Measuring How Much Is Enough
The question of “how much is enough” is of central importance in our financial lives. In fact I think you could make the argument that it’s the only question to be answered in relation to the determination of how much of our lives we will devote to working and earning an income. I do not mean to imply that work is not noble and valuable independent of the income-earning function—it is. But once you separate the income-earning necessity component from the underlying work activity, people are free to pursue whatever type of work engages them, and without consideration for whether the income that the activity generates is of a requisite level. Many work endeavors yield a relatively low market rate of compensation by comparison to the activity’s inherent utility and value (think working at a shelter for abused women and children), while others conversely yield a relatively high market compensation by comparison to inherent utility and value (think corporate tax lawyer; I know, I lived it for 16 years). Remove the compensation consideration and the individual is free to allocate his human capital (time, energy, talents) to the work that creates the most inherent value for himself and—who knows—maybe even for society. Maybe if more of us were able to remove the compensation variable from the work equation we would produce a greater supply of skilled and compassionate individuals devoting time to work that is making the world a better place—and have more empty desks at the elite Ivy League law schools.
I have a working hypothesis that the psychology that we are born with as infants and carry with us through childhood does not change all that much as we reach adulthood. Sure, we all become socialized to a point where we understand that overt greed and self-centeredness are undesirable traits, but in reality I think most of us still carry those innate psychological tendencies with us through our lives and we simply learn to disguise and/or suppress them because polite society tells us that we must (or at least it used to; I’m not so sure it does anymore). This working theory of psychology has been developed and confirmed over my 11 years (and counting) of raising three children. Kids are hard-wired for certain impulses, and only through the socialization process and parenting are the most base and disagreeable impulses managed and restrained.
One impulse that I observe in my kids almost daily is the need to define “enough” by reference to the person sitting in the next chair—a sibling. I have regularly witnessed my 8-year-old look at the ice cream given to her 11-year-old sister before looking at her own allocation, and then quickly making the determination of whether her take is “enough” simply by relative standing. In a more extreme example of this phenomenon, a few days ago Mrs. JF was re-counting a story of when she used to periodically take our 8-year-old into her former entrapment chamber (office) for this or that, and the receptionist would give the little one candy on the way out the door. Before the story could continue even a word further, our 5-year-old blurted out “did she give me some too?! No fair!” She was genuinely distraught over this perceived slight, and my exhortations that she was not even born yet fell on deaf ears. And so my 5-year-old daughter spent some part of her day convinced that she did not have nearly enough just because at some point in distant history (prior to her creation) her older sister had received something that she had not.
Applying my working theory of child-to-adult psychology symmetry to our adult culture, I think that a large portion of our society is answering the question of “how much is enough” every day by reference to the person sitting next to them. But wouldn’t the far better approach be to gauge “enough” by reference to our own individualized assessment of wants and needs? The relativism of the child psychology is problematic for anyone seeking financial independence because there will always be someone that has more than you. If instead we were to gauge our assessment of “enough” using a subjective standard that seeks to answer the question based on our own individualized assessment of content and satisfaction, a significant hurdle standing in our path to FI could be removed.
Footnote: In writing this I am reminded of this historical legend: When asked how much money was enough, John D. Rockefeller—founder of the Standard Oil Co. and at one point in time the richest man in the world—allegedly replied: “A little bit more.”