How much is enough?

Posted in News on 16th August 2023

A conversation that often arises with clients when completing a Financial Plan is around how much is enough. Everyone is different and has unique wants and needs in life, most of which come with a financial price tag. If someone could wave a magic wand and guarantee each of your wants and needs in life, would that be enough for you?

This all might sound a bit philosophical, but really that’s only because we’re not programmed to naturally think this way in relation to our finances and our investments. Instead, people fret about the size of their pension fund, whether their particular investment fund is going to deliver the very best possible outcomes or what they will do if their pension contributions bring them up to the €2m Standard Fund Threshold (yes, people lie awake thinking about this). We worry about growing our money as much as possible, about making use of every cent of available tax relief and working until our late 60’s to accumulate as much wealth as possible.

For what?

Because thankfully quite infrequently, we have other much more difficult conversations with clients during the Financial Planning process. These are the conversations where a client is seriously ill, and their prognosis is poor. While these conversations with us of course are about money, the real focus of the conversation is about time. This is the most precious resource to these people, and one that money unfortunately cannot buy.

These Financial Planning conversations jolt us back to considering both for ourselves and our clients the importance of recognising how much is enough. These conversations remind us that whether we have €500,000 or €600,000 in our investment fund or even whether we have €5million or €6 million is somewhat irrelevant. Target wealth levels to make one feel better don’t really matter, as once you achieve that number, you’ll likely just want to achieve a higher number. Instead, if you fully determine and articulate the life that you want to live through financial planning and all of the things you want to do, surely if you have enough money to achieve these, that is enough? We read a piece recently that quoted an interview on CNBC with the billionaire Warren Buffett who said he would be very happy with €100,000 a year. That is enough to fulfil his wants and needs. Another legendary investor, Jack Bogle once said that enough is one dollar more than you need.

We’re not suggesting for one moment that achieving the best investment outcomes etc. is not important – of course it is. But it is only a means to an end, and the goal of Financial Planning should be ensuring you have enough to live life on your terms. Once you realise that you have enough, this liberates you in so many ways. You don’t have to worry about money, maybe you don’t have to work anymore, even though you might choose to for other reasons. Now you can spend your time doing the things you want to do, safe in the knowledge that you have enough money to live your life. This is true financial freedom.

Going back to our difficult conversations with ill clients, they never wish they had worked longer, had made more money or had more money in the bank (beyond providing for their family after their death). Instead, any regrets tend to be around wishing they has worked less, had spent more time with the people they love and had more experiences in the memory bank.

By the way, these conversations with ill clients are not always regretful! While sad, they are often the most uplifting conversations that we have the honor of being privy to. We hear people who lived full lives surrounded by the people they love, did the things they wanted to do and who are leaving strong legacies after them. While they might be running out of time, they left it all out on the pitch and have no regrets. “Enough” instead of “More” was their guiding North Star and that was how they lived their life.

How much is enough for you?

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