This post is the first in a short series exploring what we term an ‘ethic of enough’ and one way that ethic is applied to personal finances.
A word we don’t often hear in our American culture of excess is ‘enough.’ We especially don’t hear ‘enough’ paired with words like ‘money’ or ‘wealth’ to form sentences like, “No thanks, I have enough money.” Right?! When was the last time you heard a friend utter that sentence? Or have you ever heard a friend utter that sentence?
I have a friend, Craig, who said something like that to me a few years ago and he might as well have sucker-punched me in the nose. Yes, his statement was that startling and confusing. Craig had asked me how my work was going and after a little recap I asked him the same. That’s when he said he’d recently retired. Since he was only in his mid-50s and still succeeding in a traditional professional career I assumed he was going to tell me he retired for health or industry disruption reasons. But no. When I asked why he retired, he just looked at me and plainly said, “I realized I had enough money and didn’t need to keep earning more.”
Image Credit | Jessica Doll
I was speechless. I literally didn’t know how to process Craig’s words and the concept they represented. I don’t remember what I said, probably something like “congrats” or “good for you. ” But I do remember my mind spinning over a lifetime of hearing and believing, “You can never be too thin or too rich.” Or can you? How can you have enough? What does that even look like? Those are among the questions we’re going to explore and offer solutions in this series of posts. Let’s start with the Boss.
Bruce Springsteen holds up an unexpected mirror to an aspect of behavioral economics with four lines of lyrics from his song “Badlands”:
Poor man wanna be rich
Rich man wanna be king
And a king ain’t satisfied
’Til he rules everything
With that kind of insight and poetic framing, no wonder we call him the Boss. There’s wisdom to mine in those lyrics, but for now we use them to begin exploring and determining and measuring what's enough.
There are general, societal perceptions around wealth. In a September 2018 YouGov survey of a thousand Americans, the public opinion tipping point for being considered rich was when 56 percent agreed an annual income of $90,000–$100,000 clearly qualified a single person as being rich. The financial firm Charles Schwab asked the same number of Americans a related question about wealth for its 2018 Modern Wealth Index, and its respondents averaged in with the opinion that a net worth of $2.4 million was needed to be considered wealthy. Opinions and emotions around income and wealth vary, of course, but these responses reflect consistent perceptions from a variety of reliable financial reporting sources.
Perceptions are instructive, primarily because perceptions are real in their consequences. Matthew Smith, the author of the YouGov survey, observed, “What is perhaps more interesting here [than the actual numbers] is that, although people become less likely to consider themselves poor the more money they make, they don’t really become much more likely to consider themselves rich.” The YouGov survey supports Smith’s observation around a sliding-scale perception of the annual income needed to be considered rich. Beginning with 60 percent of those with an annual income of less than $20,000 and who think that an annual income of $90,000 is rich, perceptions slide down to 45 percent of those with an annual income of $40,000–$60,000, and slide down again to 19 percent of those with an annual income of $90,000–$150,000 and who think the same.
The YouGov and other data support Smith’s observation that, in sum, the richer we are the higher we set the bar for what we consider rich. The result is that we never feel we are ever rich enough. This behavioral flaw is why our world has unsustainable sayings and goals such as, “you’re never too rich or too thin” and “I’ll be rich when I get the next million (or billion).” Robert Reeves, of the Brookings Institute, has described this flaw as the “Me? I’m not rich!” problem. It describes the phenomenon whereby most people tend to believe they are not rich, and the point where others become rich is the next earning level immediately above where they themselves are perched. So, we never stop striving or envying others, and we are never satisfied. Now that you see and understand this tendency toward a sliding scale perception, you can see and understand how this tendency is critical to supporting and sustaining plantation systems, and why it is encouraged.
We anticipate some might errantly dismiss perceptions as merely subjective. That is errant because things perceived as real are real in their consequences. But we will oblige the doubters and turn for a look at other numbers in the next post of this series.
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