Financial Wellness

Will You Ever Have Enough Money to Live Your Best Life?

That word enough is a relative term. We all should have our own set of unique life goals to guide financial decisions. Unfortunately, if you haven’t taken the time to explore your financial plans, you may end up getting trapped in the pursuit of more rather than the contentment of enough.

A financial wellness “Think Tank” group regularly gets together to share information (and occasionally commiserate) about our most challenging opportunities to change lives in a positive manner. Here are some other common questions that we cannot get enough of lately: (See what I did there?)

  • Am I saving enough for retirement?
  • I’ve had enough of my frustration with debt, how do I get it under control?
  • Do I have enough life insurance to take care of my spouse and children if I die prematurely?
  • How much is enough for an emergency fund?
  • Are my investments diversified enough?

We all have a finite amount of resources to dedicate to the things that matter the most to us. Whether we are examining our financial resources or the allocation of our time, it can be challenging to determine how much is enough. The real question behind each one of these questions is quite simple – How am I really doing when it comes to managing money?

Determining how you should you measure the concept of “enough” in your life plan

There are numerous financial measures to help us track our progress financially speaking. Best practice examples include running a basic retirement calculator, determining your savings ratio as a percentage of your gross income, calculating your net worth, and figuring out your current debt-to-income ratio. While these are all important for financial tracking purposes, you may still be left wondering what this information really means.

I recently read financial planner and Forbes contributor Tim Maurer’s book, Simple Money: A No-Nonsense Guide to Personal Finance, in which he discusses how we have the tendency to run away from having enough towards having more stuff in our lives. I’ve written about the importance of simplicity before and enjoy finding effective ways to demystify personal finances. Some of my favorite concepts over the past few years include The One-Page Financial Plan by Carl Richards and Note-Card Investment Planning.

The Enough Index

The “Enough Index,” as described by Maurer, provides much-needed perspective to help you see exactly where you stand. It’s not a perfect system, but it’s designed to generate a 100-point score if you achieve what is labeled as “textbook” or financial planning best-practice scores across four individual areas: savings, debt, retirement, and giving. Here is the breakdown of the Enough Index score that you can use to assess your overall financial health:

Savings Index

Since the early days of the cave dwellers, it has commonly been understood that you should set aside resources for a rainy day. In modern financial times, 3 to 6 months’ worth of basic living expenses is what most financial planners agree on as a desirable emergency safety net. For the purposes of calculating your savings index, multiply how many months’ worth of living expenses you have in emergency reserves by 8 (the numbers will make more sense at the end).

Emergency reserves (months’ worth of living expenses):       ________       

Multiply the number above by 8:        ________                                     

Your savings index =        ________            

Example:  If you have enough money in savings to cover at least 3 months’ worth of living expenses, you will receive a savings index score of 24.

Debt Index

It’s no secret that debt is a major obstacle on the path to financial wellness. For the purposes of the Enough Index, your debt index score is a red flag measure of how much revolving consumer debt you have. Other types of debt such as mortgage loans, student loans, business loans, and other installment loans that will eventually go away are not included in the debt index. Maurer refers to this unsecured debt such as credit cards or lines of credit as “flesh-eating zombies” because it is designed to keep you in debt and often results in high-interest.

For the purposes of calculating your debt index, determine how many months’ worth of living expenses you have tied up in revolving unsecured consumer debt (credit cards, lines of credit, etc.).

How many months’ worth of living expenses you have tied up in debt payments:      ________                 

Multiply the number above by 10: ________          

Your debt index =    ________                     

Example: If your gross income is $5,000 per month and you have $10,000 in credit card debt, you will receive a debt index score of 20 ($10,000/$5,000 = 2, multiplied x 10 = 20). In a similar scenario, $2,500 in credit card debt would yield a debt index score of 5 (0.5 x 10 = 5).

Retirement Index

Next, the focus shifts from the past and the present to the future – retirement. Running a basic retirement calculation is a simple process and is a best practice financial planning activity that should be done at least once a year. But what if you just want to get a quick snapshot view of where you should ideally be at a certain age without running a retirement calculator? Well, if you are looking for some quick benchmarking tools, you are in luck! According to a study conducted by Fidelity, retirement savings benchmarks based on your age and current salary can be used to generate your retirement readiness score.

In order to retire at age 67, you would ideally want to have the following amounts saved at different ages. The key word here is “ideal.” If you are behind, you aren’t alone.

Your current ageAmount you should ideally have saved
301 x current salary
352 x
403 x
454 x
506 x
557 x
608 x
6710 x
Source: Fidelity Investments*

(The Fidelity benchmarks were updated as they have changed slightly since the original publication of Simple Money.)

Note: If you are under 30, don’t feel left out of this calculation. Simply take the percentage of your income you’re currently saving and multiply that number by 5.6. That way, if you are saving 10 percent of your income, your retirement index score will be 56 (10 x 5.6 = 56).

The first step is to determine your retirement multiple. If you are 30 or over, this is your total retirement savings divided by your current salary. If you have saved $200,000 and your current salary is $100,000, then your retirement multiple would be 2.

There is one more step for the purposes of creating your retirement index score. You must then take your retirement multiple and divide it by the Fidelity benchmark for your age. For example, if you are 45 years old and you’ve saved 2 times your salary, your retirement readiness score would be 0.5 (your multiple of 2 divided by the Fidelity target of 4 x salary). The final step is to multiply your retirement readiness score by 56.

Your retirement readiness score:         ________  

Multiply the number above by 56:      ________    

Your retirement index =       ________       

Giving Index

According to Maurer, the reason the giving index was included as a measure of overall financial health is because overall financial satisfaction can be measured by your ability to give to others. Personally, I would agree with this statement but realize that not everyone shares the same desires for charitable giving. That’s why I would adapt this index to the giving/living index and perhaps leave it open to interpretation as to how much you are currently giving or could potentially give to others. The “giving/living” aspect of this could essentially be viewed as a measure of financial freedom to help others and not feeling like you’re living paycheck to paycheck.

What percentage of your current income do you currently give each year:                              

Multiply the number above by 2:       ________     

Your giving index =          ________             

Your Current Financial Status

Once you have determined your individual scores for each section (savings, debt, retirement, giving) you are ready to tally up your scores for the Enough Index.

Savings Index:         ________        

– (minus) Debt Index:        ________           

+ (plus) Retirement Index:          ________

+ (plus) Giving Index:                  ________ 

= (equals) Your Enough Index:    ________              

My Final Thoughts

The Enough Index should be used as a benchmark but may not tell your entire financial life story. For instance, if you are a grateful member of the rapidly decreasing group of Americans who are covered by a pension plan or have streams of passive income from rental properties or other sources, your retirement index may have a better outlook. In contrast, your Enough Index score may be misleading if you are overleveraged with your home mortgage and have significant student loan debt or other high installment loan payments putting a drag on your cash flow.

Some people will see these index calculations as something to avoid. I get it. Financial numeracy isn’t something everyone gets excited about. But you may just find contentment in your own financial life plan if you take the time to explore your definition of Enough and track your financial progress on a regular basis.

A version of this article originally appeared at