t mean you need to pound the pavement selling vacuum cleaners until you’re 95, but you also shouldn’t call it quits at 45 because you’re finally “a millionaire.”

A million bucks ain’t what it used to be. You have to take some risk along the way and not just sock away dough with your...socks. As Warren Buffet said, "Jesus Saves. (But Moses invests.)"