How Much is Enough? Income.

How Much is Enough? Income.

May 07, 2019
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In this article: 

  • The importance of mindset and the three keys to having “enough” 
  • Defining enough 
  • Contentment: a contrarian perspective 
  • Planning to keep it enough 

During the Christmas shopping season last year I saw an ad about a man Christmas shopping at an electronics store. The salesman said, “Hey, why not a new TV for you and everyone in your family, the newest models are on sale!” And the man says, “Oh yeah, I haven’t upgraded my TV in a couple of years!” 

The implication was clear: if we haven’t updated our TV in a couple of years,then ours is too old! Marketing isn’t evil, but constantly thinking about what we want but don’t have will give jobs to dollars we don’t even have yet. Then when we get that sought after raise, the new dollars are already gone. They slipped through our fingers! No, they were assigned by our wants before we even got them.  

This is why our mindset about money and how much is enough is so important. Let’s look at the three keys to answering the question of how much is enough income: 

Key 1: Define Enough 

There’s a story of two people on their way to work. When both get a flat tire, one has the means to get their car towed to a store and repaired while at work. The other spends the rest of the week on the flat tire trying to scrap together the funds to buy a new tire - or worse, buys tires on a credit card paying 20% interest. 

If enough is defined by the next higher standard of living level we aspire to then we’ll never feel confident about our income. But if enough can be defined by meeting our needs today and the financial capacity to weather the regular bumps in life,that’s a number we can calculate by adding up our monthly living expenses and deciding a target savings amount. 

If you have enough to cover the living expenses and flat tires in your life, you probably have enough - even if you don’t have this year’s TV. A great way to help you determine how much income is really enough is setting a budget, and you can learn more about that HERE.

 

Key 2: Contentment 

Once you’ve decided how much is enough - and used real-life numbers to make that decision - you can shift your mindset. Contentment is a choice, and if you know deep down that you have enough you can tell the media messages of more more more to take a hike. 

For example: 

Perfect looking person on TV: “Hey, check out what my car can do, only $300 a month! 

You: “No, that’s ok, I like my car, I have enough.” 

We live in a world of excess consumption and consumer debt. Smart investors choose contentment so they can move dollars from impulse buys to the rewards of planning. 

 

Key 3: Planning 

Planning is part of deciding how much is enough because when you assign dollars to long-term goals you get the gratification of meeting those goals.  

Planning is the difference between scarcity mentality: “If only we had more money we could _. ” And contentment mentality: “We’d like to _ (insert life goal) so we’ll make a plan to save for it.” 

For example: 

Perfect looking person on TV: “Hey, check out what my car can do, only $300 a month! 

You: “No, that’s ok, I like my car, I have enough. And in fact, I’m saving now for my next car that’s going to be what I want, not what you tell me I want.” 

The rewards of planning can be short-term for family vacations, medium-term for replacement vehicles, and long-term for retirement. But it all starts with defining what is enough and then choosing an attitude of contentment so those planning dollars aren’t diverted away from your real goals. 

This is the first in our “How Much is Enough?” series. Next time we’ll be talking about how much is enough insurance. Would you like some help determining how much is enough and making some financial life plans? Contact us to setup a time to meet. 

Photo by Sharon McCutcheon on Unsplash