How Much Money is Enough?


Written By: Sheelagh Blumberg

So many people spend their lives only pursuing money. I can see it literally and metaphorically every day, especially when living in Los Angeles. People should realize that income is how we build our worth. After consuming our earnings, we can save what we have left to construct our wealth. Perhaps the most significant part that this question misrepresents is unasked: How do I build enough cash flow for the life I want to live?

That used to be who I was. I believed in the myth that more money is always better. It was an empty and sad way to live a life. I was told early in my life that money is a scorecard to determine if I was winning. I was also told it’s a measure of how much worth you have put into the world. But neither of those is accurate. I was getting financially well off, but I wasn’t living a rich, satisfying life.

If you ask a billionaire, he’ll likely respond that no amount is enough. Others might reflexively say, “One million dollars.” Those that are more thoughtful might have a different number. There comes the point that there might be a better way to spend your time than chasing more money. You’ll never know if you’ve reached that point if you don’t define it.

Studies have shown that happiness doesn’t increase beyond $70-75k per year. That’s a comfortable living in most parts of the country, but it’s not enough to drive a new Mercedes every three years and vacation in Europe with the family every summer. It would be tough to send your child to Harvard on a $70,000 salary.

How much is enough? It depends on you and your circumstances.

I will ask you these questions. Be truthful with yourself. You need to realize is that you may answer these questions one way now, but it can change in ten years. Time changes everything.

  • What sort of life do I like to live?
  • What do I value?
  • What is my mission?
  • What does the ideal day look like?
  • What truly makes me satisfied?
  • What do I want to be my legacy?

Now that you can answer the first part, it’s time to find exactly what that number is and consider how much you need to live fully.

How old are you? How much longer do you expect to live? If you’re 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’re expected to live. Plan to live longer than expected!

How much are your monthly expenses? What would your costs be if you were living the life of your dreams? Let your imagination run wild. What expenses would you have? A new bowling ball each year or the second house in Bali? A housekeeper? A thoroughbred? It’s your life. Determine how much it would take to finance your ideal life.

Who are you responsible for? Do you have two children that will attend college in the next ten years? Do you have a partner that doesn’t work? Do you care for an elder parent? For how long do you anticipate providing for others financially?

What is your current debt situation? Do you have 20 years left on a mortgage hanging over your head? Significant medical bills? Credit cards?

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? How much would a typical month in retirement cost?

Maybe you value your free time above all else and would be happy living a simple life with a Labrador retriever and a large vegetable garden, reading books all afternoon.

What toys do you want to own? A plane? A Porsche? A boat? A second home? Swimming pool? Motorcycle?

There’s no set answer to the question, “How much money is enough?” It’s utterly dependent on your desires and circumstances. The number might be relatively minor or extremely high. It’s your number, no one else. If you’ve never thought about how much cash flow you need, take the time to think about it.

There are several ways you can calculate how much money you need for financial freedom, but the most precise is to multiply your expected annual expenses by 25, so it takes about $100,000 to live the life I love to live, so my number was $100,000 x 25 = $2,500,000

The calculation was straightforward, and I chose to stick to it. That was more than enough for me.

I made a commitment to myself that once I made $2,500,000, it would be sufficient for me. At that time, I would no longer chase money unless it aligned with something I’m incredibly inspired by or that aligns with the life I wanted to live.

Of course, I am still making money, but I love what I do and only work on what I’m impassioned by. Money is just a number unless there are dreams and aspirations behind it. 

Money is great for a few things: mainly, solving problems and providing choices. It has limited value beyond those two purposes. Many people think that money is to buy you status. It is a mistake to use the funds to establish status. Honestly, living life to impress anyone is above who you are. You are no longer a teenager, so leave impressing your peers to teenager. Needing money for the wrong things is restraining. It requires working longer and harder than necessary, so you don’t get to enjoy what life is really about.

So, what’s your number? How much money is enough?

You could be doing other things with your finite time on Earth other than just making money. Think long and hard about what is most meaningful to you. Ensure that you generate an income, savings, and net worth to obtain the possessions and freedom that will allow you to live your life in the way you truly desire. Spend time addressing this critical issue. You might be able to quit working sooner than you think.

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