How Much Money Would Change Your Life?

Have you ever played with the thought experiment “What if I won the lottery?” Even though we don’t ever buy tickets, we’ve still had this conversation once or twice. It’s a fun What If game that sets you to dreaming and may even lead to some great discussions about priorities and goals. Another version of this game is “What would you do with a million dollars?” and usually involves some version of quitting your job with flair and buying large and unnecessary consumer goods.

I just read a great book called Hand to Mouth: Living in Bootstrap America by Linda Tirado. It’s about being poor in America and the challenges and struggles that go along with it. In the Introduction to the book, she defines the terms she uses throughout:

Poverty: A quarter is a miracle
Poor: A dollar is a miracle
Broke: Five dollars is a miracle
Working class: Being broke, but in a decent location.
Middle class: Living in a nice area with personal furniture, able to purchase other items, and not (constantly) worry about homelessness.
Rich: Anything above the prior.

I really like her definitions (do you?), and they got me thinking. After you are no longer Broke, and five dollars is no longer a miracle… what IS a miracle? What constitutes a life changing amount of money when you are Working Class, Middle Class, or Rich?

Under the Working Class definition above, I’d say about $500 would qualify as a pretty significant windfall. This would establish a small Emergency Fund that could end the cycle of payday loans or other predatory lending stopgaps that people resort to with no other options. It could pay for a nice new suit for that job interview, or new tires on your car to get to a better job further from the bus route.

If you are Middle Class, about $5,000 would be enough to change something. This would establish a significant Emergency Fund, or help to pay off high interest credit card debt. It could help you to begin buying in bulk to save money, or pay your car insurance or property taxes in six month payments instead of monthly (usually a significant savings). It could allow for a class to get a new certification in your field, or just ease the anxiety of living paycheck to paycheck.

If you are Rich, you’ve got all the money you need, and it would take a good chunk of money to cause you to change anything about your life. I am very fortunate to count myself in that category. I wouldn’t change a thing about my life unless I received some sort of windfall of about $500,000 or more. This would put us squarely into the Financial Independent category, meaning we would no longer have to earn income to live on. We could survive off our investments and passive income alone. Meaning, we would be free to quit our jobs and pursue more travel or passion work.

So what about you – how much money would it take to change your life? Where do you see yourself on the continuum from Poverty to Rich? Do you agree with Ms. Tirado’s definitions (and my own additions)?

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