Wednesday, June 8, 2016

How much money is enough?

Imagine you are running a race. A marathon, if you like.  It’s a multi-day marathon. You get a couple of hours to prepare everyday and then you start running. Running as hard as you can. And then you take a breather for the night. Only to start all over again the next day. I got to admit here that I have lied here a little dear readers. It’s not a multi-day marathon. It could last years. Actually, it WILL last years. It could quite possibly last your lifetime. Actually, it’s quite possible that you don’t know where the finish line is. You just got to keep running as hard as you can. I know what you are thinking…..this is f***ing crazy right? Who in their right mind would willingly do this? Well, this is you dear readers. This is me. And we do it every single day of our lives.

The title should have given it away. This is us in our endless pursuit of money. Our endless tireless pursuit of money. Maybe it’s not money per se. Call it quality of life or standard of living or keeping up with the Jones, if you will. But make no mistake about it. It all comes down to money. How much time do you spend in your pursuit of money everyday? Probably stuck in a job you would quit today if you only could (As a side note, if you have a job that you love, I just hope you appreciate how lucky you are!). And in calculating this time, don’t forget to add the time that you spend in commute to and from work. Also, add the time you spend at home preparing for work. This is all time that you could be spending with your family and/or spent doing something you love. Now, make no mistake dear readers, I have nothing against money. In fact, if anything, I love money. Heck, this is a financial blog for crying out loud! Let me tell you what I DO have a problem with.

I have a problem in running a race without knowing where the finish line is. Without knowing where the finish line is, the race looks something like this.

So, if you don’t draw the finish line, life will draw it for you. Pretty simple, isn’t it?

Hence, the question. How much money is enough? The problem is that this is a highly subjective question. A man who has a lot of money and poor health, will gladly exchange all his wealth for health and a man who has no money and good health, will gladly exchange his health for wealth. Hence, you can’t have one-size fits all approach. But luckily, this is also the easy part. Just grab a retirement calculator and see where it takes you.

The problem is that the question is also a philosophical one and not just a quantitative one. How much money is enough? But luckily, we have our in house resident philosopher, Seneca (4 BC - AD 65), whom we have been studying in this blog for the past few weeks, to help us answer this question. Luckily for us dear readers, Mr. Seneca did ponder over this conundrum and this is what he has for an answer.

"Do you ask what is the proper limit to wealth? It is, first, to have what is necessary, and, second, to have what is enough."

Now, this answer just blew me away. The beauty of this statement lies in its simplicity. Read it again dear readers. It’s delightfully simple yet utterly profound!! William of Ockham would be proud of it.

Now, you may very well ask, if the answer is so simple, then why don’t more people practice it. I asked myself this question too and found that the answer to this also lies in that line itself. Let’s have a look at it again.

The first extreme or the bare minimum is “what is necessary”. The way I see it, this part consists of our basic physical needs, for example food, shelter, clothing etc. Of course, the definition of necessity will itself be subjective, but since this is the starting point, let’s take this to be the bare minimum. Coming from a country where majority of the population still struggles to live above the poverty line, you get a pretty good appreciation of what bare minimum is. But I am not going to argue with someone who says that a decent internet connection is also a basic necessity as I certainly agree with him! But the point I am trying to make here is that the “what is necessary” part is mainly determined by our physical needs and is generally pretty common to all.

Let’s go to the other extreme now – “what is enough”. In contrast to the previous extreme, which depended on the physical needs, this one is purely mental in nature i.e. it totally depends on one’s state of mind. And that’s what makes it so difficult to implement!! Fulfilling the basic physical needs is the easy part, but putting a limit to what all we think we need is difficult indeed!

The end point being a mental one is hard to quantify. And that’s what makes winning this race so difficult. But the moment you quantify this goal and mark the finish line, you will notice a change in your attitude towards money and you will begin treating money as what it really is – as means to an end rather than as the end itself.

Also in this series:

Take care and good luck! 

You can follow me on twitter for latest blog updates. Also, here is the link for free subscription to the blog.

No comments: