Financial Finish Lines

The concept of a financial finish line came from John Cortines and Gregory Baumer’s book, “God and Money”. Without an income and wealth finish line, people continue to want for more. It doesn’t help that our current society promotes a non-stop work culture that all too often leaves us unsatisfied. This never-ending quest to make a lot of money is also a safety behavior. The future is unpredictable, so we earn as much as we can in order to protect ourselves from uncertainty. Setting a finish line can help evaluate your goals, which can lead to feelings of contentment and security.

Absolute VS Relative Wealth

To determine your income and wealth finish line, make sure you are not comparing yourself to others. A financial finish line is your own criteria for self-evaluation. First, get a clear picture of your financial situation. Next, set the milestones you want to achieve. Use it to constantly re-examine yourself. The financial finish line itself is a metric that you can regularly tweak when there are major life changes. But having one is important, and promotes frequent self-reflection.

How Much Income is “Enough”?

A study was conducted by Kahneman and Deaton in 2010 that wanted to find out how much income is enough to assure a sense of well-being. They found that well-being did not significantly improve beyond an annual income of 75,000 USD, which is equivalent to 92,000 USD today.

A longitudinal study by Harvard that spanned almost 80 years found that relationships contributed the most to happiness. At age 50, the best predictor of health in your 80s is the quality of your relationships. Watch Robert Waldinger’s TED Talk about the longest study of happiness here.

Four Questions to Help You Set Financial Finish Lines

Here are some questions that can help you determine your income and wealth finish line:

• What is the purpose of my wealth?
• How much is enough for my family and me?
• How much should I give to the next steward of this wealth?
• Should I give now or later?

Make Generosity a Part of Your Plan

Saving and investing are good practices to build your wealth. As you grow your assets, don’t forget to be generous. If possible, include giving back in your plan from the start. Hopefully, you’ll reach a point where you can be radically generous with your wealth.