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What is Your "Enough?"

Updated: Sep 9, 2021

"Mo money, mo problems." - Notorious B.I.G

Unless your name is Jeff Bezos, most of us will never be the richest person on the planet. At some point, we have to stop the pursuit of wealth-building and be content with what we have. I call it finding your "enough."

It sounds rather simplistic; build wealth, find your happy place, and enjoy life. But there are countless examples of people building wealth, only to never take their foot off the gas. They keep pursuing wealth or have extremely concentrated holdings without ever considering the question, "what is my enough?"

In many cases, failing to identify their "enough," resulted in financial ruin due to taking unnecessary risks.

Business Insider put together examples of catastrophic falls from grace. Here's a snippet:

Patricia Kluge invested the majority of her high-profile divorce-settlement money into her own vineyard. She bet ~$65 million of her own money, later borrowing more, into the project. When the housing market crashed in 2008, she lost it all.

Sean Quinn was once the richest man in Ireland. Because of bad investments in an Irish bank, Quinn was forced to hand over most of his $2.8 billion fortune. In November 2011, Quinn claimed his assets to be less than £50,000 when he applied for bankruptcy.

Once Brazil's richest man, with a net worth of $30 billion, Eike Batista lost a majority of his wealth when his oil company, OGX, went bankrupt in 2013.

In Morgan Housel's new book, "The Psychology of Money," chapter three is titled "Never Enough: When Rich People Do Crazy Things."

It would seem getting rich and staying rich require two entirely different dispositions.

Getting rich requires an aggressive, risk-seeking mindset. For example, looking for the next opportunity or deal, embracing leverage, taking large concentrated risks.

Staying rich requires finding your enough and downshifting. For example, being content with what you've done, conservative, and shunning risky ventures.

Recognizing the need for a mindset pivot is half the battle. Often times, people miss the downshift all together. This is understandable. Many successful people had a lifetime of building, chasing, and taking calculated risks in the pursuit of more. It's tough to turn it off, but it's precisely what one must do in order to stay rich (or at least keep the risk of ruin small).

I've had retired people with more than enough, say things like...

"I like to squeeze every ounce of returns during good times to weather the down times."

"I like to get when the getting is good."

There's nothing wrong with that, but it's a get rich mindset.

Maybe a better way to say it would be...

"I have more than enough, but I’m fine taking risk because the assets are going to my grandchildren."

We've said it time and again, taking risks where the best outcome will not change your life, but the worst outcome will jeopardize your financial plan is foolish. Yet, history is littered with countless examples of tragic financial endings.

Here's how you can find your "enough," live the life you always wanted, and keep your risk of ruin low or non-existent.

Take inventory of your income and expenses. Be meticulous on the expense side.

Account for investment assets, real estate, business interests, etc.

Write down everything you want to accomplish. This could be paying for grandkids' college, buying your kids a house, donating $1,000,000 to charity. Err on the side of being aggressive, we want to create your ideal plan.

Run a financial plan, including all of the above, and set the return expectation for your investment portfolio (or whatever your biggest asset is) to 0% . That's right, assume you will not receive a rate of return on any of your assets.

This is how we find your enough.

It’s an incredibly powerful thing to run a financial plan mapping out your best life, have it be favorable, taking little to no risk.

You don’t need to speculate. You don’t need outsized returns to bail you out. You are content with your enough.

If your plan is not favorable, start to dial back some of your goals or expenses. You can modestly increase the rate of return to low single digits. Re-run the plan until you find a happy medium.

Keep in mind, your enough will different than your neighbors. It will be different from your sister's. Your enough number will be a reflection of your unique lifestyle.

Buying land in Eastern WA. Minimalist lifestyle. Enjoying the outdoors.

Condo living in uptown Manhattan. Like to travel and spend. Prefer to own the latest luxury sedan.

Two different lifestyles. Two very different "enoughs."

If you're about to retire, start to think about downshifting from a wealth building mindset to an "enough" mindset. Acknowledging the differences between getting rich and staying rich is half the battle.

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