Jordan Peterson: Here’s What Would Really Happen If You Had $400 Million
Written by
Gina Hagler
Edited by
Nicholas Morine
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Dr. Jordan B. Peterson is a Canadian psychologist and author. Among his many books, “12 Rules for Life: An Antidote to Chaos” contains advice that can be used for managing your personal finances. In a recent YouTube short, he spoke about the reality of suddenly receiving $400 million.
“People say,” Peterson said, “‘I’d be happy if I had $400 million.’ It’s like, you think you could handle that responsibility? Do you? Like you’re so sure of that? You can’t even control your household budget. You live from paycheck to paycheck. Now someone is going to dump a treasure on your steps, and that’s going to fix your life?”
Among the burdens that come with this windfall, Peterson mentions the attention it will draw from family and friends, the burden of deciding how much is the right amount to share, and the fact that the average family fortune lasts for just three generations due to a lack of proper management. What do Peterson’s comments mean for those of us with far less than $400 million on the horizon?
5 Steps to Managing “Found” Money
If you’re fortunate enough to receive an unanticipated bonus or inheritance, your first reaction might be to celebrate. Soon after, though, you’ll be faced with the reality of managing that money. How can Peterson’s insights guide you?
- Treat this money as a responsibility. If you focus only on the excitement of suddenly having extra money, you’re not as likely to plan your expenditures. Spending recklessly will be the surest way to run through the cash, leaving you with some great experiences and goods, yet not much better off than you were. You also need to take into account that this money may increase your liability at tax time.
- Create spending categories. What’s reckless to one person may not be reckless to another, so first, set aside 25% for future emergencies and the money you’ll need for additional taxes. If you’re sharing with family or friends, also set that amount aside now. Then, allocate the remaining funds between your spending categories: what you must have, what you’d like to have, and what you consider a splurge.
- Make a list of possible uses for your money. We all have more than enough ways to spend our money, but only a certain amount to spend. List everything, then, assign it all to one of the spending categories you’ve created. Prioritize the items in each list.
- Add the cost for each item. Here comes the part about handling responsibility. Add the prices. Don’t guess; take the time to look them up. Total what you’ve got, compare that to the amount you’ve allocated, and calculate the amount you are over or under.
- Finalize your lists. With your groundwork complete, re-allocate the money between your spending categories to cover the cost of the items in that category. You may find you’ll need to cut some things from your list. Maybe you’ll decide to prioritize the need category before the splurges — maybe not. Give it some thought and make a decision you feel good about.
With some thought, discipline, and a game plan, you can take Peterson’s words to heart and responsibly handle any large sum of money that comes your way.
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