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“ENOUGH” IS a powerful notion. Unfortunately, it’s largely absent from financial conversations.
The concept is rooted in deep self-awareness. It asks the question, how much do I really need to be happy? I believe we should ask this more often because, if we don’t, culture will fill in the blank—and the default answer will be “more.”
Enough has two dimensions. The first dimension is about spending. Too often, we succumb to the hedonic treadmill—the endless pursuit of the next thrilling purchase, only to find our level of happiness unchanged. How’s that been working for you?
The second dimension is about saving and investing. I’m guessing that HumbleDollar readers may grapple more with this aspect of enough. I certainly do. I’m talking about knowing when we’ve saved enough and reached our financial goals. In short, when is enough really enough? If we lack a concept of enough, we’ll end up constantly moving the goal posts farther downfield.
The great enemy of enough is comparison. There will always be someone with more. If we allow it, comparison can be a killjoy. Making comparisons is a deeply ingrained human trait, but that doesn’t mean we can’t overcome it.
Below is a far-from-exhaustive list of benefits that come with knowing what “enough” means to you. When you decide what constitutes enough:
I am 73 and widowed. My question is how much is enough for me so that I can begin giving the excess away to family and friends. I have 1.45 million in a 403b and I draw $2200 month from social security. My very lean budget is $4000 a month and does not account for inflation. My portfolio earns 3-4% a year which is less than my RMDs each month. It sounds like I am rich but I know my wealth would only translate into a $7500 per month annuity/pension payment. However, I would like to leave an inheritance so an annuity is not enticing even if it would make planning easier. Also, I am a child of the 70’s and I am terrified of inflation. How much is enough when planning for a drawdown of 20-30 years?
Based on a 4% withdrawal rate, you could withdraw $58,000 a year, or $4,833 a month, from a $1.45 million portfolio. It seems like you’re in good shape.
I believe that your answer is too simplistic to a complicated problem. It ignores my desire to leave and inheritance and it also ignores inflation. It does not seem to be an adequate solution for me. Thank you for your response.
Might I suggest you begin giving away some money to your heirs now, when you can share in their joy?
It seems paradoxical, but I’ve discovered that giving away money can increase your joy while loosening the grip that money has on our psyches.
“ENOUGH” IS a powerful notion. Unfortunately, it’s largely absent from financial conversations.”
This concept is also absent from investment strategy conversations. So many “passive” index investors still spend extraordinary time, energy & angst squeezing out that last bit of return, jumping among nominal bonds, TIPS, bond funds, Tbills, cds & myriad other fixed income options. Tax loss harvesting strategies, IRMAA & RMD strategies. Constantly strategizing and optimizing.
I get that many enjoy it. I don’t: it feels exhausting. I have accepted that I won’t match their returns or savvy tax savings, but I should still have enough for retirement at the end of the day. And that’s starting to seem like enough to me.
Enough is Enough when you sleep well during times of Financial Distress like now and the 3 downfalls this century
I concur, Kenneth. I think if one can reach a feeling of being “financially bullet proof”, “Enough” has been achieved.
The vast majority of people in the US are not like us. They spend all they make, and don’t save anything. That’s why all the articles in personal finance magazines and web sites talk all the time about reducing debt, cutting back spending, and saving more.
Who reads these articles? Not the people who need to – they’re off vacationing at a luxury resort. Rather, it is people who are already inclined to save and invest. They are the ones who constantly hear that they need to save more and invest more, or they’ll run out of money in retirement.
Of course, a lot of big financial houses want to sell more product and manage more money. It’s in their interest to have everyone save as much as possible, so they can get more fees. But their advice is actually correct for a huge majority of the the population.
Good point. My daughter works a couple of days a week in a day care center. One couple is $2,000 in arrears for payment, but they took the whole family to DisneyWorld on this last spring break. Financial priorities?
Yes, I fear much personal finance writing is indeed preaching to the converted. That’s unfortunate but still useful: Even those who “get it” often need regular reminders.
It’s also needed for early stage converts, those who’ve realized they need to plan, save, and invest, but aren’t sure how.
Your simple advice for recognizing and holding the mindset of “enough” reflects Buddhist admonitions that having a “comparing mind” usually leads to dissatisfaction and discontent (suffering) because someone or something always has more of whatever you value. Our capitalist society thrives on creating feelings of inadequacy if we don’t purchase or indulge in this, that or the other. Like cultivating a mindset of “gratitude,” the concepts you describe are so simple, yet so difficult to practice.
I believe there is a important difference between “Financial Independence” and this term “Enough,” and “Enough” probably requires adding an extra zero to our numbers. Those with truly “Enough” don’t have to shop carefully, read Humble Dollar daily, ponder tax issues and asset allocations, worry about inflation, and thoughtfully consider donations. While many folks may achieve financial independence, few will ever reach enough.
I agree. Many of those claiming financial independence do so through extreme (my opinion) frugality. They may find that acceptable even satisfying, but that is not my idea of “enough” when you must monitor a monthly budget and buy at thrift stores.
I am fortunate to have what I feel is both “Financial Independence” and “Enough”. By your definition, “Enough” would be 10x what I have. No way! I am lightyears from the top 1% but am very content with what I do have and am quite free to do what I want when I want. I suspect many regular HD readers “shop carefully, read HD daily, ponder tax issues and asset allocations, etc.” because they want to and it’s part of who they are even if they, at the same time, feel they have “Enough”. Too many people in my area of the world have your definition of “Enough” and to this reader it’s sort of gross. I do NOT say that out of envy by any means!
I would respectfully suggest that many HD readers have “enough” *because* they shop carefully, read HD daily, ponder tax issues and asset allocations, et al. I fail to see why this should be framed as an either- or- situation, in my view (many times) one naturally follows the other, or ideally it should. For me, that’s kind of the whole point, in a way.
But I think there’s a law of diminishing returns at play: quality of life vs optimizing every aspect & angle.
How deeply should we dive into intricate tax loss harvesting strategies? How much “litter box” shuffling in fixed income assets? How much comparison shopping before we can feel good about pulling the trigger on a needed item? I’ve seen the pursuit of optimization become as obsessive an exercise for some, as out of control spending is for others.
When do we give ourselves permission that what we’ve done is “good enough”?
I don’t disagree, but still believe Mr. Lim’s final two points are quite challenging to achieve enough: “give generously” (alzheimer’s and cancer have particularly impacted our family) and “stop worrying”.