Enough Part 2 – A Framework

Circling back to a topic that’s garnered a fair amount of interest: Enough.

Probably a better place to start is first reading that article if you haven’t already. Towards the end of it, I made mention of maybe rounding out a few points by referencing a multi-part email series I send out in my weekly letter to clients. That’s what I’m doing here.

And at the end, I’m going to spend a few moments revisiting the term itself after a conversation with a friend which challenged my paradigm of viewing the term itself.

But to refresh: what is Enough?

Enough income.
Enough revenue.
Enough assets.
Enough wealth.
Enough stuff.

It’s a tricky question – and the answer isn’t quite as simple as plugging some variables into a spreadsheet and running some fancy calculations (although that can help at least with some general inputs).

There are a myriad of reasons why it’s beneficial to know this ballpark Enough answer: knowing how much to save towards a specific goal, identifying when you can stop doing something, freeing up resources (time, money, energy and ability) for other things, etc.

But that knowledge alone wasn’t enough to do much for me. So I started working through a sequential framework when it comes to defining Enough in our lives. Some of them are mindsets, some of them are action steps, and each one is a powerful idea standing by itself. But I found when I stacked them, or worked sequentially through them, it helped clarify Enough for me personally.

1- Money should be a Means, but it has this sneaky habit of becoming a Meaning.
2- One way to keep it as a Means is by assigning specific Dollars for specific Jobs.
3- Recognize and prevent Lifestyle Creep by keeping track of expenses over time.
4- Once we’re reached Enough, then we can decide what to do with the Excess.

1- Means vs Meaning

All of the initial reasons I listed above are helpful to define enough are super beneficial and super important to wrestle with.

And yet I think there is a deeper and most powerful issue that comes up when talking about Enough: our identity.

I mentioned this at the tailend of the list on my initial post when I described how my wife and I personally framed arriving at Enough, which led to the decision to stop taking on new clients for my firm.

This is by far the most powerful element. You can do all the other things (budget/cash-flow plan, know how much to save, identify lifestyle creep, and stop benchmarking) but if people don’t get a handle on how money is being used as an identifier in their lives, there’s little hope of ever arriving at Enough.

Too often we conflate money being a tool vs being a symbol. It has this sneaky way of subconsciously transforming itself from a currency to a status symbol. And if we let our wealth define us, we will truly never have Enough. To paraphrase Francis Bacon (or PT Barnum, depending whom you ask): “Money is a terrific tool, yet a terrible tyrant.”

The problem with money (or even our reputation) is that there will always be someone who has just a little bit more than us. Or at least the perception that they do. It’s a never ending treadmill.

What’s more is that very few people – myself included – are consciously aware at regular intervals if this is happening to them. This monetary metamorphosis of money as a Means to a Meaning happens in the shadows of our souls and minds. And it’s certainly not discouraged by our culture.

French sociologist Jean Jean Baudrrillard has made the point that materialism has become the new dominant system of meaning, and further that atheism hasn’t replaced cultural Christianity – shopping has. (This isn’t a religious post, but it’s hard to deny even from a secular standpoint that something has shifted.)

In what’s become a comical/cynical habit of mine, I’ve recently been looking at advertisements and marketing campaigns from this lens – Means vs Meaning. What is the advertiser actually trying to communicate to me?

No longer is that car just a means to get me from point A to point B in a fuel efficient and safe way, driving it now demonstrates I have arrived.

No longer is that exercise machine just a means to get me from into better shape, owning it now demonstrates I have the ability to afford it.

No longer is that drink a means to quench my thirst in a low calorie kind of way, drinking it now shows how accomplished I really am.

I don’t want to be overly cynical here, as owning or enjoying any of – well, anything – isn’t wrong. It’s just an example of how advertising has helped this cultural paradigm shift from money and materials being a Means vs being a Meaning.

I also can’t claim to offer a magical tool outside of some deep self-reflection to help delineate these two issues. However, I have found a good question to ask ourselves: do we measure our dollars by their effectiveness as a tool, or as a status symbol of our worth?

Which is a perfect segway into point #2.

2- Assigning Jobs

If money should be a Means, but has this sneaky habit of becoming a Meaning, then one way to keep it as a Means is by assigning specific Dollars for specific Jobs.

At the peak of his wealth, John D. Rockefeller had a ridiculously large net worth. Estimates vary because of inflation, but some peg his personal wealth being equivalent to 1% of the entire US economy at the time. For comparison’s sake, Forbes #1 richest person, Jeff Bezos, has a net worth of around $191.7 billion. The US GDP at the end of 2020 was $20.93 trillion, meaning Bezos’s net worth is around 0.92% of the US economy. (Pre-pandemic when GDP was higher and Amazon stock was lower, this ratio was closer to 0.68%).

A famous story is told of someone asking Rockefeller how much is Enough for him – and he answered “Just a little bit more.” I don’t know enough about the man or the context of that conversation, but that answer has always haunted me.

It seems like an awfully tiring hamster wheel to run on.

Chances are, you and I aren’t going to be approaching Rockefeller’s net worth, or popping up on the Forbes list anytime soon, yet as I’ve been saying, I think it’s helpful to start sketching out what is Enough for our own personal lives. So that we don’t have to personally answer with “Just a little bit more.”

One way that we can do this is by assigning the dollars in our lives. Giving them a job, and measuring their ability to do it.

I’m going to be saving __% of my income towards retirement, because I know that as of right now, I need $__ to achieve my goal of phasing out of work at age __.

Or

I’m going to keep $__ in the bank because I know I have this upcoming expense that’s going to cost $__.

Or its counterpart

I’m going to keep $__ in the bank because I don’t really know what COULD happen, and want to be prepared.

Or

I’m going to grow my business to __ revenue/employees because that fulfills my goals of __.

These questions require intentional thought. And they should be written in sand, not in stone. Life changes and plans blow up – we’re naïve if we think otherwise. But they’re a good starting point. And once we know those approximate numbers, we’ve taken an important first step in establishing Enough.

And yet, there’s still more to hash out.

3- Lifestyle Creep

Once we’ve given these dollars to these jobs, there’s still a threat. And this threat never goes away. It’s called Lifestyle Creep.

Lifestyle creep is the tendency for individuals to inflate our own expenses as our income goes up. It oftentimes happens subconsciously without us realizing it’s going on.

This makes “Enough” an even more slippery and elusive idea to define.

We buy larger homes, drive nicer cars, and go on more expensive vacations.

We spend more on clothing, food, drinks, and hobbies.

The arbitrarily-assigned dollar amount that used to give us pause before a spontaneous purchase increases.

This expansion in expenses isn’t of itself necessarily bad, but it becomes dangerous when money starts its aforementioned metamorphosis from Means to Meaning. Are these new things and activities still tools, or are they becoming status symbols for us?

The question is impossible to answer for anyone else other than ourselves.

How do we go about proactively stopping – or at least limiting – Lifestyle Creep?

Well, for one we should be measuring our income and expenses. At the very least annually, and ideally much more frequently than that, we should be doing some rudimentary exercise to measure (and even better, proactively plan) where our dollars are going.

As a macro tool for both myself and as an advisor, I find the Live/Give/Owe/Grow template super helpful, especially to measure these areas over time. (I even created a Google sheet template you can purchase and use on your own finances or those of your clients – or you could also just recreate it from this PDF.)

Personally, I’m a huge fan and personal user of YNAB – which aptly stands for You Need A Budget. But I’m less concerned with the specific tool than I am with families actually using and implementing a system that works for them.

Once you have the data, you can compare the results year over year and see if those initial jobs that we assigned to our dollars are still doing their work, or if they’ve gotten a bit lax or even bloated.

A particularly useful exercise is comparing the year-over-year data next to each other, and comparing it with your values as an individual or as a family. As your income increased, what did the percentage of your income go towards? Were there certain areas that came as a surprise to you? Are there certain areas that seem overly indulgent?

Again: an increase in our expensenses isn’t inherently wrong, but it should be a proactive and not a reactive result. It’s one tool in our toolbox to go about defining Enough by practicing some resistance against Lifestyle Creep.

4 – The Excess

So if we’re clearly distinguishing money as a means from meaning, assigning specific dollars to specific jobs, doing our best to keep lifestyle creep in check – what next?

This is the beautiful area of identifying Enough.

We’ve done the hard work and soul searching and number crunching, and now get to dream a little bit. (Quick note: if you’ve already done the process of clearly identifying your values, this becomes all the easier.)

I see 3 general options of what to do with our Excess after reaching Enough.

Slow down. Depending on our individual situations – we might have the option to just turn the income spigot off, or at least dial it down a bit. Maybe if we’re an entrepreneur we pursue slower growth, or if a freelancer we dial down our caseload, or if a corporate worker we stop climbing the ladder. Since our goals are funded, or on track to be funded, we have this potentially unrealized luxury and it could lead to increased free-time and increased mental health. This is the path that I chose with my firm.

Overfund Values. If slowing down doesn’t make sense, then maybe we reallocate resources to overly fund different important Values in our life. Perhaps generosity is something important to us, and we can redirect a disproportionate amount of our income to charitable causes relative to other expenses. Or maybe it’s entrepreneurship, and we find ways we can either start a side gig or seed-fund someone else’s. Or maybe it’s family time, and we use resources to buy more time with our loved ones.

Press Pause. Honestly, before doing either of the first two, I think this should be the starting point. Too many of us run too hard for too long, reaching a point of exhaustion (or worse) when we could have taken a breather (or several of them) long ago. A friend of mine, KJ, is closing in on Enough at a young age. He’s not sure what is next, so his plan is just to Press Pause for an undefined period of time. He’s going to evaluate, to collect, to dream, to wonder and to wander. The reason he’s able to do that is because he’s clearly defined Enough.

But a warning: unless we’ve defined Enough BEFORE we get here, we won’t know when we’ve arrived. And the race will continue it’s grueling, unending pace.

Bonus #1 – A case study of myself.

If the last two articles (Enough and Why) weren’t enough of an awkward peek into my own head, then I’ll divulge even more here.

Moving from theory to practice of Enough is new to me – and I don’t proclaim to walk this path perfectly. It’s largely an experiment that I’m happy to share with others on the way.

Ever since I contemplated sending out these thoughts, even in the initial emails to clients, I’ve had this sneaky voice in the back of my head whispering “You’re a fake! You don’t even have it all figured out yourself. Who are you to talk about this?” I’ve done my best to ignore him, but I want to make sure that I’m communicating not from a guru perspective of having it all figured out (hence my use of inclusive pronouns throughout), but as someone who struggles, thinks a lot about it, and is pursuing diligence over perfection.

So I thought I’d share a few examples of where I’m applying it in my own life.

Means and Meaning
One area I’ve consistently battled with – and have shared before – is how I compare Fident to other advisory firms. Revenue, assets, client, general growth, etc. An un-killable competitive part of my mind will always do this. However, I realized that I was making decisions for the firm’s future based not on what I felt I wanted to personally do, but what would keep up with my peers: how to grow faster, how to hire, how to market more.

I dwelled (and sometimes still dwell) in this rut for a period of time until I realized how foolish it was (is). I don’t even want to have a huge firm, so why would I compare myself to those types of firms?

Ahh – right. Because Fident was trying to morph from a Means to a Meaning. I was (am) finding more identity in who I am based on how others saw Fident. This is unhealthy. (Fellow Enneagram Type 3’s: you get it.)

And quite honestly, shutting down to new clients was a bit of a forcing mechanism for me in this regard.

Lifestyle Creep
While my wife and I are obnoxiously obsess- err, diligent from a personal cash flow standpoint, I noticed that last year (2020) from Fident’s standpoint, I was getting lazy with expenses. To be quite honest, my business budget philosophy the first few years after launching was this: spend as little money as possible. As Fident grew in revenue, I became more and more lax on expenses.

I run a tight and forward looking personal budget, but don’t really proactively budget on the business side. And while doing some Quickbooks work sometime in the fall of 2020, I realized just how bloated my expenses had become. It was kind of embarrassing, to be honest, as I shared it with a friend.

So my fix to this was creating a Fident budget within YNAB at the end of December. So far, so good (although the year is young).

Excess
If it’s not quite obvious, the route I decided to go with the Excess from our Enough was to shut down to new clients for my firm. I don’t think this is the right answer for everyone out there – and for a lot of people, it’s not even an option. But that’s what we decided to do for us.

My point in sharing these isn’t to humble brag, but to show that it’s a journey. I won’t be perfect on that journey, and neither will you. But we can be diligent.

Bonus #2 – A different lens to see “Enough” through

One of my favorite things about sharing work in public is the conversations that are sparked. One of which started with a Twitter comment from a friend and led to a heart-felt zoom conversation that was super helpful for me.

In it, my friend shared how the term “enough” is a bit of a trigger word for him. And how growing up, “enough” meant something entirely different.

The term wasn’t used as “Do we have enough for retirement? For college? For our vacations?”

It was used as “Do we have enough for rent this month? For groceries? For the heat bill?”

Those are vastly, otherworldly differences in use. And although I’m a son of a pastor, we lived a comfortable life growing up where those second set of questions were never part of a family conversation.

In my talk with my friend, the image of Enough came to mind – with a downward facing arrow and an upward facing arrow squeezing it together. The first was applied through the pressure of abundance, and latter was applied through the pressure of scarcity. And depending on which perspective you’re looking from, that word has a very different meaning.

Now my friend wasn’t bashing my initial piece – in fact he thought a lot of it. But he wanted to share a perspective that I might not have been aware of. And truthfully, I wasn’t really aware of it in the context of Enough. I wrote my two pieces on the topic with more of a paradigm of abundance. Even so, I don’t think the overall criteria or encouragement to define Enough in our lives changes as a whole – but it is certainly written more from the perspective of those of us with abundance compared to scarcity. And it’s helpful to be aware of that distinction.

So. Concluding thoughts on the framework of Enough:

Money should be a Means, but it has this sneaky habit of becoming a Meaning.
One way to keep it as a means is by assigning specific Dollars for specific Jobs.
Recognize and prevent Lifestyle Creep by keeping track of our expenses over time.
Once we’ve reached Enough, then we decide what to do with Excess.
Bonus: our way of defining Enough might be very, other-worldly different than someone else’s.