Money: How to Know If You Have Enough

~The Simple Sophisticate, episode #138 ~Subscribe to The Simple Sophisticate: iTunes | Stitcher | iHeartRadio "Enough is the quality of having everything you need and want but nothing in excess, nothing that burdens you." —Vicki Robin, author of Your Money or Your Life While numerically, there isn't a magic number equated to having enough money due to a myriad of variables, it may seem at first impossible to answer the question at all. However, there are fundamental questions to ask yourself and habits to bring into your daily living that will help you inch ever closer to the number that is right for you.



1. Let go of comparisons "Comparing ourselves to others is essentially a coping mechanism for our own insecurities." —Rachel Cruze of Love Your Life, Not Theirs: 7 Money Habits for Living the Life You Want



Now more than ever as we live in a world where lives of anyone from anywhere are displayed on social media, refraining from comparing our lives to others' is a mental exercise in willpower. And as we know willpower is finite. A dependable way to combat comparison is to become clear about your own life's path. Become clear about what excites you, what you want to improve upon and create a vision for your life. And then become courageous. Read more about how you can live courageously and the benefits, including eliminating the need for comparison, doing so will invite into your life.



2. Debt is eliminated (within reason) Debt is a broad term. Many of us, if we own a house, will have a mortgage, and business debt is necessary at different periods of a venture. However, personal credit card debt should be at zero. If you can look at your balances and know you can pay them off in full each month without denting your monthly living budget, your finances are in great order.



~Why Not . . . Get and Stay Out of Debt?



~How to Successfully Have a Credit Card



3. Live within your means A quote that upon first reading has ever since been part of my vocabulary and approach to money was shared by Suze Orman, "I think the nicest thing you can say about a woman is that she lives well, and she lives below her means." And as we know our means will shift, change and hopefully grow from year to year. As was discussed in last week's Why Not . . . ? post, conducting a financial check-in each year is a great way to determine if you are spending too much or not enough in certain parts of your budget in order to live the life you want.



4. Monthly savings goal exceeds expectations Currently I am saving for a down payment, and with this goal in mind, I have designated that a certain amount will be put into my money market account each month. When I am able to exceed my target amount, I cannot help but do a little dance. According to financial experts, this is a good sign that you are on your way to having enough money.



5. Spending wisely Take a moment and check your current spending habits with habits from five years ago. Are you spending more? Spending less? Spending more wisely? Staying within your budget? The key reason to reflect regularly is to spend consciously. If you see that your spending has increased, ask yourself why. Then ask yourself, is it necessary? Am I able to spend more? Living well is not a bad thing to do. The key is to make sure you can afford to do so.



6. Proper attention is being paid to retirement savings While there is no magic formula for retirement savings, the one thing that won't work is doing nothing. The first thing to do is begin saving yesterday. I know that may be unnecessary to say, but begin now if you haven't already. Then sit down and examine how much you will indeed need to retire so that you can have a goal and then create a plan to make it happen. I have shared many money and specifically retirement savings related posts here in TSLL "Money" archives, be sure to have a look here.



7. Adherence to a monthly budget that supports the life you want to build and live Massachusetts senator and former Harvard bankruptcy law professor Elizabeth Warren suggested organizing one's monthly budget around these percentages: "Spend 50 percent on needs, 30 percent on wants and 20 percent on savings" (NYTimes). Now you may have to dip into your wants for your needs from time to time depending upon where you live and during different periods of your life, but saving 15-20 percent for retirement, emergency, dreams & vacations is a must for peace of mind and the ability to respond to life's unexpected hurdles and adventures. Similarly, diligently keeping your housing payment (rent or mortgage) to 33% is quite savvy. (Click here to view a simple budget spreadsheet to organize both mandatory and discretionary spending.)



It has been debated that we, as humans have a tendency to move away unconsciously from achieving "enough" rather than towards it (Tim Maurer Simple Money). However, I would argue that it is a choice, it is an appreciation for what moving...