Singletary: How much money do you need to feel rich?
By Michelle Singletary
Published: July 13, 2018, 6:02am
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How much money would you need to feel wealthy?
A recent survey sponsored by Charles Schwab asked 1,000 Americans ages 21 to 75 what level of personal net worth would make them feel “financially comfortable.” The average figure was about $1.4 million. It would take another $1 million — a total of $2.4 million on average — for them to consider themselves wealthy.
Although many respondents said there are things you can’t measure with money, such as spending time with family, the truth is that our idea of the American dream is often tied to being rich, or at least having the appearance of affluence.
For this month’s Color of Money Book Club, I have a recommendation that just may change your perspective about financial stability. It offers a way of thinking that examines the abundance you may already have and not even realize.
I want you to read “Your Money or Your Life: 9 Steps to Transforming Your Relationship with Money and Achieving Financial Independence” (Penguin, $17).
Financial blogger Peter Adeney, whose online persona is Mr. Money Mustache, captures in his foreword why this is a bookshelf classic: “It is a personal development guide to help you figure out what you really want out of life, while also training away the money-wasting habits that you have probably developed that are getting in the way of it.”
Authors Vicki Robin and Joe Dominguez had a mission. They wanted to help people understand that financial independence starts with getting rid of the costly race for more. Since Dominguez’s death, Robin has kept their vision alive with updates to their work.
“What does it mean to ‘transform’ your relationship with money?” Robin writes in the new introduction. “It doesn’t mean getting more money or less money; it means knowing how much is enough money for you to have a life you love, now and in the future.”
Dominguez, who died of cancer at 58, came up with the nine steps to free himself from what he called “the shackles of wage slavery.” And he did. He retired at 31 after achieving success as a financial analyst on Wall Street. He spent the rest of his life volunteering to teach others how to find financial freedom.
Achieving financial independence requires a plan. Here’s how you liberate yourself from the “work-and-spend treadmill,” according to Robin and Dominguez.
Figure out your total lifetime earnings so far and then ask yourself: What have I got to show for it?
Compute your real hourly wage. Consider the cost of working, including commuting, maintaining a work wardrobe and how often you eat out because you’re too tired to cook. How much are you spending on escape entertainment to recover from a stressful job?
Do a real deep dive into what you’re spending every month and why.
“This program is designed to liberate your mind and life from the thrall of the consumer culture,” the book says.
Chart your monthly income and total monthly spending. The goal is to make yourself accountable.
Redefine the pursuit of a paycheck. “Our fulfillment as human beings lies not in our jobs but in the whole picture of our lives.”
Invest for financial independence. Learn about income-producing investments to create a surplus sufficient for your long-term needs.
Robin suggests that you first read the whole book from start to finish and then go back through to implement the strategies. There’s a real hourly wage calculator at yourmoneyoryourlife.com.
The book helps you really look at your financial life to determine whether your pursuit of more money to buy more stuff is keeping you from a happier existence.
I’m hosting an online chat about “Your Money or Your Life” at noon Eastern time on July 26 at washingtonpost.com/discussions. Robin will join me for a discussion on getting to the point where you don’t have to work for money.
Michelle Singletary welcomes comments and column ideas. Reach her in care of The Washington Post, 1150 15th St. N.W., Washington, DC 20071; or singletarym@washpost.com.
