Updated on 02.28.07

The $100 Question – And What It Means

Trent Hamm

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.

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  1. Ellen says:

    I’ve actually been in this situation, sort of–the first one, anyway. I worked a job a few summers ago that involved per diems on top of salary–every week we got handed $280, cash. Some people went crazy with it–sushi every off-night!–but the ones who realized that we were being handed about 3 grand pre-tax for the run of the job ate bus food and kept the cash (despite the pretty strong temptation–it’s so much FUN to break hundreds!).

  2. noah kagan says:

    It would depend on my situation. At my current level I would spend it on a friend and buy them something unique and surprising. If I had more financial troubles I would put it in my money market account.

  3. Citoahc says:

    It is probably a good thing that my first thought was “That $100 would save me $10 in interest over the next year and the year after that until I pay of the credit card.”

  4. Christy says:

    It doesn’t have to be an all or nothing proposition, does it? When I won almost $600 a few years ago, I spent roughly a third on myself, a third paying off bills, and a third donating to charity. To me, that’s a fair way to deal with unexpected money. If it was $100,000, a lot more would go to debt and savings, less to charity, and a lot less to myself for fun, but I’d still divide it up.

  5. Keith says:

    It depends on the situation.

    I set aside a certain limit for retirement savings, regular savings, etc. If I’m below the limit, I’ll plunk some cash down on “important things”. If not, it’s good to spend.

  6. Stephanie says:

    I actually did a post on this a couple days ago, having no idea you were asking people a similar question! I wrote about what I would do with $10, $100, $1000, $10,000, $100,000, and finally $1,000,000. You can read the whole post here: http://kgazette.blogspot.com/2007/02/if-you-give-girl-dollar.html

    For $100, I said I would put it towards my next car and credit card payments. For $100,000 I put a lot of things, but paying off all of my credit card and student loans was a part of it.

  7. Chris says:

    At $100, I might spend it. My wife and I already invest about 13% of our savings each month and still have plenty to pay off whatever debt we have.

    For $100,000, I would look into purchasing or starting my own business. You can easily get one of several franchises for that kind of cash. And since banks generally require at least 20% down for a business loan, you could qualify to purchase something larger than a $100,000 business.

    I still have 30 years to retirement. While that $100,000 would be a great boost to my retirement accounts, it certainly isn’t necessary.

    A business of your own gives you true financial independence immediately, without having to wait decades for your $100,000 to grow to a much larger amount. Yes, it’s risky and yes, it could fail. But, it’s also risky having one job with one boss with sole decision-making power over you and your career.

  8. Rob says:

    For $100 I would spend it. I spend money. I need to eat, sleep, etc.

    But it would mean that I would then have extra cash in the bank that I didn’t need to take out that week. At the end of the month – that goes into savings.

  9. plonkee says:

    I’m not sure about this. If you found $1 would you spend it or save it?

    I bet almost everyone has an amount below which they wouldn’t consider it important enough to matter (regardless of whether they spend it or not). Maybe $100 is a little high but in real life its not an all or nothing proposition. When I get a payrise, I usually plan to invest or save half and spend half and they are pretty small amounts.

  10. $100 spend it on dinner out we don’t spend that much usually and DH loves sushi.

    $100k is a different story, we’d save all but $1k of it probably.

  11. The hundred dollars would go into my wallet and be forgotten about for quite some time. Because I use credit cards (full paid off each month) cash tends to get forgotten in my wallet until I run into a case where I really need (which is quite rare). So I guess it eventually gets spent, but that’s $100 that I don’t have to go to the ATM for. In a way it goes to savings or expenses that I would typically have anyway.

    The difference is a $100 in cash vs. $100 in check form. If it’s in check, it has to go to my bank anyway, so that’s a no-brainer. If it’s $100 in cash, I hate to put it in the bank. I don’t trust ATMs with cash and finding a teller is never easy or convenient.

  12. Michelle says:

    I’ve actually FOUND a $100 bill before. =) I was working retail in a store around Christmas time. I was the only one closing the store and right when I went to close the gate, I noticed the crisp bill just laying on the floor in front of the counter!

    At the time, I didn’t have many bills and was not thinking of my future. So I made the mistake of going shopping a few days later and instead of leaving it at home, I took it with me. But I didn’t spend it on myself. I found a Dale Earnhardt racing jacket for, guess how much…$100…that I just KNEW my now father-in-law would love. It sure was great to see his face on Christmas day! And he still wears it to this day, so I feel as if it was a good investment.

    However, if I were to find $100 today, I would definitely do things differently. My husband and I want to buy a new house…but are going to end up owing money on our current house since the market is so bad. We also have student loan debt and lots of other bills that we didn’t have a few years ago. So I can definitely see that $100 going right into savings or being put towards debt.

    Now if only I could find a $100 bill more often!

  13. Michelle says:

    $100,000 would be put to good use in paying off my high-interest student loan, and my house. That wouldn’t really leave any money left over after taxes.

    But then my husband and I would be able to put away over $3,500 every month directly into savings…or use some of that extra income to pay off other debts like cars.

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