If you found a $100 bill floating around, what would you do with it? It’s a question I’ve been asking a lot of people lately, and the answers seem to fall into two general groups. According to my notes, I asked thirty one people that very question, and here’s how they fell out.
Spend it. This is where perhaps 90% of the responses fall (28 of them). Their eyes immediately flash with the idea of getting a new gadget or a new article of clothing or a new pile of books or something like that.
Save/invest it/use it to pay off debts. The other three people I asked fell into this category, in which they used that money to build up to more money over time.
After asking that, I followed it up with another question: what if an uncle you didn’t know about suddenly left you $100,000 (after taxes) in his will? The answers changed quite a bit with this one.
Spend it. Almost exactly half of the people (15) would still spend it quickly. I heard answers like getting a great car, outfitting a home theater room, and other such things. One woman actually claimed that she would hire a maid.
Save/invest it/use it to pay off debts. The rest claimed that they would use all or nearly all of it to pay off debts, mostly their homes. A few who own their homes claimed that they would invest it either in improving their current home to sell it later or as a down payment on another home.
When I asked what the difference between the two situations was, most of the people said that $100 wasn’t important enough to really matter, so they might as well spend it.
To me, this response explains exactly why consumer debt is such a problem. People have become so trained as consumers that $100 no longer seems “important” to the average person, and thus it can be spent on consumer goods without guilt. Even more amazing, to some people the same philosophy applies with $100,000.
The parable of the ant and the grasshopper appears here: it’s always better to plan ahead when you can rather than act wastefully now.
What could be done with $100? It could be put into an emergency fund so that the next time your car breaks down, the pinch isn’t so bad. It could be put into an extra house payment, which would singlehandedly drop multiple hundreds of dollars from your final payment. It could be put into your child’s 529, making college easier for them. It could be put into your own Roth IRA. It could be another brick in building a secure future for yourself or your children.
Or it could be spent on something you completely don’t need.
Ask yourself: what would you do if you found $100? Does your answer make you feel happy – or does it make you want to make a change? It’s a question I can’t answer for you – you have to answer it for yourself.