how do I assign a numeric value to the word enough?

TLDR: It's hard, but surprisingly simple

Hello to the 1,318 hotties who subscribe to this newsletter! Thank you for being here.

I’ve had my nose to the grindstone these last few weeks, seeing clients, teaching classes, and preparing for my next round of group coaching, which will start on October 9.

I’ve been meditating deeply on the fears that my clients share with me during our budgeting sessions. Climate catastrophe is upon us and the world is ending. What’s the point of taking care of our finances? What happens if I lose my material comforts in this wild economy? These fears persist regardless of the client’s income level, bank account balance, or access to wealth. 

I realized, deep down, that we all have the same underlying questions: Exactly how much money is “enough”? How do I know if I have enough? And if I don’t have enough, how do I get there?

I don’t promise to solve this collective problem for you nor do I want to preach that some kind of budgeting hack will save any of us. That’s wildly unrealistic. But I do promise to acknowledge your fear and help you find answers without ignoring or dissociating from those very real, very valid feelings.

Here are five questions to help you get started:

1. Basic definition of “enough”

2. How much are your monthly living expenses?

3. What kind of pleasure makes capitalism tolerable?

4. What amount of emergency savings would make you feel comfortable?

5. Other than emergencies, what are some fun things you’d like to save for?

6. How much are you realistically able to save every month?

Defining enough

Much like the task of budgeting, there is no one-size-fits-all definition of the word “enough.” The meaning of this elusive word varies from person to person.  You’ll have to take into account your own beliefs about money and financial safety. And you’ll have to be abundantly clear about what you need to survive.

When people make a budget, they typically start with the restraints of their biweekly paycheck. I’m not saying this is inherently incorrect, but I need to point out that our paychecks do not always meet our fluctuating basic needs. 

For example, I have immunocompromised clients who put KN95 masks on their credit cards. These sweet folx have taken a pay cut because they cannot comply with their company’s policies to begin working in person more frequently. And the continued increase in COVID cases leads to more expenses down the line.

The task of defining the word “enough” is liberating and sobering. It allows us to confront the gap between how much we earn and how much we actually need with actionable solutions and shameless rage.

Step 1: How much are your living expenses?

First, make a list of what you need to survive. Here’s an example I made up for someone named Roxy, who has two kids:

• Monthly rent or mortgage payment: $1,700

• Utilities $250

• Childcare $800

• Car payment and insurance $400

• Health insurance, co-pays, and prescriptions $500

• Pet care $150

• Food $600

• Debt repayment $900

• Mutual aid: $100

• Total expenses: $5,400

One more plug for properly accounting for your healthcare expenses: If you pay out-of-pocket for massage therapy that relieves your chronic pain and herbs that support your immune system, you have every right to factor the proper amount of healthcare into your living expenses even if your health insurance doesn’t cover it — or if you don’t have health insurance at all.

Step 2: What kind of pleasure makes capitalism tolerable?

Babes, I’m not suggesting that you go on an extravagant shopping spree every month to tolerate capitalism. Don’t do that. I also don’t think you have to be a monk on a hill with no earthly possessions to be a good anti-capitalist. Don’t do that either.

But we do need a few nice things to make this life entangled with capitalism more bearable. 

Some examples of things I’ve suggested to my clients:

• Organize a large dinner with your friends. The cost can vary from $25 to $400 depending on whether or not you decide to pay the tab for your friends. You could also organize a potluck and have friends over instead of going to a restaurant.

• Get a massage after hitting significant financial milestones.

• Go to the movies. Nothing better than sitting in the dark with a room full of strangers, pretending it’s not scary as hell in this current political climate. ¯\_(ツ)_/¯

So, let’s say your monthly bill for what makes capitalism tolerable is $150 per month. Bringing it back to Roxy’s example:

• Living expenses: $5,400

• Making capitalism tolerable: $150

• Total: $5,550

Step 3: What amount of emergency savings makes you feel comfortable?

The recommended amount of emergency savings is 3 to 6 months' worth of living expenses for people with a stable, biweekly paycheck. For people who are entrepreneurs and freelancers, 6 to 12 months is the recommended amount.

Following our previous example:

• Roxy’s living expenses: $5,550

• 3 months: $16,500

• 6 months: $33,000

• 12 months: $66,000

Now, as someone who takes care of money for a living, even I personally do not have 3 months in my emergency savings fund. 

Of the 100+ clients I’ve worked with in this past year, less than 10 of them have a full emergency fund. And those 10 people have monthly expenses that are less than $3,500 — either from communal living arrangements, from living in small cities with less queer community, or from inheriting generational wealth.

Some of my clients feel stable with one month of emergency savings, while others need at least two years’ worth of expenses in cash to feel comfortable. The 3- to 6-month emergency fund recommendation is simply a guideline — you can make up your own rules depending on what makes you feel safe!

Step 4: Other than emergencies, what are some fun things you’d like to save up for?

Okay, we’ve got the boring emergency savings talk out of the way. Now, we get to the fun part.

I work with some people who have been so burned financially that they can’t quite imagine what it would be like to make a financial goal based on their desires, not just their needs for safety and security. That’s understandable. But if this is you, I encourage you to spend a little bit of time dreaming and visioning everyday.

Here are some fun things that Roxy wants to save up for:

• A trip to Disneyland with her kids ($3,000)

• A trip to Tokyo with her best friends ($3,000)

• Total: $6,000

Following our example:

• Living expenses: $5,550

• Emergency savings goal: $16,500

• Fun savings goal: $6,000

Step 5: How much are you able to realistically save every month?

So now, in step 5, we look at your income.

Following our example, here is Roxy’s income and current savings accounts:

• Roxy’s income: $6,000

• Living expenses: $5,550

• Left to save every month: $500

• Current emergency savings: $1,000

• Current fun savings: $200

To meet a 3-month emergency savings goal, Roxy has to save $15,500. To meet a $6,000 fun savings goal, Roxy needs to save $5,800. But how will they do that with only $500 left to save? 

Here’s where I come in: I would audit Roxy’s expenses and ask if there are any other places where they can cut back on their spending. I would likely recommend that Roxy save $400/month toward their emergency savings and $100/month toward their fun savings. 

At this rate, it would take 3 years and 3 months to hit their emergency savings goal and about 5 years to hit their fun savings goal.

If we find an extra $100 in their budget to put more in their savings, Roxy would hit their fun savings goal in half the time — 2.5 years. If Roxy finds a second part-time job, they could save even more but it comes with a steep price: precious time with their kids.

Of course, this entire conversation would be different if Roxy made $3,000 per month instead of $6,000. The conversation would be less about getting a second job, and more about tapping into resources for low-income single parents.

These are the kinds of decisions that I get support my clients with. It’s challenging, but it’s such an honor to be able to do it. 

If you’re interested in working together, I have a new 6-month group coaching program that starts at $550. The package includes at least one individual coaching session, and there are monthly payment plans available if you can’t pay the full fee at once.

Excited to work with you,

Leo