There’s one experiment that everyone would love to be a part of. What happens if a million bucks gets dropped into your bank account? Could you hold on to it and use it to improve your life for the long-term? Or would you squander it like so many high-paid athletes, entrepreneurs, and lottery winners?

Unfortunately, there’s no such experiment underway, but a test that I’ve developed, called The Toothpaste Test, will tell you which of these two outcomes is most likely for you, should you ever come into an abundance of money. Everyone thinks they’d be able to handle it, but could you really?

TRANSCRIPT:

Everyone thinks they’d be the exception to the rule.

I preach that you need to have a healthy relationship with money and be financially fit before you ever get a serious amount of money because otherwise it’ll disappear and maybe even leave you in a worse off financial situation than before you got the money. It is so important to have the strength and wherewithal to think about what you’re going to do with this money and have the discipline to see it through and not get thrown off track by other people or “opportunities” or shiny objects that are not aligned with your plan.

When someone tries to skip financial fitness and go straight for bringing in the big bucks, I try and remind them of the statistics on lottery winners, professional athletes, and others who have made vast sums of money but ended up broke, bankrupt, or in expensive lawsuits. Like the lawyer I am, I lay out my case for financial fitness first and that after you have a foundation of financial fitness, you can turn your attention to earning or having more, so that you don’t lose all the money and hurt yourself in the process.

But inevitably, in a half joking way, whoever I’m explaining this to says: “Try me. I don’t think I’m like all those people who squander their money if all of a sudden they came into a lot of money. I can handle it. I’d like to test it.” And yeah, I get it, whether we’re actually ready for it or not, all of us would love a couple million bucks to magically land in our bank accounts.

We’d love to see if we’re one of those people who are bad with money and lose it all, or whether we’re different, and who wouldn’t go bust like all those other people. Of course everyone thinks that they’re special and wouldn’t be so dumb as to lose it all.

Fortunately or unfortunately, there’s no real way for most of us to test this theory with real actual millions of dollars. But I’ve developed a quick test that could tell you what’s likely to happen if you came into an abundance of money. I call it the Toothpaste Test.

And here’s how it goes:  I want you to imagine that you have just gone shopping and you loaded up on toothpaste. Like you got a bunch of tubes, enough to last you months, if not the rest of the year. You’re not running out anytime soon. Ok, so now I’d like you to envision yourself standing at your bathroom sink. You grab your toothbrush, turn on the faucet and wet the bristles, you open your tube of toothpaste and squeeze some onto the brush, knowing that you have what feels like a lifetime supply of toothpaste at your disposal.

Now tell me, how much toothpaste is on your toothbrush? Is it a teeny dab, just enough to get the job done, is it a pea-size amount or is it a chunk of toothpaste so heavy that it falls off into the sink as you raise it to your mouth? Be honest, you used a lot, didn’t you?

So now imagine yourself down to your very last tube of toothpaste, about half way through it, and you’re standing at your sink. You squeeze the tube and put paste on the toothbrush. This time, is it a teeny-tiny amount, a pea-size amount, or way too much toothpaste? This time, if you’re are being honest, you’re trying to make that last tube last as long as humanly possible. So you’ve used the smallest amount possible that you think you can get away with – just barely enough to get the job done. Amiright?

And more importantly, why would this be? And what does it tell us? The tendency we have as humans is to use more of something when there’s an abundance of it, to the point of being wasteful. That’s true whether it’s toothpaste, money, or any other finite resource. We tend to be much more cognizant of how much we use, and become much more careful with it, when a resource is running low. And that’s exactly how most of us behave with money.

We’re quicker to spend it when it feels like there’s more than enough of it and we’re much more thoughtful and careful with money when it feels like we’re running low on funds. Now I’m no dentist but if I recall the directions on the toothpaste tubes correctly, it says to use a pea-sized amount. The correct amount of toothpaste to use for the health of your teeth and gums has nothing to do with how much toothpaste you have at your disposal; it’s whatever your dentist says. Similarly, how much money you should spend, shouldn’t fluctuate with how much you have, it’s whatever your budget says you should spend.

If you use more toothpaste when you have a lot of it in stock, then you’re probably also spending more money when you’re feeling flush with it. And so if you became a multi-millionaire, it’s safe to say that you would eventually, not overnight, but eventually spend it all. Well, that is, until you get to the last of it, you might really stretch out the last few thousand or tens of thousands but until then you’d spend, spend, spend.

You may not even intend for that to happen, but you’d find yourself spending thoughtlessly. You’ll say to yourself, there’s so much more where that came from, what’s 100 bucks here and a thousand bucks there, when I’m a multi-millionaire! But if you use the same amount of toothpaste, regardless of how much you have, you’re probably more consistent and disciplined, and you pass the toothpaste test.

If you’re one of those who spends the same regardless of the fluctuations in your bank account, you are more likely to be a “good” millionaire, which to me means someone who can maintain their money, and actually grow it, and is unlikely to lose it.

So tell me, do you pass the toothpaste test? Let me know in the comments and I’ll catch you in the next video.