Behavioral Finance Archives

Can You Really Stop Saving? Understanding Coast FIRE

Coast FIRE: So Hot Right Now

Why wouldn’t it be! I get to *coast* to financial independence? Sign me up! And robots + humans agree! It’s all the rage. ChatGPT will have a nice chug of our fresh water to tell you Coast FIRE is one of the “fastest-growing FIRE concepts,” and the fine folks of Reddit are migrating like birds from the Traditional FIRE community to the Coast FIRE one. Because Coast FIRE isn’t about *not* working, it’s about flexibility, whether that’s pulling back or doing something that feels more authentic to yourself. Both of which strongly appeal to the younger generation, who strive either to connect on a personal level with their work or to do less of it.

As planners, we love this calculation because it quickly shows how on track a household is based on their current savings. It answers whether you are generally on the right track and can start making changes to live with more flexibility today. At its heart, Coast FIRE is about being in a position to save less, which creates room for more spending or for not needing to earn as much.

As with all things personal finance, achieving true Coast FIRE isn’t the end all be all. The concept is often romanticized, so I’m sharing this blog to explain the calculator we use, how it works best, and when Coast FIRE could be a realistic vision for your household.

How Traditional FIRE Works

FIRE is an abbreviation for “Financial Independence, Retire Early”.

In Traditional FIRE, the endgame is to no longer work, period exclamation mark! How exciting! You save 25x your annual expenses and walk away completely because of the 4% rule. So if you needed $100,000 in income to cover your annual expenses in retirement, you would need $2,500,000 in retirement savings. This is because 4% of $2,500,000 is $100,000, and that’s what the rule says you could sustainably withdraw from an investment portfolio starting in your 60s. Huge money hack alert! Instead of getting rich quick, get rich by saving and growing your investment account over time, then use that money to replace your salary. Okay, maybe not as thrilling as rocking your bod in Tulum on Instagram while bragging about how much passive income you get from your rental properties! But this actually works and is 1000% less cringeworthy.

As with everything in the FIRE movement, the most attractive part is the “Retire Early” aspect. “How do I save enough money to stop working before the traditional retirement age of 65?” Boy, you might not like the answer to that question. Unless you are lucky enough to receive a financial windfall, you have to drastically increase your savings. And if the savings side of your financial lever increases, then the spending side must decrease accordingly.

That’s the rub. If you aren’t earning a high-end income that lets you reduce spending while still maintaining a pretty fulfilling lifestyle with some convenience spending and worthwhile experiences, you may be sacrificing a lot. And for a growing subset of the population, that’s exactly what occurred. People were just not living in their 20s, 30s, and 40s. They’d eat ramen noodles (honestly, not the worst part) for most meals and forgo any and all lifestyle expenses or wants (that part definitely stings). But by missing out on the experiences that help define who you are in your young professional years, you can save beyond the traditional guidance of 10 – 20% of your income.

It’s not for me to judge whether that’s right or wrong for those who celebrate, but there are, of course, drawbacks, some of which I don’t think were entirely clear at the outset. Besides cutting costs and the challenges that come with it, consider how it impacts your relationships with friends and family. If they don’t share the same lifestyle, it’s likely you’ll drift apart somewhat. Then, retiring early leaves a significant void in your daily routine from 9 to 5. Most of your peers around your age are probably still working. You’re not spending when your friends are most active, and you’re not working when they’re at their busiest.

Additionally, as planners we know it’s hard to transition from a “saver” to a “spender”. Many books have been written on the subject to help retirees enjoy the financial independence they’ve worked so hard to achieve. So there’s no guarantee you’ll be able to simply “turn it on” and start using your money as a tool for happiness after decades of drastic frugality. This resulted in various versions of the FIRE movement, one of which is now commonly known as “Coast FIRE”.

How Coast FIRE Works

Coast FIRE, Explained

First we makey the money, and then we SURF! Coast FIRE is a wonky name because it has nothing to do with living on the coast or even retiring early, at least in a traditional sense. Achieving Coast FIRE is to have enough investment savings that you no longer need to add to it. Your nest egg is already expected to grow enough to allow you to make sustainable withdrawals from it by a future date.

Here’s an example timeline with conveniently rounded numbers.

At Age 45, whether through regular saving or a sudden windfall, the example party finds themself with a $1,850,000 investment portfolio. While their annual living expenses are $130,000 at Age 45, this won’t remain steady forever due to inflation. So they need to calculate their inflation-adjusted annual spending in retirement. Assuming a 3% inflation rate, $130,000 in today’s dollars (Age 45) is equivalent to $200,000 in future dollars (Age 60). Hence, according to the 4% rule, they must accumulate an investment portfolio worth $5,000,000 to cover their $200,000 in annual expenses without working.

Using this same example and to make the math easy, let’s assume they saved an even $36,000 annually from Age 22 to Age 45, amassing the $1,850,000 portfolio. Let’s also assume they want to maintain their current spending from their normal working years and begin distributions at Age 60. By achieving Coast FIRE, they can reduce their income by $36,000 annually, and likely a little more, because, theoretically, they might pay less in income tax from Ages 45 to 60. So while they no longer have to add to their savings, for their Coast FIRE calculation to be successful, they still have to match their earnings with their expenses during their coasting years to avoid reducing their portfolio value.

Achieving Coast FIRE is defined by your earnings equaling your expenses in those coasting years.

Benefits of Coast FIRE

Wait, so I build up this epic portfolio, and I still have to work? Yeah… that’s right. In the example above, I used an even savings amount, but in reality you may be saving far more as you approach Coast FIRE than in earlier, normal working years. This may allow you to reduce your income by a more substantial amount.

Or you may have saved nothing and just received a sudden influx of money through the sale of a business, equity compensation, or an inheritance. It might be a number well over your Coast FIRE number, which may allow you to reduce your income by a larger amount.

Ultimately, you have to find a balance among the following levers: savings, spending, and how long you are willing to work. The longer you work, whether normally or during Coast FIRE, the less you need to save. The same concept applies to spending. If you are willing to spend less now or at your distribution age, that lowers the time you have to work or save.

True Coast FIRE allows for two (2) things before retirement age:

You can spend more as you no longer need to save -OR-
You can theoretically work less as you no longer need to earn as high of an income, assuming you can still cover all of your expenses.

When Coast FIRE Makes Sense

It’s helpful for households that did a great job saving in their 20s and 30s and now need permission to back off their savings rate because, deep down, they want to spend a little more or work a little less. Usually kids have entered the picture and bigger experiences or educational goals have come to the forefront.

And for pre-retirees who need a breather and are interested in working longer at something less strenuous while letting their current investments grow.

Overall, the calculation is most accurate for individuals planning to retire at a normalish age in their late 50s or 60s before they start drawing from their portfolio. It leaves less time for surprises.

When Coast FIRE Doesn’t Work Well

Saving shouldn’t be an all-or-nothing proposition. It’s beneficial to always save some while working, especially if it’s to collect a 401k match, avoid a high marginal tax bracket, or build in a cushion for when life happens or changes.

If I had a $1 for every time someone said they would “start consulting” and make about 70% of their current full-time salary, and could do that for decades by working only 5–10 intentional hours a week, I’d already be “consulting” myself! In reality, it’s hard to leave a stable, high paying job and become self-employed as a consultant or to follow a passion that also covers all of your expenses.

*How* the money is being saved adds uncertainty, as does future taxation. Of course, for a true calculation, it really needs to be your investment portfolio in post-tax dollars. But it’s hard to make blanket assumptions about tax rates across different buckets in the future. All of which have different effects not just on the taxation of the distribution, but also on eligibility for healthcare subsidies. Some of which is in your control (the act of the distribution itself), and some of which just isn’t (tax rates, penalties, healthcare subsidies).

Your “Coast FIRE” number is only as accurate as your true annual spending, and the earlier you stop saving or plan to fully retire and start taking distributions, the more that number tends to fluctuate as you hit certain milestones (paying for your kid’s college, paying off a mortgage, receiving Social Security, not having health care). Change is a certainty, and this calculation needs to be revisited often.

How We Calculate Coast FIRE

I present the calculator we use with our households to quickly gauge their Coast FIRE possibilities. Consistent with the example in the graphic above, I used the same assumptions. This results in our example client having saved $14,793 more than necessary at Age 45, enabling them to Coast FIRE until a starting portfolio distribution age of 60. I continue to note that they still have to earn enough from ages 45 to 60 to replace their net income of $130,000 until distributions start. If they earn less, they have to spend less so they do not need distributions from their portfolio.

While there are different, more complex, and certainly more involved or aggressive ways to model the “safe withdrawal rate”, this simple calculation isn’t meant to replace financial planning software or a review of your entire financial picture. We just want to know how on track you are at the moment. And that will likely change year to year.

Why Compound Interest Makes Coast FIRE Possible

Your money still needs time to grow during those coasting years because Coast FIRE relies on compound interest, which demands time. Compound interest is really like an angsty teenager. Just leave me alone, man!!!

In the scenario below, if you had a $250k nest egg and never added to it, it would take 20 years to grow to almost $1M. And then the magic happens in the subsequent decade as your $1M nest egg grows to almost $2M by year 30. The slope of the Y-Axis (US Dollars) gets drastically steeper in those later years. A 7% gain on $250,000 is $17,500, but on $2,000,000 it is $140,000.

To Coast FIRE successfully is to let compound interest do its job. While time is necessary, the other component is money. You need a starting point that can get you where you need to go on whatever time horizon you’ve set. And that means you either:

Saved and saved and saved while young
Grew your savings later in life and are able to move into a role that allows you to delay taking distributions
Received a sudden, life-changing financial windfall but just want to keep working for some arbitrary amount of time
Built up a concentrated equity position and it performed very well

In any of these scenarios, you may actually have enough money to pursue Traditional FIRE, but you’re avoiding it because you enjoy working in some capacity, or you want to spend MORE in retirement, or you’re building in a safety net because you have no clue where life will take you decades from now.

Common Coast FIRE Mistakes

Coast FIRE can be challenging or misinterpreted when people flirt with it but really just want Traditional FIRE. As explained, the whole point of Coast FIRE is to continue working in some capacity to cover your normal living expenses, not to dip into your nest egg. So distributions, for any reason, work against you and can result in you needing to work longer or start saving again. Therefore, if you’re only just on track to achieve Coast FIRE, you can’t also claim that you want to reduce work in a way that involves withdrawing from your portfolio to meet your expenses. Unless, of course, you account for that cash withdrawal by reducing your starting portfolio value needed in the first place. Ultimately, Coast FIRE isn’t suitable for someone who merely wants to toy with working after their normal career years, since they can’t really fully exit without replacing that income. This isn’t really a F-YOU money situation. The further you are from your anticipated distribution age, the more harmful an unplanned distribution is from your portfolio.

And Really the Biggest Challenge

It’s hard for most to find that ideal job/balance. As mentioned, Coast FIRE is a little daydreamy. You imagine quitting a lucrative role as a law firm partner or in tech to pour beer at a brewery or pursue a career as an artist. Or simply go to work one day and announce that you will drastically reduce your hours and alter your day-to-day responsibilities. And in return, feel free to pay me 30% less. In most cases, following a passion or starting a business and going to $0 income isn’t what Coast FIRE is about. For most, the bigger the departure from your current earning capacity, the more drastic your spending cuts have to be. Some will find that easy. Others will find it very difficult.

In either case, you need a solid grasp of your cash flow. We run this calculation a lot, and clients sometimes insist they don’t need a certain amount of money to live on, saying the annual spending figure feels too high. But their numbers tell a different story. We know their income, tax liability, savings, and larger fixed expenses that will *hopefully* run out someday (tuition, mortgage payment). Everything else is being spent. We know the number, and just because some things are more expensive in your current season of life (kids) doesn’t mean other types of expenses won’t be in the future (health).

Is Coasting Right For You?

In my view, running this calculation is more valuable than following any BuzzFeed-like money rule articles that many major investment custodians or financial blogs publish, which suggest you should have $X saved by age 30, $X by age 40, and so on. We are all trying to slay the work/life balance dragon. And a proper Coast FIRE calculation attempts to account for your personal strategy. Like with any aspect of personal finance, you want to feel empowered to make the decisions that are right for you. Knowing what’s right for you involves asking the question, “What is enough?”

Frequently Asked Questions About Coast FIRE

Q1: What is Coast FIRE?

Coast FIRE is a financial independence strategy where you’ve already saved enough that your investments are expected to grow into your retirement nest egg without additional contributions. Rather than continuing to aggressively save, you only need to earn enough income to cover your current living expenses until retirement.

Q2: How do you calculate your Coast FIRE number?

Your Coast FIRE number depends on several factors, including your current age, expected retirement age, annual retirement spending, anticipated investment returns, and inflation. The goal is to determine how much you need invested today so compound growth alone can fund your retirement without future retirement contributions.

Q3: Does Coast FIRE mean you can stop working?

No. Coast FIRE assumes you’ll continue working to cover your living expenses until retirement. The difference is that you no longer need to save aggressively because your existing investments are expected to reach your retirement goal on their own.

Q4: Is Coast FIRE better than Traditional FIRE?

It depends on your goals. Traditional FIRE focuses on leaving the workforce as early as possible, while Coast FIRE prioritizes flexibility by reducing the pressure to keep saving. Coast FIRE can be a better fit for people who enjoy working but want more freedom to reduce hours, change careers, or spend more during their working years.

Q5: What are the biggest risks of Coast FIRE?

Coast FIRE relies on assumptions about investment returns, inflation, future spending, and retirement timing. Unexpected expenses, market downturns, or withdrawing money from your portfolio before retirement can delay your plan. Reviewing your Coast FIRE calculation regularly helps ensure it continues to reflect your financial situation and long-term goals.

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Mike Turi, CFP® APMA™ is the Founder and a Lead Financial Planner at Upbeat Wealth, a fee-only firm based in New Orleans and serving clients virtually across the country. He specializes in providing straightforward financial guidance to ambitious young families as they navigate life’s many milestones.

Do you have questions about what we shared in this post, or anything else in general? Feel free to schedule a free consultation or drop us a line!

Disclaimer: All content in this article is provided for educational, general information, and illustration purposes only. None of the information is intended as investment, tax, accounting, or legal advice. Nor is it a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult with a financial planner, accountant, and/or legal professional for advice on your specific situation. Read our full disclaimer here.

The Risk of Holding Too Much Cash & What to Do About It

Too Much Cash?!

Yes, it’s possible.

Much like any time I sit down with a spoon and a pint of Ben & Jerry’s, the same holds true with cash… You can, in fact, have too much of a good thing. When it comes to the ice cream, I always do. When it comes to your cash, we want to help you avoid “overindulging”.

Of course, cash has its benefits:

Security
Financial flexibility
Easy access to your money

Even so, there’s a very real tradeoff. What you gain in safety, you give up in potential growth and progress toward longer-term goals.

Risk #1: Inflation

As we all know too well, stuff gets more expensive over time – except, of course, for the Costco hot dog. One dollar today doesn’t buy what it did 20 years ago. This is the handiwork of inflation. It erodes the real value of money through the years, reducing your “purchasing power”.

The graph below shows year-over-year inflation during the last decade.

Source: https://www.bls.gov/

Even now, with inflation cooling, prices were 2.4% higher in February of this year relative to February 2025.

If your dollars aren’t growing at a rate that outpaces inflation, you are losing money in terms of actual spending capacity. An account balance of $100k 30 years from now won’t do nearly as much for you as it would today.

In fact, going off inflation data for the last 30 years, it would do about HALF as much! To buy the equivalent amount of goods and services with $100k in 1996, you’d need $211k today (based on this CPI calculator).

Thanks, largely in part, to the post-COVID spike, the average annual inflation rate over the 10-year period between the start of 2016 and end of 2025 was 3.2%. The Federal Reserve has a target inflation rate of 2%. So even in “the best of times” prices are still expected to go up.

Cash vs. Inflation, an Example

Let’s take a look at what inflation would have done to even a relatively favorable cash position over the last 10 years.

The State Street SPDR Bloomberg 1-3 Month T-Bill ETF (BIL), as the name indicates, invests in Treasury bills with maturities of 1-3 months. Because T-bills are issued by the US government, they’re considered to be nearly risk-free and are a “cash alternative”.

We’ll match that up to the overall US stock market, using the Vanguard Total Stock Market Index ETF (VTI). Specifically, we’ll view the performance of these two funds for the 10-year period from 1/1/2016 to 12/31/2025.

Assuming that dividends were reinvested, the overall return for each of these funds during the stated period was:

BIL: 2.04%
VTI: 14.25%

Here’s what that looked like:

Source: https://totalrealreturns.com/

If you were in search of safety for your money, BIL would have done well preserving your capital while earning some interest. $10,000 would have grown to $12,236.59. This is roughly what your cash would have done had it been sitting in a high-yield savings account during that stretch.

However, there’s one (now hopefully obvious) flaw here. The 2.04% overall return is before accounting for inflation. The returns above are what we call “nominal”. When we adjust for inflation, we work with what’s called the “real” return.

So here’s how those funds compare over the last 10 years with inflation (CPI-U) baked in…

Real Return

BIL: -1.12%
VTI: 10.71%

Source: https://totalrealreturns.com/

In terms of what your money could actually do for you, it would have lost value if left in BIL for 10 years.

If that same $10,000 was collecting dust in a checking account or traditional savings account, earning 0% to 0.05%?? Forget about it.

Risk #2: Longevity

At this juncture, some people out there may wonder, “What’s so bad about losing just ~1% over 10 years? At least my money wasn’t subject to big swings in the market. In the end, I barely lost any purchasing power.”

Well, sure. But it’s a simple fact: the longer you want (or need) your money to support your lifestyle, the more of it you need to have. So the growth rate of your assets over time directly contributes to the length of the runway you build up for yourself.

This isn’t to say you should go full throttle on the most aggressive investments you can get your hands on. There’s a wonderful world that exists between the extremes. But it underscores the importance of taking a risk-appropriate approach to growing your wealth so that you set yourself up for the best chance of success in realizing your ideal future state.

What is the RIGHT Amount of Cash to Hold?

To determine the “right” amount of cash…

Calculate your Emergency Fund need
Evaluate any short-term goals (new car, vacation, home project, etc.)
Add these together and voila!

We recommend keeping these funds tucked away in a high-yield savings account. To take it one step further, we favor using an option like Ally that allows you to create “buckets” within a single account. That way, you can easily categorize the savings and always know exactly what each dollar is set aside for.

And bear in mind, the point of this cash is NOT to be a growth engine in your plan. Rather, it DOES…

Cover you when something inconvenient inevitably occurs
Help prevent the need for taking on higher-interest debts (credit card balances)
Allow for quick and easy access
Avoid market losses

OK, Now What?

Once you’ve established the optimal cash balance to keep on hand, it’s time to create a plan for the rest. One benefit of getting clear on your cash need is that it frees you up to take on more risk (appropriately) with other resources, creating more efficiency all around. Having adequate cash set aside increases your plan’s risk capacity. In other words, with your bases covered, you are in a position to handle greater risk in the accounts geared toward your long-term goals.

In short, that “extra” cash is ready to be invested.

Similar to what you did above, ask yourself: What is the purpose of these surplus funds? What will they ideally do for you? Additionally, consider the anticipated timeline before you expect to access them.

Addressing these points will guide what type of investment account those resources go into and how much risk you can reasonably take on when they get to work. For example, money tagged to help support your retirement at age 60 makes sense going into a Roth IRA, where it might be allocated to 100% equities. Funds that will be used to help with a down payment 6 years from now are not as well-suited in an IRA, nor should they be invested so aggressively. Those will serve you better in a taxable brokerage account, with a more conservative approach.

Cash plays a critical role in your financial plan. Yet, it pays to understand its limits and what to do if you can identify any excess.

Frequently Asked Questions for Cash

Q1: How much cash is too much to keep in savings?

You may be holding too much cash if you’ve already set aside enough for your emergency fund and any short-term goals, but still have a large amount sitting in checking or savings with no clear purpose. Cash is useful for flexibility and protection, but too much of it can quietly slow your long-term progress if it isn’t keeping up with inflation.

Q2: Why is holding too much cash a problem?

The biggest issue is that cash often loses purchasing power over time because of inflation. Even if your account balance stays the same, or grows a little, the real value of that money can decline if prices rise faster than your interest rate. Over long periods, that can create a meaningful drag on your financial plan.

Q3: Is cash losing value because of inflation?

Yes. Inflation reduces what your dollars can buy over time. That means money sitting in cash may feel “safe,” but if it isn’t earning enough to outpace rising prices, it is losing real value in the background. This is one of the main reasons excess cash can become costly over the long run.

Q4: Where should I keep my emergency fund?

Your emergency fund should usually stay somewhere safe, liquid, and easy to access—typically a high-yield savings account. The goal is not maximizing return. The goal is making sure the money is available when you need it, without taking market risk.

Q5: Should I invest money instead of leaving it in cash?

If the money is not needed for emergencies or short-term goals, investing may make more sense than leaving it idle in cash. The best place for that money depends on its purpose and timeline. Money needed soon should generally stay conservative, while money for long-term goals like retirement can usually tolerate more investment risk.

Q6: Is a high-yield savings account enough to beat inflation?

Not likely. A high-yield savings account can help reduce inflation drag compared with a traditional checking or savings account, but it won’t consistently outpace inflation over long periods. It can be a great tool for cash reserves, but it usually shouldn’t be your primary strategy for long-term wealth building.

Eddy Jurgielewicz, CFP® is a Partner and Lead Financial Planner at Upbeat Wealth, a fee-only firm based in New Orleans and serving clients virtually across the country. He specializes in providing straightforward financial guidance to ambitious young families as they navigate life’s many milestones.

Do you have questions about what we shared in this post, or anything else in general? Feel free to schedule a free consultation or drop us a line!

Disclaimer: All content in this article is provided for educational, general information, and illustration purposes only. None of the information is intended as investment, tax, accounting, or legal advice. Nor is it a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult with a financial planner, accountant, and/or legal professional for advice on your specific situation. Read our full disclaimer here.

behavioral finance financial literacy

What is Enough?

What is "enough"?

There’s nothing like a major life milestone to bring on a spell of deep reflection. Since having our daughter a few months ago, I’ve really been chewing on the question of, “What is enough?”

I’ve been asking myself questions such as:

What do I need in order to feel fulfilled in my day-to-day life?
What are the experiences that fill my cup?
How do I want to allocate my time?
What is it that I value most?
What does this look like today? Next year? 20 years from now?

Sorry, folks, but this one might leave you with more questions than answers (not that I claim to have all that many to start with). Maybe that’s the point?

Enough is elusive

It’s at the core of any real financial planning endeavor. Yet it has a way of eluding many of us. If we are fortunate enough to fully wrap our minds around the concept one day, it’s likely to shapeshift and escape our grasp not long thereafter, leaving us searching once again for an accurate description of what breeds true contentment in our lives.

It’s almost never a simple question to answer. It makes sense, though. Life is far from linear. People evolve. Circumstances change.

Then there’s the fact that it’s different for everyone. No one can tell me what enough is in my life, just as I can’t tell anyone else what enough is in theirs. Though, as a financial planner, I get to have a lot of fun with gently nudging people to find their answer.

Is enough a number?

I think not.

At least, it’s not the best place to start. Sure, a number is necessary to punch into a financial plan. We need to have that data point as a goal to shoot for, so we know how to build our resources up to it. But what is it that the dollar figure represents? What does it do? What is the significance? What will that money be in service of?

Because the reality is this: a number, alone, is void of any meaning.

A common “enough” question revolves around the idea of retirement. Most people we work with ask some version of the question, “How much money do I need to stop working for a paycheck one day?”

I just typed into Google, “How much money do I need to retire?”, and the AI Overview told me:

“A common benchmark is to save 10–12 times your final annual salary or aim for a portfolio that allows you to withdraw 4% annually. For many, this means a total nest egg between $1 million and $1.5 million, though this varies heavily based on location (e.g., $700k–$2.2M+ in the US) and lifestyle.”

Great! In reality, this largely tells me nothing. Obviously, blanket guidance is rarely all that helpful in specific scenarios. But this is a stark example of that. Sure, it’s better to build up $1 million than $0. Nonetheless, the numbers provided are empty. As would be my response if I attempted to answer a person’s “how much do I need” question before doing the real work of learning what truly matters to them.

The point is, I can’t begin to tell someone how much money they need if I don’t yet know what that money is meant to be in service of. Life is not purely numbers.

This is why, at Upbeat Wealth, our initial planning process includes an entire meeting dedicated to learning about the values of the family we’re working with before we begin offering recommendations.

How do you know when you have enough?

You don’t usually get in the car without knowing where you’re driving to. Unless, of course, you’re an angsty 17-year old Eddy in his ‘96 Crown Vic, blasting The Eagles, windows down, going wherever the road would take him, finding peace in nothing more than the warm southern summer wind and that freedom that only a few bucks of gas can buy… Ok, digression done. You can’t make it to a destination unless you have one to begin with.

Here’s the thing, though: money, on its own, makes a terrible goal. Winning the lottery, getting a big inheritance, landing that promotion, finishing first in your high-stakes fantasy football league… None of those are sufficient if you haven’t done the real work first. You have to first understand what purpose the money will serve in your life.

Ok, now you might be thinking something like, “I’d sure feel like it was enough if I was making triple my current income!” (and not gonna lie, that does sound nice). Still there’s a ton of research out there that remains generally mixed.

An older study from 2010 by Daniel Kahneman indicated that emotional well-being increased as income rose to $75,000 and then basically flatlined from there. In 2021, Matthew Killngsworth refuted this and determined that well-being did rise with income even as it exceeded the $75k mark. Interestingly, hold the phone, the adversarial dynamic duo later teamed up in 2023 and found a more nuanced result. They saw that, generally, higher incomes were associated with higher levels of well-being for many people. However, for people classified as “unhappy”, higher incomes did little to improve their overall level of happiness.

My takeaway is probably overly simple, but I can’t see a way around it: “Happy” people have figured out how to align their resources with what’s important in their lives. If you’re “unhappy”, more money, alone, is not a magic bullet. And if you’re “happy”, having more money increases your ability to fill your life with even more of what brings you satisfaction.

Someone might earn what’s considered a “good” salary. At the same time, if that income isn’t used intentionally to align with the person’s values, it is essentially worthless. It comes and goes.

You could have millions set aside. Yet, what is that money really worth if you don’t have a clear definition of what enough is in your life?

Don’t skip the critical first step: Get clear on what’s important to you and your life. Find your destination.

To answer the question, my best guess for how you really know when you have enough… I wager it’s more of a feeling than anything you can put your finger on.

If your money could talk, what story would you want it to tell?

Here’s a thought exercise I’ve been toying with… I personify money and ask the question: “At the end of my life, what will you have done for me over the years?”

What story would I want Money to tell me in response?

Immediately, I know I wouldn’t want Money’s first words to be anything like:

“I grew to such-and-such balance across all of your accounts”…
Or, “I compounded at an average annual rate of x% over your lifetime”…
Or, “Y% of me was allocated to tax-advantaged and tax-free accounts”…

There’s no emotion in any of that. It sounds a little empty.

Because it’s not about Money. Money is simply a facilitator. It’s the outcome that matters, the life that’s lived.

I would hope to hear something raw. Something with teeth to it. Something that moves me. I’d want Money to tell me a tale that makes me smile. The kind of smile that grows deep inside and extends to every corner of my heart. It’s a story I’d yearn to hear time and time again. That story is beyond the scope of this post…

If you put Money in the hot seat, what would you hope to hear?

So what is enough for me now?

My current version looks something like:

Spending time with my wife and daughter
Seeing a smile on their faces
Supporting my wife’s dreams and ambitions
Raising my daughter to see the best in herself and be a positive force in the world
Sharing time with our loved ones and friends
Experiencing new places, cultures, and ways of life
Getting outside into nature on a regular basis
Prioritizing my physical and mental health through an active lifestyle
Having flexibility in how I distribute energy between my family and my business
Serving client families that inspire me
Being generous with my time and resources so that I can have a positive impact on others in my community

That list right there. That’s my north star. Or as we call it here at Upbeat Wealth, my Statement of Financial Purpose. It’s an ever-changing work in progress, and that’s ok with me because I want it to always represent what’s most important to me in the moment.

If I’m doing it right, my money – my financial plan – will only ever be enough if it facilitates those things above.

Do you have questions about what we shared in this post, or anything else in general? Feel free to schedule a free consultation or drop us a line!

Disclaimer: All content in this article is provided for educational, general information, and illustration purposes only. None of the information is intended as investment, tax, accounting, or legal advice. Nor is it a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult with a financial planner, accountant, and/or legal professional for advice on your specific situation. Read our full disclaimer here.

behavioral finance financial literacy

Comparison: The Thief of Joy & a Monster Without Context

Comparison: The Thief of Joy and a Monster Without Context

Two of the most helpful financial tools out there might just be:

A pair of earplugs
A set of blinders

Hear me out…

The Thief of Financial Joy

The idea that “comparison is the thief of joy” deeply resonates when it comes to how a lot of us think about money and wealth, especially in a world that grows more connected by the minute. All we have to do is open our phone, and almost instantly we’re likely to be reading about or looking at someone else’s beautiful life, thinking “wow, they have got it made in the shade”.

We all do it to some degree. I like to think I’ve gotten better at recognizing and limiting it with age. Nevertheless, it’s dangerously easy to stack ourselves up against everyone else we encounter. There must be something evolutionary about mentally calculating whether we have the leg up on another person or vice versa. And we come to all sorts of conclusions based on a long list of information we subconsciously gather… What car does she drive? Where does he shop? What kind of house do they live in? How do they travel? And on and on…

There’s a Lot of Bull💩 Out There

But the truth we all know, and simply need to be regularly reminded of, is that things are not always what they seem. The grass is, in fact, NOT always greener on the other person’s side of the fence. Maybe now more than ever, in our influencer age, there’s a lot of B.S. and heavy smoke screens out there. Virtually everyone is trying to present themselves in a very curated way.

Comparison + a Lack of Context = Monster

Sometimes we might have the whole picture and can make a fair assessment of what’s being presented. Where comparison can really send the mind spiralling, though, is when we don’t have the full story. Lack of context can unfortunately open the door for one’s imagination to fill in the blanks.

A client recently shared a story with me that highlighted just how this can play out…

An Unimaginable Loss

During our meeting, she told me about a conversation she’d had with an acquaintance a while back, in which he disclosed that he’d “LOST $250,000 in an investment account”. While the guy revealed this information rather calmly, my client was floored by the thought of this staggering and sudden loss in wealth.

And she brought this up with me because it was influencing how she felt about her own investment strategy… Fueling a growing nervousness about the stock market. In her mind, there’s NO WAY she could stomach losing $250,000. The idea left her terrified.

So I asked two questions:

➡️ How much total money did this other person have?

➡️ What was he invested in?

(There was also a 3rd question: How do you know he was even telling the truth?)

Of course, her conversation partner didn’t fill her in on any additional information… She didn’t have the full picture. So her mind defaulted to filling in the blanks with her personal financial situation – a perfectly natural thing to do. She thought, “Given my own financial circumstances, how could I deal with losing $250,000???”

We don’t know the reality. But it could very well be that his liquid net worth was north of $12.5M, and he was referring to a time he lost 2% or less (an objectively minimal drop). Or maybe he experienced that decline purely in a highly volatile stock (whereas this client is only invested in well-diversified portfolios). In any case, he doesn’t share all the same data points and goals as our client.

There are a couple lessons here:

1️⃣ CONTEXT is KEY… One small detail can be misleading. But if you have the whole picture, it might be a different story altogether. Don’t take everything you hear at face value.

2️⃣ FOCUS on YOUR plan… Your situation is highly unique. Don’t apply someone else’s experience (alleged or true) to yours. Tune out the noise. Put blinders on.

There’s enough emotion that comes with watching the movements in the market – though there are things you can do to prepare for and handle them. Avoid making it even more challenging by taking these two lessons to heart.

Real Wealth is Not Usually Loud – It’s Quiet and Boring

The bite of comparison can hurt us in several different ways. The example above made it difficult for our client to view her investment strategy through the appropriate lens – one that made sense specifically in her case.

Another way we may succumb to the challenges of comparison is when we have all these influencers flaunting their supposed riches and sharing the “secrets” of how they amassed their fortunes. It can look enticing and make us feel like we’ve really missed the boat. But in many of those instances, they’re saying what they think will get clicks and followers, not necessarily the truth. So don’t let it get to you.

The Millionaire Next Door paints a detailed portrait of what many people with wealth actually look like. The book tells us that, for the most part, they’re hidden in plain sight. Generally, people who do have money aren’t the ones trying to prove it to the world. Instead, they wear normal clothes, drive older cars, and live lives that mostly seem outwardly modest. While it was originally published almost 30 years ago now, I believe the theme of the book tends to hold true today. Those who are living loud, flashy, extravagant lifestyles very well may be rolling in more debt than dough.

Today, the more modern term might be the “Stealthy Wealthy”.

Remember this if you start to fall into the financial comparison trap…

Just because someone seems to have money, or presents themselves a certain way – it doesn’t make it the case.
No, you’re likely not missing out on a “secret strategy to build wealth fast!”
Those who do have meaningful wealth are probably pretty boring about how they deal with it, and built it in the first place.
The only person worth judging yourself against is… you.
Keep your mental energy strictly on your own goals and situation.
Don’t listen to the limited information you may gather about someone else’s financial situation and try applying it to your life.
Do listen to a professional who understands your entire picture (AKA a trusted, fiduciary financial planner).

Don’t let comparison rob you of your joy, especially if you don’t have all the context. Keep that monster at bay and turn away.

With that, I’m out – gotta go talk to Mike about Upbeat Wealth branded earplugs…

Do you have questions about what we shared in this post, or anything else in general? Feel free to schedule a free consultation or drop us a line!

Disclaimer: All content in this article is provided for educational, general information, and illustration purposes only. None of the information is intended as investment, tax, accounting, or legal advice. Nor is it a recommendation for purchase or sale of any security, or investment advisory services. We encourage you to consult with a financial planner, accountant, and/or legal professional for advice on your specific situation. Read our full disclaimer here.

behavioral finance investing