How Much Money is Enough

Lewis Walker |

How much money is enough? This writer grew up in a household where often there was “too much month left at the end of the money,” generating empathy for those who say, “There’s never enough!” The current inflationary surge has made the situation worse.

In April, Adviser Investments CIO Jim Lowell appeared on “Mornings With Maria” on the Fox Business Channel, indicating that in his opinion in the coming recession the top 1% to 15% of consumers “will fare pretty well and the majority of consumers will struggle to make ends meet in terms of the household items they need.”

Inflation decelerated slightly to 8.5% in July after hitting 9.1% in June, the highest level since November 1981. The decline was largely in costs for fuel as drivers have reacted by driving less, reducing demand. However, “food at home” prices rose 13.1% on an annualized basis, the highest since 1979! So the question as to how much money is enough may seem outrageous to those working hard just to keep up with basic needs and family demands. Nevertheless, for those doing long range financial life planning with an eye toward financial independence at some point, certainly by retirement, financial projections are foundational.

Two books may be useful to your thinking:  The New Retirementality: Planning Your Life and Living Your Any Age You Want by Mitch Anthony, 5th Edition (Wiley, 2020) and What Your Money Means, And How To Use It Well by Frank J. Hanna (Crossroad Publishing, 2008). Anthony, with a financial rendition of Abraham Maslow’s famous Hierarchy of Needs, “Maslow Meets Retirement,” devised a pyramid with Survival Money” at the base. Once you earn and accumulate enough money after tax to meet basic needs, the next level is “Safety Money,” reserves to “meet life’s unexpected turns.” Next comes “Freedom Money,” spending on things that bring “enjoyment and fulfillment to life.”

Higher up in Anthony’s pyramid is Gift Money, funding “for the people and causes that we care deeply about.” However, in this writer’s experience there are people of faith that regard giving to God-centered causes is part of the monthly “must do” obligations, as in tithing. Share your religious and humanistic preferences and objectives with your financial advisor. It’s important.

At the top of the pyramid is “Dream Money,” “for all the things we’ve dreamed of being, doing, and having.”

Hannah opens his book by asking questions, focusing initially on the basics as does Anthony. “How much (money) is enough for me?” “Am I spending my money as I ought?” He posits that if you can’t afford to pay for your own bare necessities and genuine needs and those of your dependents if you have them, you don’t have enough money. It’s useful for recent graduates and those just starting out in the working world to ask yourself realistic questions based on hard realities. Inflation has always been with us in some measure, with few exceptions. Elevated levels of inflation are likely to persist for some time. Hannah offers a tough question paraphrased thusly. How much will it cost to provide yourself and your dependents with “genuine needs” beyond bare necessities─ decent housing, adequate medical and dental care, a fundamental education, and the other basic goods needed to develop as we should physically, morally, intellectually, and spiritually? Think that through. Pie in the sky is not a plan.

Moving to the next level in Hanna’s hierarchy of thinking, have you thought through and planned for “profession-related needs”? That may be continuing education, an appropriate wardrobe, equipment, licenses, professional designations, professional  association dues, coaching, travel, etc.


Educational choices, including majors or areas of study, whether high school, trade school, college, graduate school, will have significant impact on the success or failure relative to your life plan and the attainment of financial freedom with ample gift and dream money. What is the current earnings potential for graduates with certain skills and education? Can you afford to live and pay back loans in a given locale? Is where you want to live tax-friendly? Will your career path enable you to stay ahead of inflation with after-tax earnings? Will you work for someone else or for yourself?

Adequate levels of insurance (life, disability, health, and liability) are foundational to peace of mind and protection against calamities. A savings plan that allows you to build a “what if?” reserve is basic. Beyond that you want to create and maintain a long-term wealth accumulation plan that moves you toward freedom, gift, and dream money.

Reading Mitch Anthony’s book and Frank Hanna’s book is a recommended “good start,” to be followed by a goal-oriented financial plan backed by an experienced advisory team. If you have a plan in place now, a review based on the inflationary and tax law outlook is advised.

Chapter 1 of Hanna’s book is entitled, “Money Demands Answers.” Are you asking yourself the right questions? If you are parents ready to cough big bucks to underwrite the education of a child, are you asking the right questions relative to educational choices and long term strategies encompassing financial freedom?