Money Matters: How Much is Enough?
Written By: Leah Woodly
In a world where we are inundated with so many opportunities to spend, it is easy to fall victim to the trap of more, more, more. When success is measured by billions and Birkins rather than impact and influence, it is easy to detour from a responsible financial path tin an attempt to get to that elusive place of having it all.
I’ve seen this up close and personal. I recently read through client notes, where a husband and wife in their sixties were preparing for retirement. They had amassed over a million dollars worth of liquid assets (assets they could easily turn into cash), but the husband was not convinced that they could retire. The advisor helping them with their retirement plan illustrated that they would not need to touch most of their investments to retire with ease. The wife, satisfied with their fiscal position, was completely exasperated by her husband’s need for more. The wife asked: “How much is enough?”
The wife’s question, though posed to her husband, felt directed right at me. I had to pause and evaluate my wants and needs so I don’t end up like her husband, in an endless pursuit of more.
Thus I ask you — What is your “enough?” Your answer will impact nearly every aspect of your finances. It will influence how you spend your money. It will impact the amount and means by which you invest. It has bearing on whether or not you need certain legal documents to facilitate transfer of wealth.
It will stop you from hopping on the latest Robinhood trend and following random Tik Tok advice and will lead you to consider how those things fit into your big financial picture.
So, to figure out what your “enough” looks like, you first need to figure out your core values, be honest with where you stand fiscally now, and seek out professional help.
Get to the Core
Value — the regard that something is held to deserve; the importance, worth, or usefulness of something
- Oxford English Dictionary
Your values ultimately define how much is enough. If your money is like gas in a car, your values drive the car to the destination. These values may be activism, creativity, environmentalism, or family. Maybe you value faith, generosity, health, independence or justice. Write down your top five values. If you are married, discuss your values together. Let these values dictate how you spend your money. Let these values dictate how you invest money. (Did you know socially responsible investing is a thing? Look up ESG investing.) Let these values lead you to your “enough”.
Get a Grip on Your Finances
You can’t know how much is enough without knowing how much you have now. It is imperative that you know your current income and expenses. You can track your spending for thirty days with good ole pen and paper. Not your style? You can opt to utilize your bank’s tracking services or apps such as Mint or YNAB. Furthermore, determine the value of your assets. Gather together your retirement statements (e.g. 401k, 403b, 457, IRA, Roth IRAs), brokerage accounts, checking and savings account balances, etc. You also need to know your liabilities. This includes all your debt payments such as credit cards, loans, mortgage, etc. Knowing all of this information will allow you to assess where you are now in relation to where you need to go.
Get Certified Help
While I believe individuals can figure any and everything out eventually, I think it wise to get help, especially when it comes to your finances. Good help can be hard to come by these days, as all “financial advisors” are equal. Almost anyone can call themselves a financial advisor, and many “advisors” are simply salespeople, selling pre-packaged products under the guise of well thought out financial advice. I strongly recommend seeking out a CERTIFIED FINANCIAL PLANNER® as they must adhere to a code of ethics in order to maintain thier CFP® designation (in addition to their mandated education and experience). Your planner will partner with you to determine your enough and the strategies and steps needed to get there.
After following these steps, I realized my “enough” includes being completely debt-free, retiring by a specific age, traveling internationally every year, and leaving an inheritance to my children and future grandchildren. Maybe this is true for you too; maybe your “enough” looks wildly different. No matter. Just remember you don’t have to chase money for the rest of your life. You don’t have to hop on every financial trend that comes your way.
If you know how much is enough for YOU, you can manage your money to enjoy a quality of life that is most meaningful to YOU.