Who wants to be a millionaire? Part 2

In Part 1 of this topic, we explored the idea of becoming a millionaire and how there are three very different strategies you can use. The Scrimp and Save method is the simplest method that anyone can adopt, all it takes is the commitment to three requirements and the time to see it through. Start early and you’ll be mathematically guaranteed to become a millionaire. Now, let’s look at the second method, Hoping and Praying.

Hope and Pray

This strategy to becoming a millionaire comes from the ‘get rich quick’ school of thought, you hope that you bought the winning lotto ticket, hit the jackpot at the casino or you pray that you come into a large inheritance or that the heavily leveraged bet on shares or real estate grows 10 times. While you can become a millionaire from this method, the odds are generally stacked against you, especially when it comes to lotto and gambling. You may have a bit more luck with leveraged bets on shares or real estate if your timing is right and you avoid any market crashes.

The Problem with it

The problem with this method is that it’s usually a ‘dream’, a fantasy that captures your imagination. How good would it be if you won the $50m lotto? Or you put $10,000 into shares that grew to be worth $1m. Apart from the fact the amazing feeling would be short lived, in reality it’s unlikely to happen. By following this method you don’t need to ‘take control’ of your finances, you can just hope and pray that whatever you do will somehow make you a millionaire. If it works you can take the credit, if it doesn’t work you can just blame it on bad luck.

Let’s take a quick look at applying the hope and pray strategy to Oz lotto. Say you played every week for 40 years, spending approx. $60 per week on games (so you could have all your lucky numbers of course!), you’d have spent $125,008 on tickets. Now in that time you could have got lucky but with odds of 1 in 45,379,620, during that time you would have been having to do a lot of hoping and praying. Had you put the money spent on lotto tickets towards the Scrimping and Saving method you’d have made it halfway to the total savings needed.

It’s not the answer

The Hope and Pray method is seductive and can easily cloud your judgement with the dream of “what if?” However much you want to implement this strategy you will be far better choosing from the other two alternatives. If you want to be certain of becoming a millionaire, choose the Scrimp and Save method. If you want to get there faster, have a little bit more risk and develop the skills to go beyond one million dollars, pick the Earning and Investing strategy. This will be my next post.

Your path to being a millionaire is an adventure that you should enjoy, don’t leave it to hoping and praying that you’ll reach the millionaire destination.

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