How Much Is Enough?

[Jenifer Madson]

When I was in the financial planning industry, people asked me this a lot, especially regarding their earnings, and how much to save for emergencies and retirement. They wanted me to tell them where they should be, because they hadn't examined it for themselves.

When talking about income, a client once told me, "I need to make $100,000." I asked her why. She said, "Because it will tell others I've made it, that I'm a successful business woman."

"But what if your perfect life costs $64,789.32 a year?", I asked.

She gave me that tilted look my German Shepherds sometimes do.

She hadn't looked at what her ideal life cost, so she was wearing herself out chasing someone else's dream of where she should be. When she broke it down, the perfect life for her came in around $72,000 a year. She found more motivation to get there than to her original goal of 100K, because now the income was tied to what she valued, not driven by others' expectations.

Take A Minute:
Map out an income or savings goal based on the best-case scenario for you.

Make A Minute:
Consult with a financial expert to help you strategize how to get there.

The principle applies whether you're asking how much to save for retirement, emergency funds or even a simple vacation. Ask yourself first what a great scenario is, then ask the experts how to get there. You dramatically increase the odds of reaching your goals when they are connected to your highest values.

[jpolito830]

Thanks for the article...I really think business owners underestimate the costs that are involved in starting and running their business, which is why businesses fail. It is obviously better to borrow more money than needed, incase of emergencies.