How Much Is Enough?
At this time of year, it never hurts to pause and ask yourself an important question: What is the real end of all your saving and investing?
Different people will have different answers. In my new book An Embarrassment of Riches, I list four primary benefits of wealth accumulation.
The first is that if you have money, you don't have everyday anxieties about it. Folks who aren't sure they can make the rent, afford insurance or ever retire comfortably are plagued by worries that never cross the minds of those with some level of financial security. Money offers peace of mind. That's worth a lot.
The second is that money gives you freedom to pursue your passions. (One of the reasons I was able to save a lot as a young man is that my primary pastimes were reading, swimming, tennis and hiking. These require very little financial commitment.) A measure of financial freedom also gives you the ability to swap into a new job that may be less lucrative but more fulfilling.
Third, money also buys you more time with family and friends, our most important connections. Rather than loading up on more stuff, you can make memories.
And, finally, money is not just about doing well. It is also about doing good. You can aid a friend or family member who needs a helping hand. (Always remembering that it is better to give than to lend - and it costs about the same.) Or you can donate to some worthy cause. My favorite is The International Rescue Committee.
Of course, this still doesn't answer, "How much is enough?"
This is a deeply personal question, one very much dependent on your chosen lifestyle. And this is where we see so many friends or colleagues go off the rails. If you keep insisting on a bigger house, a fancier car, exotic trips and all sorts of bling, you will never have enough.
It's an impoverished state of mind, this constant sense of lack or feeling of envy. Not long ago I was invited to a dinner party at the home of a well-known CEO and found myself seated next to a Goldman Sachs executive who told me about an unhappy partner.
The fellow had a seven-figure income and an eight-figure net worth, but was killing himself to earn more. Why? Because he had chosen to hang out with a bunch of hotshot hedge fund managers with money to burn - and he couldn't keep up.
"He's rich," the Goldman executive said, shaking his head. "But he isn't 'private-plane rich.'"
That may be one of the most pitiful stories I've ever heard.
We Do It, Too
However, many of us do something similar, just on a smaller scale. We envy the owner of the mansion on the hill, the guy with the Maserati, the woman at the exclusive club, or the flaunted lifestyle of some "friend" on Facebook.
It's pretty silly when you think about it. Too often the world is governed by false values. Rather than following your own path, you can easily get the impression that you should strive to know important people, gain power over others, acquire expensive things or be highly thought of by your neighbors. But these are just the tinsel of life, glittering but worthless.
Throughout the ages, our best poets and philosophers have often distilled this wisdom into a few crystalline thoughts:
"It is a cold, lifeless business when you go to the shops to buy something which does not represent your life and talent, but a goldsmith's."
- Ralph Waldo Emerson
"Getting and spending, we lay waste our powers."
- William Wordsworth
"If there is to be any peace it will come through being, not having."
- Henry Miller
"A wise man should have money in his head but not in his heart."
- Jonathan Swift
So you might ask yourself a few important questions. How much is enough? Will you know it when you get there? And what will you do then?
These are thoughts worth considering this time of year, when the pace slows down a bit. Because, as another famous sage reminds us, you can't always get what you want. But if you try sometime... you just might find... you get what you need.
Good investing and Merry Christmas,