The term ‘millionaire’ isn’t what it used to be. Winning, making or stealing a million used to mean that you were made for life; now, whatever currency you’re dealing with, you need multiple millions to kick back into early retirement and enjoy the classic millionaire lifestyle. Let’s pretend that at sometime in your thirties, you inherited a £1,000,000 from some distant relative living in the UK, and see just how possible living the dream would be.
Buy Your House, Or a Better One
The average detached house price in the UK is around £200,000, so buying a new house, or paying off an existing mortgage (leaving room for interest if you had already started paying) shaves a chunk off your million in sterling, leaving you with £800,000. Of course, it would be boring to simply buy the standard house you live in, so let’s say you decided to buy a bigger, better property for £500,000. That leaves you with £500,000.
Put The Kids Through University
Image of Oxford University: via Moore Travel Tips
On average, households in the USA, UK and Australia have between 1.8 and 2.5 children, so let’s say you have two kids who both need educating. In the USA, tuition fees for an entire degree can cost up to $75,000. Then, the little darlings need to stay somewhere whilst they study; at the best universities, this can cost up to $8,000. Then, the bare essentials such as books, pens and paper can run up a bill of $1,500. Altogether, to put two children through university (ignoring day-to-day expenditure, like travel and spending money), the cost is roughly $84,500, or £42,250. That leaves you with £457,750.
Pick Up a Fancy New Car
Image: via AR15
When asked what they would do if they won the lottery, most people would list a nice car as one of the things they would buy. If you’re the extravagant type you might decide to go for the ultimate eye-catching car; a brand new Ferrari 360 Modena. This would set you back $200,000 in Australian dollars, or £114,599. Out of your million in sterling, you would now have a mere £343,151. Goes fast doesn’t it?
Go On a Dream Holiday
Some people may travel the world, but you may want to opt for an expensive holiday rather than a year-long round-the-world backpacker trip, to keep in style with your new affluent life. For argument’s sake, supposing you decide to take a month’s break in Italy’s Lake Como, the popular, exclusive and expensive holiday destination. The cost of taking your family to stay for a month in the most expensive hotel, along with flights, can cost up to £11,000. Then, of course, there is shopping, spas, fun stuff for the kids, food, drink and all the other luxuries, which could come to another £1,500. So, the perfect luxury holiday could cost you up to £12,500, leaving you with £330,651.
Take Care of Grandpa
Looking after elderly relatives is an expensive business, one that many middle-aged children worry about when it comes to money. In the UK, around 40% of elderly people who need social care are paid for out of their own savings or their children’s, with no government help, and the cost is around £25,000 per year, or $50,000 US. So, assuming that Grandpa, or Grandma, lives in residential care for another three years, this would cost you £75,000, leaving you with £255,651.
Help Out a Friend
Image: via Ron Martin
In the UK, personal (that’s unsecured on property) loans reach a maximum of £25,000. Most people have, on average, between three and six close friends, and one in four people are affected by debt problems. So, if you decided to help out your debt-ridden friend, you would lend or give them £25,000 of your million, leaving you with £230,651.
Image: Peter Menzel, from the book Hungry Planet
The average family of two adults and two children run up a £480 food bill every month. That’s £5,760 per year. Assuming it will be another ten years until your kids leave home at 18, you will spend £57,600 feeding the lot of you, taking your nest egg down to £173,051. Once the kids are gone, you and your partner will be roughly 45, with about another 45 years of life ahead of you. So, you’ll spend £2,880 per year on food, or £129,600 for the rest of your life, eating (literally) your million down to £43,451. Spending on clothes in the US is around $474 per person per year, so, added together, you can clothe you and your partner for $42,660, or £21,330. That takes you down to £22,121. The average monthly spending the UK on leisure, including cinema, eating out, sports, holidays and so on, was £350, which would rack up to £15,750 in the remainder of your lifetime, leaving just £6,371.
Can It Be Done?
Having bought the things that most people aspire to buy, you would be left with a measly £6,371, or US$12,742, or AUS$11,136. This is without having paid any phone, internet, water, gas or electricity bills, insurance payments, or pension contributions, which, unfortunately, cost more than £6,000.
So, unfortunately, it looks like a million is no longer enough to live on straight out; you would just have to keep working, although you could work far less and in a job that you really enjoy, rather than the highest paying. Alternatively, investing your million in an account, bond or ISA with an interest rate of 5% would bring returns of £50,000 per year, which would leave you very well off indeed, if not living the millionaire dream.