Financial Independence
Financial Independence

How Much is Enough?

By Mary Jo Lyons, CFP®

In the month of July, we come together as a nation to celebrate our country’s independence. In keeping with that theme, I couldn’t help but think about what it means to truly be independent. To me that implies financial independence.

Financial independence can mean many different things.

For most I think it’s safe to say that to be financially independent one has enough assets to cover their expenses without having to rely on earned income from outside work. One school of thought is that it’s not about how much you have but about how much you spend. I’ve seen various studies that support this theory.

One standard that many financial advisors refer to is the sustainable withdrawal rate. There is much science and much debate about what rate this is and how often that spend down rate has proven to be successful. Another approach is to take your expense figure and multiply it by 25 to get your number. This is conceivably how much you would need to generate the income needed to cover your expenses over an extended period, say 30 – 40 years. Financial independence is about the relationship between savings and expenses. The more you are willing to work on these numbers the higher your chance of achieving financial independence.

I would encourage you to think about financial independence a little differently. Isn’t financial independence really about freedom from anxiety about money? If you agree then the real question becomes “How much is enough”?

When asked what it was they hoped to achieve by completing the financial planning process a recent client responded with “contentment”. That really stuck with me.

There are four uses of money:

  1. Living Expenses
  2. Debt Repayment
  3. Taxes
  4. Giving


Lifestyle is the total of all spending not related to these four uses of money. It is typically the most significant use of money. It is also the primary driver of “How much is enough”?

Our culture encourages us to spend all that we make. Our lifestyle drives our debt decisions and our spending decisions. By spending less on lifestyle, we have more to save and more to give. ““How much is enough”? differs for every family. It’s a number that changes over time as circumstances change. A big part of this equation is planning for the unexpected and planning for longevity. I would never suggest otherwise.

In Biblical wisdom there are 6 Transcendent Planning Principles

  1. Spend less than you make (Proverbs 13:11)
  2. Avoid the use of debt (Proverbs 22:7)
  3. Build liquidity or reserves (Proverbs 6: 6-8)
  4. Set long-term goals (Philippians 3:14)
  5. Develop and maintain an eternal perspective (Psalm 24)
  6. Rejoice in generosity (II Corinthians 8-9)


I would suggest that if you follow these principles you are more likely to find contentment that leads to less anxiety about money and thus true financial independence. If you would like help in determining “How much is enough”? for your unique situation I’d encourage you to consider going through the financial planning process.

Of the four uses of money, giving is the only one that brings joy to our lives. When we can give generously and from the heart we experience true contentment. The key to significant giving is a controlled lifestyle.

Whatever you set your heart on so goes your wealth, so goes your life. From the Parable of the Talents (Matthew 25:14-30) we gain a fundamental principle: Your use of money reflects your goals, your values, your priorities and your spiritual convictions.

Giving can be about providing for God’s Kingdom and supporting Kingdom work. It can also be about helping your community after times of disaster such as we saw with Hurricane Harvey or countless other charitable and philanthropic causes.

There are many creative ways to structure planned giving, during life or after death. I was blessed recently to be able to attend a Journey of Generosity workshop sponsored by Generous Giving. It was a life changing and heart opening experience. Generous Giving helps people discover the great joy of giving.

If you would like to learn more about these topics or planned giving strategies give me a call at (830) 609-6986 or email me at ma****@ci*******.com.


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