Right pocket cash12/29/2023 ![]() Privately, and one by one, a representative of the donor approaches each of you with a blank check and a pen, and poses the following question: You're all roughly the same age, equally healthy, have the same number of children, and you all live moderately low-risk lifestyles. The five of you all have comparable debt-levels and costs-of-living, as well as similar, middle-class financial situations. Suppose you’re one of five people who have been selected by a mysterious philanthropist to participate in a contest. But perhaps the best way to get a feeling for your goal number isn’t math but a simple thought experiment from writer Brad Stollery: There are other more elaborate calculators that can give you a sense of what financial independence means for you. ![]() So if $50,000 a year is enough for you to live comfortably, you need to save $1.25 million. Its boosters generally say that 25X your expected annual expenses is enough. This is the goal of the catchily named FIRE movement (for financial independence, retire early). One way to calculate that point is to figure out how much money you'd need to make decisions based entirely on enjoyment and impact, without pressure to earn. There is a level of wealth way before Bill Gates status that trading more effort and time for more money ceases to make sense ( even Bill Gates says so). But beyond that point, each additional dollar adds a little less to your life. If you’re below this level, making more will likely make you significantly happier. That number will be different for everyone, depending on your circumstances and values, but science can give us some sense of how much money might be “enough.” Research shows that up to a certain threshold (studies consistently put it at about $75,000 dollars a year, give or take a bit depending on cost of living) money has a big impact on both day-to-day happiness and life satisfaction. ![]() The answer is to take a hard look at your own financial realities and aspirations and come up with a goal number. The answer is not to compare yourself with others ( Jeff Bezos will always be there to make you feel bad), or to blindly try to keep making more (there will always be some shiny, new thing to covet). It’s not just the wealthy who fall into the trap of earning more only to spend more and feel just as dissatisfied. But while these families may be extreme (and annoying), they aren’t alone. It’s ridiculous that anyone could complain about raking in $350,000 a year, and it’s clear many of these folks are wildly out of touch with how privileged they are. Have you ever read those articles where some extremely well-off family details their budget and then bemoans that they’re barely getting by?
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