That’s the big question, isn’t it? What is “enough”?
When I asked about saving for a down payment while still maintaining contributions to retirement accounts and fulfilling our travel dreams, StackingCash, a long-time reader, commented that my income isn’t enough for my goals. When I read that comment, I was taken aback at first, I thought “I make OK money, and our goals aren’t that outlandish!” But StackingCash is right. We don’t have “enough” income to fulfill our goals.
Don’t get me wrong, I recognize that in a country of 8%+ unemployment and even higher underemployment, many folks are struggling. We are lucky in many ways. Adding up salaries, bonuses, overtime pay, and some freelance work, our 2011 gross household income hit $140,000. That’s the highest number it has been and will be for at least a few years, given that we are both planning on going back to graduate school this year.
That number is also higher than many families’, including CB’s family. It is apparently high enough to place us into the top 25% of household income in the country. But that number is not so high when we look at all things we need and want to pay for, now and in the future. I don’t say this to complain, “oh poor us.” We are thankful for what we have, but I also know that to fulfill our goals for the long-term, we need to make more. The bottom line is, we need to focus on progressing our careers and increasing our income. With two professional careers in relatively-well-compensated (but certainly not the most lucrative) fields, hard work, some luck, and ingenuity, I don’t think it’s unrealistic for us to make a combined gross household income of $250,000-$300,000 in our peak earning years. Also, $300,000 in 10 years will not mean the same thing as $300,000 now.
Again, the question: How much money is enough? Doubling our income to $280,000 or beyond for several years would make a material change in our lives: more aggressive retirement savings, a bigger down payment and quicker mortgage payoff, money to invest in rental properties, more travel (certainly more luxurious travel!), and more resources for helping our families. Imagine if CB and I can consistently max out all of our retirement accounts – 401K/403b and Roth IRAs – and have enough money to pay off our home and go on big travel every year? Or if we can send our parents on around-the-world cruises and fly them first class. Imagine what an amazing gift that would be.
On the other hand, I’m sure that I have readers who do make $300,000 who have obligations and goals that require an even higher income. I remember when we made $70,000 combined a couple of years back, I was laid off for part of the year and CB haven’t gotten a full-time job yet, and I was driving myself crazy trying to figure out how to make sure both of us were still on track and saving for retirement. Now money is less tight, and we’ve been able to save more for a few big goals and spend more on some little things, but it’s quite amazing how easily we have adjusted to having more money. What if we do make $300,000 in 10 years, what if our wants increase in tandem with our income? What if instead of staying at a hostel we now are only comfortable at 4-star hotels? What if instead of a 3-bedroom home in the mid-$400,000s, we want a 4-bedroom home in the high-$900,000s. What if I become addicted to Louboutins? (tongue-in-cheek… kind of).
Will our income be enough to accommodate our goals and wants then? Wants are infinite. Financial resources – for most of us – are not. I want to be very careful that we realize that money is a means to an end, and not the end itself. And that – this is very important – not to confuse our income with our self-worth. Not to let income determine how we relate to each other, especially not in our marriage. It’s a balancing act: to strive to make more money but also to recognize that just more money isn’t the answer to everything. It’s a balancing act that we are trying to work on, every day.
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