How To Find Your "Sweet Spot" For Building Wealth

How Much Money Do You Need To Be Wealthy And Financially Free?

If you had one million dollars would you take risks and work hard to make it five million? Suppose you had five million – would that be enough so you could relax and pursue non-monetary goals, or would you push onward to reach ten million dollars? When is enough – enough?

This is a question I've had to answer for myself. At what point do I turn off the monetary spigots, put my investment portfolio on auto-pilot, and completely re-focus my life? It is not a simple question because you pay a price to continue onward and upward, and you pay a price to stop. It is a very personal question as to which price you want to pay. At some point more money becomes meaningless in terms of the quality of your life, but where is that point? It's an important question, so let me explain with a little story…

Why A Private Yacht On The French Riviera Is Too Much

During the summer of 2009 I took my family to France for a month of vacation. As we travelled along the French Riviera we spent two days in Monaco. If you have never been there it is a beautiful place with an amazing concentration of wealth. I have never seen more Lamborghinis, Bentleys, Ferraris, and every other exotic, luxury car on the market. Driving a Mercedes or BMW in that town is like driving a 1970's Chevy station wagon in the United States. The level of wealth and luxury is astounding.

Even more amazing than the luxury cars were the luxury yachts in the harbor.  I had been to Monaco twelve years earlier and was amazed by the yachts back then, but on this trip the size and opulence of the yachts was over the top. Some of these personal boats were so large you had to look closely to make sure it wasn't a commercial cruise liner. We are talking huge yachts that require large staffs to operate, incredible overhead to maintain, and cost more money to purchase than most upper-middle-class Americans earn in a lifetime.

As I walked along the harbor gawking with my 9 year old daughter we watched one of these mega-yachts docking. It was a very involved process to bring a yacht that size into port. I noticed 12 deck hands working the boat, 2 harbor personnel, and much more going on while the family that apparently supported this operation stood passively on the upper deck watching over everything – but doing nothing. The most striking part of the whole scene was how there wasn't an ounce of happiness written on the faces of any one of the three generations of family standing on that top deck. The contrasting effect was startling.

Here was a family with every luxury, convenience, and personal possession that money could afford and every one of them looked less happy than the masses walking along the harbor being entertained by this parade of luxury. I don't want to read too much into this scene because it could just be a miserable family or some recent bad news or something, but it did make me think and bring up some interesting questions…

How Much Money Do I Need To Be Happy?

I wondered if I would enjoy the day on that fancy yacht more than on shore? Would the additional money to support yachting instead of a day at the beach bring more happiness? Surprisingly, the answer was "no", and the thinking process that led to that conclusion is what prompted this article.

You see, I often work with my financial coaching clients around issues of how much money do you really need for financial freedom because many are already successful entrepreneurs pursuing even greater success. "Enoughness" is an important concept to become clear about because it dramatically affects what goals you pursue and how you pursue them. In short, it is essential to the coaching process.

Using my own business as an example, I have no intention of becoming the next Robert Kiyosaki or Suze Orman. While they both have some worthwhile ideas to share with their audiences I am not trying to deliver a "mass appeal" message. I have no intention of diluting or repackaging my information so it is palatable for New York Times bestseller status. My only focus is serving independent investors and business owners genuinely committed to achieving wealth in this lifetime. As a result, my message is meatier and sometimes a little harder to digest, but it attracts sophisticated and experienced clients instead of the masses of people who still believe in oversimplified get-rich-quick nonsense. Frankly, I like it that way.

In other words, I'm happy with existing somewhere out on the long-tail of my market. It is enough for me. I want to grow large enough to achieve my financial goals for this business, serve my target market exceptionally well, and deliver a message that is in integrity with my beliefs. Conversely, I want to remain small enough so that I can continue walk in public anonymously without being recognized. It is a sweet spot I pursue – not too large, not too small, but just right.

The "Sweet Spot" Is Having Just The Right Amount Of Wealth To Maximize Life Experience 

It is the same way with building wealth. Getting back to Monaco and yachts, the reason I had zero "big-boat-envy" was because it would add nothing of value to my day. Everything was perfect just the way it was. We were in Monaco to meet up with some friends at the beach. Our kids play great together, we rent chaise lounges to relax in, eat wonderful food and share stimulating conversation, play in the surf, and have a total ball together. I couldn't ask for a more enjoyable day.

The more I thought about it the more I had trouble imagining any reason why I would want to own a luxury yacht like that. It just seemed to be more hassle than it was worth. Even if my wealth was so massive that I could afford to purchase one and staff it, I would not want to own one. It might be fun to rent for a week or two just to have the experience of cruising around on one, but ownership would limit my experience of life rather than add to it. It would give me new responsibilites to handle and new decisions to make. Frankly, I can have more fun and more life experience on shore for a lot less money and hassle than I can on a fancy yacht at thousands of times the price.

You may notice that implied in the above statements is my underlying values. I don't value unnecesary luxury. I like nice things, but luxury has never held much appeal. For example, a BMW drives nice, but the luxury of a Rolls Royce feels stodgy and wasteful. Renting an apartment on the French Riviera for a week is fun and great adventure, but owning a luxury yacht to cruise the Meditteranean feels cumbersome. The extra luxury hinders my fun rather than expands it. Like all things, spending also has its balance point. More is not always better and sometimes less can be more. You can have too much of a good thing.

How about you? Where do you stand on these issues?

How Your Ideal Level Of Wealth Is A Statement Of Your Values

For me, the values statement lurking behind my attitudes is a clear preference for adventure and experiences in life. Unnecessary luxury puts a barrier between me and life experience.

Sitting on a yacht with a full-time staff may sound nice for a few days but would get real boring in a hurry – not much interaction with regular people, insulated from daily life experience, sterile and living in an artificial bubble of existence. Contrast that to playing in the surf with other families of kids, watching street artists, and dining at a Jazz club on the beach that evening (which is what we did). I like the real-life, common experience with all the flora and fauna over the sterile, luxury experience. I like the diversity and the spice – it's fun. Others might disagree and call me wacky, but that is what I enjoy.

What I'm trying to communicate is that at some point you have all the money you need to have all the experiences you desire. At that point you have to question the value of spending your life energy earning more.

• I only need one bed to sleep in, one chair to sit in, and it doesn't take a lot of money to buy these things.
• World travel, considered a luxury by many, can be purchased for a reasonable price. The more luxury you buy when travelling generally the more insulated you become from the experience you sought from travel in the first place. There is an efficient budget for travelling that avoids unnecessary hardship without insulating you from the country you came to visit.
• It doesn't take a lot of money to buy a good bicycle or backpack, but it does take the time, health and freedom to enjoy bike trips and backpacking adventures.
• If travel and adventure isn't your passion but arts and crafts are then the same rule applies. It doesn't take a lot of money to pursue your artistic goals – but it does take time and health.
• Close, personal relationships cost very little to flourish - but they do require time to cultivate.

The message should be clear: the stuff that is really important in life that contributes to happiness and fulfillment doesn't cost a lot of money. I know it is a cliche, but it's true. Happiness is not the exclusive domain of the wealthy. In fact, study after study has shown there is very little relationship between happiness and wealth once your income rises above abject poverty. The reason is simple: unnecessary luxury is no substitute for quality, life experience.

How Too Much Wealth Can Limit Freedom

Surprisingly, it can work the other way: more money can lead to less freedom and happiness. To earn and manage more money can require additional effort. Reaching mega-wealth raises your profile in such a way that it may place limits on your freedom. That is why celebrities and tycoons have body-guards, private ranches with security gates, and more. They become targets of attention and can't just travel anywhere and do as they please. Their success actually limits their freedom and experience of life.

Another example where success limits freedom is the successful entrepreneur who becomes trapped by the empire he created. He stands at the hub of many responsibilities as all the spokes of his empire turn around and around keeping him busy and involved. Where is the time for all the good things in life when meetings and other business obligations place endless demands on his time?

The truth is you will pay a price to build your wealth. It takes time and effort to earn and compound wealth. Even after you earn and save the money it must be managed and invested. All of this takes effort. Sure, you can hire advisors to do things for you, but in the end you are responsible and you must make the decisions. Earning and managing money is work and it takes time… time that can't be spent on other experiences in life.

In Summary

So where do you draw the line – is it one million, five, ten, twenty? At what point do the diminishing marginal returns of additional dollars make you say "Enough!"? At what point is your time and life energy more valuable than growing your financial empire? These are questions only you can answer, but assuming you are successful at building wealth someday you will confront these questions. It is a certainty. They will beg to be answered and they won't let go of you until you reach a conclusion.

My personal experience and the experience of my financial coaching clients is each person has a point where enough is enough. It is like Goldilocks And The Three Bears where one choice is too large, one is too small, and one is just right. There is a sweet spot to buiding wealth where you spend no more effort than is necessary on acquiring money; yet, you grow your wealth to the point that money doesn't limit your ability to enjoy experiences consistent with your values. It is the balance point where you're successful enough to do as you please with your life, but not so successful that the freedom you sought in the first place is lost to public notoriety and business demands.

The point I'm trying to make is happiness and fulfilment are the real goals and money is just a lubricant to achieving them. Each person's life requires a different amount of lubrication to run at maximum efficiency. Is that level of success one million, five million, ten million or more? In the end, it is a personal question only you can answer.

All I can tell you is that the sweet spot to wealth building does exist. There is an end-game, and it is out there waiting for you to discover.

Let me know how I can help.

Related Articles:

• Warning! Why Most Wealth Building Systems Are Dangerous Half-Truths: Learn the cause and effect chain that leads to wealth, and discover which broken link in the chain has held you back from financial success… until now.
• The Ten Commandments Of Wealth Building: Discover the ten key success principles that lead to true wealth. (This is about a lot more than just making money!)
• The Secret To Happiness… And Why It Has Nothing To Do With Money: Learn how a simple daily habit can create more happiness than achieving financial freedom.
• Andrew Carnegie – The Gospel Of Wealth: A politically incorrect assessment of wealth in America from one of the greatest industrialists and philanthropists of all time.