Do you have enough?
The answer is subjective
And changes with time

One of the more interesting financial podcasts to me is Ramit Sethi’s “I Will Teach You To Be Rich.” Ramit shares his conversations with podcast guests, some of whom have 7-figure incomes and 8-figure net worth. But they aren’t happy. They are worried about money. They are pinching pennies and having arguments about buying frozen berries from Whole Foods vs. Kroger.

It is possible for someone to implement a fantastic system for growing wealth and mathematically bullet-proof financial security without ever addressing a problematic money mindset. In the absence of financial systems that facilitate a healthy money mindset, or what some people call “mental wealth,” a person can amass plenty of wealth and never feel satisfied.

Consider John D. Rockefeller’s response to the question “How much money is enough?”

“A little bit more.”

In his exceptional book, “The Psychology of Money,” Morgan Housel describes some details of his own financial life. Despite his relatively young age, steady income, and professional success, he has a conservative mindset around money. He has paid off his house and keeps approximately 20% of his net worth in cash.

Morgan writes and speaks about how he knows these aspects of his financial life are not mathematically sound. He goes so far as to say he knows that these decisions look ghastly on paper.

But none of those things matter to Morgan. What looks good on paper matters to a financial planner or analyst and just about no one else. What matters most to Morgan and his wife was the feeling of autonomy they have by not having a mortgage on a home they have no intentions of selling anytime soon. It also matters to them that they have more than enough liquid cash standing by in case they need it.

By paying off his mortgage, Morgan and his wife have converted liquid cash into an illiquid house. They are not getting the tax benefits of deductible mortgage interest. That money isn’t growing in the market. It isn’t even helping their house grow in value, which happens regardless of whether or not they owe $0 or $1,000,000. What’s important to them is that they own their house outright, not a bank. That feels good to them, and they don’t care what anyone else thinks.

The 20% of the Housel’s net worth sitting in cash is losing money to inflation every year. In fact, right now, their cash is earning -8.6% as inflation continues to wear on the economy. But, they don’t have to worry about the potential tax and regulatory complexity of selling investments in order to free up funds for an emergency. Nor do they have to worry about the value of their savings rising and falling as markets ride the rollercoaster of investor sentiment.

There are costs and benefits to every financial decision. The Housels feel comfortable and secure because the price of their choices is worth the benefits they are now enjoying. They make sacrifices on the math side of the ledger to get rewards on the emotional side of the ledger.

But you and I are not Mr. and Mrs. Housel. It would miss the point entirely to pay off your house and move 20% of your assets to cash because Morgan and his wife did.

The point is that everyone needs at some point to ask themselves “what does enough mean?” If you haven’t done this yet, how can you start?

Gratitude is an excellent starting point. What aspects of your life make you feel grateful? If you’re stumped, start with everything that you’d miss if you woke up tomorrow without it.

The answers might have financial implications. I would struggle without a computer, for example, and computers cost money. The electricity to run the computer, my internet connection, and the software I like to use are all expenses I have to pay every month.

But you might get a lot of value from things that have nothing to do with money whatsoever. In late Spring and early Summer, I love sitting outside with my family to watch fireflies. It fills my heart up and only costs me a few mosquito bites.

By tuning your mind to things that are actively adding value to your life, you can start to define what is most important to you. This is a 100% subjective process. The only wrong answer is the one that applies to someone other than yourself.

Once you’ve got an idea of what is most important to you, then you have a values-based framework from which to regard your finances. Is your money aligned with your values? Or have you fallen into the enticing trap of spending, saving, and investing money based on what others say you should be doing?

A financial planner can help you define what is most important to you, and also define some limits regarding what money can and can’t help with. A planner can help educate you regarding certain types of accounts, instruments, and strategies so that you know what is available and appropriate for your situation. A planner can help implement and maintain those strategies so that they work as intended. Lastly, a planner helps keep you on track by giving you a trusted sounding board so that you can address uncertainty as it comes up and plot a new course when it’s time for a change.

So, what does enough mean to you?