There is a big question that I wrestle with on a fairly regular basis. It’s one that frustrates me because I know very well that there is no black and white answer. There is no place where I can go to look it up. I can sit on Google and search all day long and I will never arrive at a definitive answer because it does not exist.
How do you know when you have enough money?
The answer to this question does not exist primarily because the question itself begets so many more questions. What is your current cost of living? How much do you currently have saved? Do you plan to keep the same cost of living in retirement? Will you have any guaranteed sources of income in retirement such as a pension? Do you have any faith that Social Security will still be around when you need it (if you are in the US)? There are literally hundreds of variables and no easy way to plug them neatly into an equation and come out with a satisfactory answer.
If you are in your 30s like us, it is extra difficult to answer those questions because there are hopefully going to be a lot of years left in our lives… but we have no idea what the future will hold in terms of tax laws (I don’t know about you all but my guess is that taxes will go up), inflation, cost of living, etc.
We in the CMF household wrestle with this question on two fronts: 1) Retirement/achieving financial independence and 2) What to do when we adopt. For those of you who are new to Color Me Frugal, our backstory is that we have been trying to have children for a long time (5 years, to be exact). We are now looking forward to hopefully becoming adoptive parents some time in 2014. I have always loved children. So much that my job centers on children. Combine that with the fact that we have been trying to become parents for five years, and basically the result is that all I really want to do at this point is be a mom. If we were told tomorrow that we could have a child next week, I would walk away from my job without regrets.
But that leads me back to the question: How do you know when you have enough money? You see, I have student loan debt. Kind of a lot of it, and so does my hubby. I feel tremendous guilt at the thought of leaving my job and putting the hubs in charge of bringing home the bacon, not to mention paying off my student loans. I do think that having a stay-at-home parent can be incredibly beneficial to children if it is financially feasible. And in point of fact, I do think that it is financially feasible for us. Because of my deep desire to be a stay-at-home mom (and blogger!), we have actually been putting all of my paychecks into our savings account for the Last. Five. Years. That’s right, for the last five years all of our expenses have been completely covered (and then some) by Mr. CMF’s paycheck. My paychecks have been saved, invested, and used to cover costs of fertility treatments. We always save a percentage of Mr. CMF’s check too. We have also been heavily contributing to our 401(k)s and Roth IRAs every year for the last seven years. We have a solid emergency fund that could cover many months of our expenses. Mr. CMF has virtually zero chance of being laid off. The student loans are locked at low interest rates (2.5% and 3.5%), so paying those off has not been a priority thus far since we feel we can get better return on our money by investing while we are still young. We have life insurance. We have disability insurance.
But is all that enough to drop one income? We wrestle so much with this question because at the core I am a happy-go-lucky and whatever-it-will-just-work-out-somehow type of gal, whereas Mr. CMF is more of the take-every-precaution-because-you-never-know-what-might-happen kind of guy. Neither of us has been a parent before; we have some idea of what raising a child may cost, but there is no way to know for sure. I think he is apprehensive because he thinks of all kinds of known or unknown things that could happen. And I am apprehensive because I know that I am probably NOT thinking of all the potential things that could happen. I know, we’re a collective mess!!
So how do you know if you have enough money to do something like be a stay at home parent? And what is “enough,” anyway? Does it mean that every possible and potential problem has been accounted for and planned for? Who can live that way?
Don’t get me wrong. Mr. CMF very much supports my desire to be a stay-at-home mom, and we have made the decision that it is going to happen (hopefully one day soon!), but we can’t help but be a little nervous about making such a big financial change. I also can’t help but wonder if we are prime candidates to be the kind of financial hoarders that Financial Samurai has written about, or if we are missing the boat completely and nowhere near a position to achieve our dreams in this regard. Or is this the epitome of what some refer to as “Analysis Paralysis?”
I have a favorite quote that is prominently displayed on our refrigerator, and I think it is very applicable here. A man named Robert Cushing once said,
“The fact is that to do anything in the world worth doing, we must not stand back shivering and thinking of the cold and danger, but jump in and scramble through as well as we can.”
That’s the answer, isn’t it? As I complete this post I am chuckling since I have been working on this post for several days and as I got to the end it occurred to me that the answer has been posted on our refrigerator for over a year. Isn’t that the way it happens sometimes?
Sometimes I think you have to plan like crazy and then DO IT. This is the case whether “it” means dropping one income to have a stay at home parent, ditching the J-O-B to be self-employed, or retiring from outside employment to live off your investments and side hustles for the rest of your days.
Has anyone else been in a situation where you took the leap and “jumped in” and did it? What was your experience?
Photo credit: 401(K) 2012