One of the most common questions that clients ask us here at BMP Wealth is “how will I know when I have enough money?”
This can be a tricky question to answer, and it often requires as much input from the client as from us. Read on to find out how you will know when you have “enough”.
Having “enough” isn’t just about your wealth
Whenever a client asks me “how much is enough?”, that old story about the businessman and the fisherman always springs to mind.
The story goes something like this: A businessman from the big city finds himself down at the pier one day and he spots a humble fisherman who has just brought in an impressive haul. He walks over and congratulates him for his hard work, saying that it must have taken him a long time to catch so many fish.
The fisherman replies that the waters here are so abundant that it only took him a few hours, perhaps half his morning at most. Hearing this, the businessman is taken aback and asks the man why he didn’t stay out for longer if the hauls were so good.
The answer to that is simple, the fisherman tells him. He had caught enough to feed his family and then some extra for his neighbours. He could now spend the rest of his day relaxing, visiting friends, and spending quality time with his wife and family.
The businessman can hardly believe his ears. He tells the man that if he spent more of his time working, he could sell the excess fish and pay for a bigger boat and a larger crew. In only 10 or 20 years, he could pay for a whole fleet of fishing ships. That would make him a very wealthy man and then he would be able to retire.
At this point, the fisherman asks a question back. That sounds all well and good, he admits, but what would he do with his free time once he has worked so hard to become rich?
The answer to that is simple, the businessman tells him. You would have enough free time to relax, visit your friends, and spend quality time with your wife and family…
“Enough” means something different to everyone
Let’s start with “enough” defined at its most basic level: “it’s as much money as you need to cover your basic needs and no more”.
While the bare minimum would guarantee you a life, it probably wouldn’t be a very happy one.
Going a step further, let’s define it as “the amount of money you need to pay for your wants, within reason”.
You would have enough to pay for a nice home, holidays each year, and education fees for your grandchildren. This would give you a comfortable lifestyle, but you probably wouldn’t be able to live out your dreams.
Finally, let’s go one more step further and define it as “enough money to pay for your desires”.
You could take long holidays to wherever you wish, help your children onto the property ladder, and live out any dream, no matter how wild.
This obviously sounds ideal. However, being able to afford all that would usually require a great deal of work and would probably take up a large amount of your time.
While you’re building the wealth to afford such a lifestyle, you wouldn’t have nearly as much time to do the things that make you happy in the short term, such as spending time with your loved ones.
That’s why the question of how much is enough is such a difficult one to answer. It depends entirely on your needs, goals, and preferences for how you want to live your life.
Ask yourself: “Why am I building this wealth?”
One of the biggest pitfalls that people tend to make when thinking about “enough” is viewing it as a simple financial question, rather than one of lifestyle.
Many people focus on asking if they have enough, when the real question is enough for what?
If you want to build up enough wealth to meet your life goals, the first step is knowing clearly what those goals are. This is where working with an adviser can be invaluable, as they can help you to make a plan that helps you find the right balance between financial security and living your preferred lifestyle.
Generally, most people typically fall into one of three categories:
- Too little: The first category is those who don’t have enough to reach their financial goals. Having a plan can be useful to these people as it gives them clear action points to implement that strive towards their goals.
- Too much: The second category are those who have more than enough to meet their goals, which brings a host of other challenges such as too much tax. A clear plan can help people in this category to know when to spend their wealth to get the most enjoyment out of it – such as retiring earlier than originally envisaged.
- Just right: The final category are those people who have enough money to meet their goals but may not realise it. Having a plan can help them to avoid running out of money while being able to enjoy themselves.
While each category presents its own issues to overcome, working with a financial adviser can be the best way to do so. This can ensure that you have “enough” to give you financial stability while living the lifestyle that you want.
Get in touch
If you want to explore whether you have “enough” and what that might mean to you, we can help.
We specialise in building, managing, and preserving the wealth of Hong Kong’s international community. By creating a personalised, comprehensive financial plan, we can help you realise and achieve your greatest goals in life.
For more information, email firstname.lastname@example.org or call +852 3975 2878.