A Billion – With A ‘B’

I don’t think many people can actually visualize how much a billion is. All too frequently the media throws around numbers that companies spend, governments borrow, industries need. 10 Billion this, 15 Billion that, 750 Billion in bailouts… It all adds up.

But it’s a *lot* of money! So here’s a little enlightenment.

If you had to spend $1 Billion in one year you would need to spend it at a rate of $2.7 million a day.

Stack $1 bills on top of each other and you would end up with the top of the stack 32,000 feet high – right about the altitude where airplanes fly around the world.

Think you can earn $1 billion? Well for the average working American man who earns $45,311 (median income for 2007) you’d be slugging it away for 22,166 years – but we know we don’t live that long. So you’d have to be reborn 286 times. That’s a lot of work.

So maybe your strategy is to marry David Beckham and get him to help you earn that $1 Billion. Well if that’s your strategy you’d have to make sure he can play football and earn the same amount every year for 20 years. After all, it takes a long time to make a billion from $50 million annually.

OK – you’re lucky. You inherited a billion the day you were born. Better get ready to start spending it. Without taking into account the interest, you would need to spend it at a rate of $13.2 million per year – for every year of your life.

But you don’t need a billion. Really. Just having a billion for one month then giving it all back again and earning a paltry 2% annually amortized interest while you had it would do. At the end of one month, you would have earned $1.7 million – in interest!

I recently read a story on the BBC web site in which Barclays Bank accidentally debited a students account 100 billion (pounds not dollars). Imagine it got deposited into your savings account by mistake and you left it there for a month.

That would be a nice $167 million in interest (even more in pounds than dollars). Not bad.

But what this really does is puts the numbers into perspective. It’s easy to ignore or not really comprehend the amount of money involved when governments and companies spend or earn billions. A billion here, a billion there. We really should pay more attention.

Makes you think doesn’t it…