As we enter this season of contemplation and reflection, we all have more than the usual number of everyday financial questions weighing on us.
How much more might we pay for health care under President-elect Donald Trump? How will any new trade policies affect our household budgets and job prospects?
Step back a bit, however, and you will see that every money question eventually boils down to a single line of inquiry: How much is enough?
It is not a new question. But addressing the question is an appropriate task right now, given an unpredictable president-elect and a Congress nominally behind him poised to make good on at least some promises to change our financial lives. Absent any certainty about what will happen in Washington, we can at least try to get ourselves square in our heads about what feels like enough for us.
How much do any of us really know about what our spending, saving and giving add up to? Could we draw a pie chart that reflects a year of household outflows?
This is not another call to write down everything you spend in a notebook. But it is a reminder that if you don’t like what you see when you glance at the credit or debit card statement or the pile of receipts, then it’s time to reconsider a few things.
“Money’s value is, in part, as an observational tool, as something to meditate on,” said Vicki Robin, whose classic book “Your Money or Your Life” is an excellent longer course on defining enough. “Does spending money bring you pleasure in proportion to the hours that you spent earning it?”
Once you have a baseline on spending and quantity, the qualitative work begins.
Manisha Thakor, director of wealth strategies for women at the financial advisory firm Buckingham, said that one good place to start is the most elementary of benchmarks. She often is surprised, for instance, by how few people have heard of the basic one that Elizabeth Warren suggested years ago when she was still a professor: Spend 50 percent on needs, 30 percent on wants and 20 percent on savings.
Not everyone will be able to meet those targets, but at least those percentages give people something to shoot for or revise from when attempting to define enough savings and discretionary spending in their own lives.
Embedded in Warren’s (now a U.S. senator) definition is the concept of wants and needs, something that is well worth defining and discussing with any children in your life from their earliest possible age.
John Bogle, Vanguard’s founder, learned this early, and by necessity, when his family fell on hard times, an experience he describes in his book “Enough.” In an interview, he described the advantage of having to stand up for yourself financially and help your family get along. “I worked from the age of 10, 11, 12 when my friends were out playing tennis, and it never bothered me one damn bit,” he said.
His own children worked, too. In his book, he laments that so many children growing up in an affluent world don’t get enough opportunities to build character.
Giving children an allowance to budget and practice with can help get them started. How much is enough pocket money? Just enough so that they have the things they need and some of what they want, but not so much that they do not have to make hard choices.
Robin, when I pressed her for a universal definition, seized on the discernment necessary to arrive at an answer. “Enough is the quality of having everything you need and want but nothing in excess, nothing that burdens you,” she said.
Hers is an ecological sensibility. She indulges, she said, in thrift-store clothing and investments in local businesses.
Her notion of excess happens to be an essential concept at a time when many people of above-average means may end 2017 or 2018 with extra money, if the tax laws change. Giving that money away to people who need it more than you do is a worthy reflex, but Thakor isn’t sure that is the right answer for everyone.
“What would bring you one step closer to feeling more joy?” she asked. For many people, it may be paying off debt. Others may want to do something nice for themselves after years of frugality. Perhaps there is a family member who needs help, or you want to spend money in a way that will contribute to economic growth while also helping you save in the long run, by, say, putting money toward energy-efficient home improvements or other similar investments.
Whatever it is, talk about it with your spouse, friends or family. You will be richer for having had the conversation, but just don’t expect an easy answer or one that won’t change over time as your goals do.
Thakor has an MBA and is a certified financial planner, so she is surprised by the lack of a clear solution to the challenge that the question poses. “But as I travel around the country, it’s clear to me that there is not a numerical answer.”
Rob Lieber is a New York Times columnist.