How Much is Enough?

 

I often come across men and women who feel they are not earning enough. The issue is that when I ask them to quantity how much is enough, they have a hard time coming up with a clear answer.

 

A billionaire will probably respond that no amount is enough.

Others might say, "One million dollars (euro peso pound ...you name it!)" or have a different number.

 

There comes a point that there might be a better way to spend your time than chasing more money. You will unfortunately never know if you have reached that point if you don't define it. So, let's dive into it, shall we?

 

Studies in the US have shown that happiness doesn't increase beyond an income of $70-75k per year. Unless you live in a very low cost location, that is a comfortable amount, but it is unlikely to be enough to drive a new Mercedes every three years and vacation abroad with the family every summer.

 

How much is enough? The short answer is : It depends on you and your circumstances.

 

Consider how much you need to live fully:

 

1. How old are you? How much longer do you expect to live? If you are 90, you probably require less money for the rest of your life than someone that just turned 30. There are actuarial tables that can tell you how much longer you are expected to live.

One piece of advice : Plan to live "longer than expected"! It is better to do so in order to avoid having no money at all and some years to live.
 

2. How much are your monthly expenses? What would your expenses be if you were living the life of your dreams? Let your imagination run wild. What expenses would you have? A housekeeper? Holidays with your family? A huge property by the beach? It is your life. Determine how much it would take to finance your ideal life.
    
3. Who are you responsible for? Do you have three children that will attend University in the next 15 years? Do you have a spouse that doesn't work? Do you care for an aging parent? For how long do you expect to financially provide for others? This has to be factored in.
    
4. What is your current debt situation? Do you have 10 years left on a mortgage hanging over your head? Credit cards debt?
    
5. When would you like to retire and how much do you need each month to live comfortably? How would you like to spend your retirement? Do you want to travel regularly? Play golf every day? Have a much more quiet life?

How much would a typical month in retirement cost? We tend to underestimate the cost of healthcare when we are younger, be as realistic as possible here!
 

6. What "toys" do you want to own? A plane? A boat? A second home? Swimming pool? Motorcycle? This is also to betaken into consideration as it takes money out of your pocket every month.

 

 As you see, there is no set answer to the question : "How much money is enough?" It is completely dependent on your desires and personal circumstances. The number might be quite small or very high. It is your number. If you have never considered how much money you need, take the time to think about it. You may be surprised by how high or how low this amount actually is, and the earlier you start the process, the longer you have to reach it.

 

Money is great for two things: solving problems and providing choices. It has limited value beyond those two purposes. It is a mistake to use money for establishing status.

 

You could be doing other things with your money and limited time on Earth.

 

Think long and hard about what is most important to you.

Ensure that you develop an income, savings, and net worth to acquire the possessions and freedom that will allow you to live your life in the way you desire.

Spend time addressing this important issue.

 

You might be able to quit worrying sooner than you think!