How much money is enough?

Figuring out how much money is truly “enough” can be one of the most difficult financial questions we face. It’s not just about earnings or savings it’s about the trade-off between spending for today and planning for the future.

There’s no universal formula for getting this right. For some people, “enough” might mean financial freedom decades from now. For others, it could mean prioritising time with family, even if it costs more in the short term.

In this short video, financial writer and planner CARL RICHARDS explains how we can each find a personal answer to this age-old question.

Key takeaways

The concept of “enough” is personal; no one else can define it for you.

Spending on experiences tends to bring more long-term happiness than buying material possessions.

Earning more doesn’t guarantee greater happiness unless it aligns with your values.

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Transcript

ROBIN POWELL: Financial planner and writer Carl Richards has spent his career helping people find the right balance between saving and investing on one hand, and spending on the other.

Of course, that balance will be different for everyone, but there is, he says, a fundamental question we all need to ask ourselves.

CARL RICHARDS: Whether it's not saving enough or saving too much. Like they're both challenges. Most of them come down to one simple concept. And that is defining what enough is, right? Getting comfortable with your enough. And that's part of the problem here, is there's no buddy who can tell you the answer, right? 

There's nobody can tell you the answer. Should you spend on this weekend trip with the family? 

Or should you say that because you might need it 30 years from now? 

RP: These are all issues that a good financial planner can help you with.

But ultimately you need to decide for yourself where your priorities lie.

CR: So you do the spreadsheet. Important. Incredibly important. And then you kind of tear it up and you do your sun salutations or your yoga, or you go on your morning walk. Whatever you do, they get quiet and say, which one's more valuable to me because you're the only one that will know that answer. And I think that will get you closer to enough.

Sometimes you'll say, you know what? That experience isn't as important as making sure we have money 20 years from now. And sometimes you'll say, right now, our family really needs this. And both of those times you'll be right. 

RP: A rule that Carl Richards applies in his own life is to prioritise spending on experiences, as opposed to physical possessions. 

It’s advice that’s supported by academic evidence.

CR: The research is pretty clear. Experiences bring more happiness than stuff, right? And that those experiences include experiences today. And they include experiences 20 years from now and some of those experiences far off 20 years from now. You have a hard time even imagining, because the research is also clear when we think about ourselves 20 years in the future, we have the same emotional connection as we do A stranger. 

RP: Something else to bear in mind when you’re tempted to buy a new car or the latest smartphone is what behavioural scientists called the hedonic treadmill.

Simply put, the thrill we experience from buying things soon wears off.

CR: The point is, at a certain level, and this is true with ice cream. It's true with chocolate chip cookies. It's true with running. It's true with everything. At a certain level, there is decreasing marginal utility. Right. The added benefit for one more bite of ice cream when you go from buy one, that's the best buy to is really awesome.

You get to by 47 and it's actually getting worse. Right? And it's the same thing with income. Like unless we're really clear about how we're using it, it's just earning more is not going to make you any happier. 

RP: Again, only you can decide what you want to spend your money on.

And if you’ve not done this already, there’s no time like the present to figure out what your values and priorities in life really are.