I don't have millions of dollars of cash. In fact, I've probably never seen more than a few hundred dollars of cash together at one time.
But I imagine this picture to the left is close to what MILLIONS OF DOLLARS OF CASH looks like.
Pretty cool. I'd love to somehow receive a giant lump sum of cash all at one point one day and turn it into wads of bills like this. I'm sure we all would. But consider what I just read the other day:
Did anyone miss that?
78% of NFL players go broke within three years of retirement? That seems ridiculously high. And almost 16% file for bankruptcy at some point in the future? How can that be? Again I ask, how can that be? And here is specifically why I ask the question "how can that be":
The LOWEST annual salary allowed by the league in the NFL in 2016 is $435,000. Divide that by twelve, and you get $36,250 PER MONTH!!!!! How is it possible to go broke within three years of NFL retirement, if you were making close to $36K per month for over three years(!) as an NFL player?
That means that if you were the lowest paid player in the league EACH YEAR for the average NFL career of 3.3 years, you amassed $1,435,500 in salary alone during three years playing. Sure there are taxes, agent costs, etc, but I imagine that you may have done some endorsements or commercials or something to increase your earnings and offset taxes. Or maybe you played longer than 3.3 years. Or, hey, maybe you didn't do any of those things. Buy maybe you also weren't paid at the league minimum for three years either. Chances are you most likely came out close to at least $1.45 million or more over your career. MY POINT IS THAT EVEN THOSE AT THE BOTTOM OF THE SALARY CAP for an average length of NFL career still most likely amassed over 7 figures, before they retired.
So with that the question remains - how are 78% broke after three years in retirement? How can that be? Again I ask, how can that be?
I would venture to guess it is solely because of two primary reasons:
1) A lack of assets that produce cash flow.
2) Expensive living.
I would bet that the vast, vast majority of explanations for those 78% of 'broke' players can be most likely boiled down to the two reasons listed above. 1) If you are not acquiring assets that produce cash flow, and 2) if you are living a very expensive lifestyle, you can easily go broke several years after your large salary suddenly stops.
And this is why the magnitude of your salary is not important. Please hear me: The hidden lesson in the above example is exactly why people with very small salaries can achieve FI while the large majority of NFL players cannot. This is why we bloggers and readers are inspired by DividendMantra and Mr. Money Mustache, and A Frugal Family's Journey, etc. These individuals do not (or did not) make $36,000 a month, yet they are all able to have secure financial futures.
And once again it comes down to two little things, which happen to be the exact opposite of the two reasons listed above. They:
1) Have assets that produce cash flow.
2) Live frugally.
The beauty and the frustrating thing about FI (financial independence) is that it really is that simple. And this simplicity is why I say often around my site and in my comments that IT IS YOUR SYSTEM THAT IS IMPORTANT. Not your salary. If you have a system that is moving you in the right direction of 1) acquiring assets that produce cash flow and 2) keeps you living frugally, then who cares if you have a small salary. You are much better off in the long run than the NFL player who is ignoring these principles.
So stay motivated, do not look to your left and your right at those with large incomes, and ensure your system of honoring the two principles above is intact. Your success is almost guaranteed if you do.
In closing, remember that this:
is more powerful than this:
Always remember Cash flow is more important than large salaries!
Thanks for reading,