We all want a fulfilling life, but fulfillment doesn’t come automatically with greater wealth. In fact, continuously building wealth could increase your anxiety. As Morgan Housel said in The Psychology of Money: “The hardest financial skill is getting the goalpost to stop moving. If expectations rise with results there is no logic in striving for more because you’ll feel the same after putting in extra effort.”
Determining how much is “enough” for you will give you clarity about the best next steps for your business. It’s not about lowering ambition or settling for mediocrity. It’s about recognizing that none of us has unlimited time, energy, or resources. Every choice involves tradeoffs. Without knowing how much is enough to meet your goals, it’s easy to sacrifice your health, relationships, or dreams in pursuit of endless wealth building. Many people wait too long, missing opportunities to enjoy life and leaving too much money to their heirs.
One of the most common questions I get is “how much money will I need to retire?” It’s different for everyone. Some retirees are content with $5,000 a month, while others can’t imagine living on less than $100,000. You must identify what matters to you.
Three Levels of Spending
A helpful way to define what “enough” looks like for you is to sort your expenses into three categories: essential, important, and discretionary.
Essential spending is your non-negotiables: housing, transportation, food, utilities, medical care, clothing, and other basics. Peace of mind can come from knowing you have all the essentials covered, no matter what happens.
Important spending covers things that matter deeply to you but aren’t critical. Examples could include hobbies, home renovations, education, weddings, travel, or philanthropy. They bring joy and meaning, but in a crisis, you could reduce or eliminate them.
Discretionary spending is where your wealth can unlock the most exciting possibilities. It might mean buying a vacation home, helping grandchildren with major purchases, or funding a passion project. Once essentials and important expenses are secured, discretionary spending allows you to focus on impact and legacy without worrying about “having enough.”
Putting It into Practice
Try this exercise: write down everything you might want or need to spend money on for the rest of your life. Estimate the timing and cost of each. Then sort them into essential, important, and discretionary categories.
When we do this with our clients, we model their ability to cover each category under different economic conditions. Many are surprised to find they can meet not only their essential and important goals, but discretionary ones as well. Others decide it’s not worth the time or energy to continue working towards discretionary goals if they can retire now and meet their essential and important spending. Either way, this clarity allows them to make an informed decision.
Gary’s Story
In his late 60s, Gary was on the brink of selling his business, but he felt unsettled. His whole life he had worked hard to earn a living. His income increased exponentially as his business grew over time, and so did his lifestyle. Now he worried about being trapped in a lower standard of living without the ability to grow his income further through his business. He was also uneasy about relying solely on his assets to meet his needs.
Gary and his wife went through this exercise with us, categorizing their wants into the three buckets. They were surprised to discover they could cover everything on all three lists—even if inflation ran higher or investment returns came in lower than expected. This realization lifted a huge weight. Gary was a new man. Every time I saw him afterward, he seemed lighter, almost as if he were floating on clouds without a care in the world. He sold his business without worry or regret. Most importantly, he and his wife are now enjoying all the things they had long hoped to do.
Knowing what “enough” looks like gives you the freedom to stop striving and start living. If you or someone you care about would like help defining it, we’d be honored to be a resource.
