How much is “enough money”? It’s a question that plenty of people have tried to answer, but the truth is that “enough” is different for everyone. Much like how we all have different calorie intake and sleep needs, money needs are unique to each person. So, instead of offering some prescriptive amount of money you should have in the bank, or strict rules on how much you should save and spend, we want to take some time to help you figure out what “enough” looks like for you. First, we need to talk about values.
Touch base with your values
Before you know what “enough” looks like for you, you should really think about what “enough” means to you. Does “enough” mean having money in the bank for retirement? Does it mean having enough to spend on vacations when you find a good deal? Does it mean having a house that supports your growing family? Does “enough” mean not having to think about how much you spend at the grocery store? Enough is defined differently by everyone. In our work with couples, we’ve also seen how “enough” can differ within a household.
So, that’s why we recommend starting any conversation about your “Enough” number by talking about values. Our values are things we regard as important to our lives, and are the beliefs we prioritize or hold dear. Values apply to more than money, but how we live our lives often guides how we spend our money.
Take a minute to ask yourself, “What do I value?” It’s not an easy question, so you might also want to think of times in your life when you were most proud, happy, fulfilled or satisfied. What was it about those times that made you feel good? This is a good exercise you can use to find your values. You can also use our Values Exercise to pull out more of your values.
If you have a few values, such as “time with family” or “experience through travel,” you can see how those will affect your money. You may want to spend more money on a home for your family, or to travel to see distant relatives. If travel is important to you, you may forego other activities like dining out to fund your next trip. Whatever you value most is totally fine — don’t let others’ opinions affect the values you draw on.
Once you’ve got a handful of values and can connect how those relate to how you spend your money, it’s time to move on to understanding your “Enough” number.
The “Enough” formula
Now that you understand which values affect how you measure “Enough,” you can take a look at the more quantifiable (numbers) side of things. Your values and goals are great, but that enough number needs to be a number. So, let’s introduce the “Enough” formula. To do this, you’ll need to round up all your monthly expenses — everything you spend in a month on bills, groceries, gas, etc. If you don’t have a budget for each category, you can average out the last few months’ expenses to get an average. Don’t include what you put to savings unless it’s an automatic withdrawal or contribution, and don’t include “discretionary” funds, like clothes shopping, dining out, etc.
Instead, figure out what you’d want to save, including for retirement, short-term savings, and upcoming larger bills (insurance, car repairs, etc.). Also calculate what you would like to spend on discretionary items, like clothes, dining out, entertainment, and so on.
Once you’ve collected those three totals, it’s time to do some simple math!
To figure out your ‘Enough Number’, calculate:
(Your total monthly expenses)
+ (How much you want to save each month)
+ (How much discretionary money you want to spend each month)
= Your monthly “Enough” number.
Of course, if you want to see what “enough” looks like for you on a yearly level, you can multiply your monthly number by 12. This is a great way to highlight any discrepancies between your “Enough” number and what you bring in a year, whether as an individual or as a couple.
What happens if your “Enough” number is more than what you earn?
Notice how we included the word “want” in your formula for savings and discretionary spending? That’s because, sometimes, what we want to save and spend outweigh what we can save and spend. So, if you calculate your “Enough” number and you’re seeing that you want more than you have, there might be some work to do. This could take three forms:
Trimming down your expenses. Look for ways to save on things like cable/internet, extra subscriptions you don’t use, rent and car payments, etc. This will allow more money to flow to your save + spend categories.
Adjusting your discretionary spending numbers. Sometimes, you can’t afford the shopping budget you want, so cut back on this discretionary spending number until your “Enough” number balances out. You can make do without while you figure out how to increase your income or decrease expenses.
Making more money. We know, it’s not that easy, but sometimes you’ll realize you need to put in some overtime, ask for a raise, or even start a side gig to get the “Enough” number you want.
Depending on how large the difference is between what you make and what your “Enough” number is, you may need to do all three.
Adjust your expectations and understand your “Enough”
One word of caution here: sometimes our expectations of what we want can muddle our “Enough” number. So touch base with your values and make sure that everything you are currently spending and want to spend are aligned. You can even look at each part of your budget to ask yourself “Is this in line with what I value?” You’ll be surprised by what comes up!
It may take some tweaking, and a new plan of action, but you can reach your “Enough” number when you clearly outline it in this way. We’d love to hear how it goes, and what you learned from this exercise! Share this article on Facebook or shoot us a comment on Instagram about how this has helped you… we’d love to hear it.