Set Financial Finish Lines to Prevent Wealth Hoarding

As The Rich Fool, one of the core themes I plan to explore revolves around the question of what it means to build “bigger barns.” It feels critically important to define what “bigger” means and set some financial finish lines, considering the fate of my biblical counterpart who God condemned for stockpiling an abundance of possessions.

One of the most fascinating aspects of the parable of the rich fool is that he was already rich when he came into a season of abundance. Only when he decided to tear down his existing barns and build bigger ones did God call him a fool. This tells me that God wasn’t initially angered by the fact that he was wealthy. God condemned the rich fool for wanting to become wealthier when he already had more than enough crops stored up. The rich fool’s philosophy about money isn’t all that different from today’s financial independence movement.

The rich fool’s reaction to a huge blessing was to hoard the wealth, rather than become more generous. When he asked himself what he should do with his surplus, it never crossed his mind that he could use his vast resources to meet the needs around him. Instead, the landowner upgraded so he could take it easy and enjoy life for years to come.

That leads me to believe that one of the keys to being on guard against greed, the primary warning in the parable, is protecting ourselves against the temptation to over-save for a future that isn’t guaranteed. If we’re going to apply the lessons of the rich fool’s story to our lives, we have to wrestle with the question of how much we really need to save to meet our future needs, and where we cross the line into hoarding wealth at the expense of generosity. We need financial finish lines guided by a practical definition of rich.

How Do You Define A ‘Barn’?

So what exactly constitutes a “barn,” financially speaking? I define a barn as any savings or investment vehicle set up to meet long-term future needs rather than short-term needs. For my family, that includes retirement funds, college savings plans and brokerage accounts. We started other accounts for goals like a new car and home renovation, but I don’t count those as barns because they have been earmarked for specific, short-term purposes.

Barn-building means investing in goals so far away that they may not actually end up being real needs. That includes saving for a retirement that’s 25 years away, despite not knowing how long we will live; putting money away to send my son and daughter to college, even though I have no guarantee they will end up at a university; and investing extra cash flow in the stock market to build wealth, which is a safety net with no specific purpose. Just like the rich landowner turned into a fool when he died with excess wealth, it’s possible my family won’t need any of money we’re working so hard to save.

Having said that, I’m saving into each category because it’s wise to plan, and I have a responsibility to provide for my family. But I also want to be intentional about how much I put into each of these accounts, and mindful of when legitimate saving becomes selfish hoarding. I want to build the right-sized barns, which means setting some financial finish lines that shape my budget.

Calculating Financial Finish Lines

To avoid building bigger barns, I set financial finish lines for each investment area. Rather than blindly saving with no limit, I calculate how much I actually need to reach specific, calculated goals. That way, I don’t save more than I need just to feel secure, leaving more room for giving.

Here’s how I have approached each investment, keeping in mind that the right-sized barn isn’t a bad thing. It’s wise planning and good stewardship until it crosses the line into hoarding.

Retirement Accounts

By far, this is the easiest place to save with no ceiling. Most of us put money into 401Ks on autopilot without projecting how much we will eventually accumulate. That’s because we plan for worst-case scenarios like expensive illnesses or long-term care, or build a large cushion so we can enjoy retirement life like the rich fool. As a result, we end up with retirement account balances well beyond what we will ever need in a lifetime.

The key is saving with a goal in mind. In my case, I used the Retirement Planner from Personal Capital to estimate how much money we must put into our two 401Ks each month to spend $75,000 a year in today’s dollars after we stop working. The most likely scenario is that we reach age 65 with about $2.5 million in retirement accounts if we contribute 10 percent of our income (plus employer matches).

Under the median scenario (assuming average returns, an inflation rate of 4 percent and a tax rate of 20 percent), the growth of our portfolio would sustain our spending, and we would die close to where we started. In the worst-case scenario, we run out of money in our 80s. That might seem risky, but it doesn’t include Social Security, income earned during retirement, or money we’re putting into our other barns. So it feels like a reasonable financial finish line. (Update: We officially set a retirement financial finish line of $1.8 million and decided maxing out our 401Ks would be foolish.)

College 529 Plans

When it comes to college savings, my wife and I first made a philosophical decision about whether we feel obligated to foot the entire bill. We agree that we want to help, but we don’t mind if our children have to work to pay for part of their tuition. That way, they will be more invested in their own education.

With that in mind, we set a financial finish line for college savings at half the estimated cost: roughly $100,000 each. We feel comfortable getting them halfway there, knowing that grandparents might kick in and we could have financial windfalls along the way. We seeded the college funds with $12,000 from the sale of our first house turned rental property, and budgeted $500 a month between both kids. By 2029 and 2031, respectively, our son and daughter should each have $25,000 available for college expenses for four years.

Wealth-Building Funds

It was relatively easy to calculate the financial finish lines for retirement and college. I’ll admit that I’ve struggled to figure out the goal for additional long-term savings.

I have two accounts for extra investment funds: a Betterment account for automated index fund purchases and an Ameritrade account for stocks. Together, these accounts recently surpassed $100,000. Each month, I add $1,500 through automatic deposits. If you add these totals to the retirement planner, my retirement balance at age 65 jumps to almost $5 million. It grows to almost double that by age 93, with little chance we will ever run out of money.

Now I feel like the rich fool.

Of course, there are variables. My wife might stop working. My business could collapse. There’s no guarantee we will save at the same rate for the next 27 years.

Still, I’d like to cap this wealth-building number. For now, it’s limited by my commitment to giving away as much as we save into barns each month. More and more, however, a net worth finish line that sets a cap on our total savings and investments looks like the next step.

Financial Finish Lines Encourage Generosity

The problem with financial finish lines is that our culture celebrates bigger barns. A scarcity mindset — the belief that we will always be lacking — limits generosity. If we instead operate with an abundance mindset and realize how much we really have, we won’t feel the need to hoard excess wealth. We will see more opportunities use our resources to make the world a better place.

It’s scary to set financial finish lines when we’re told how much money we will need for big expenses like college, retirement and end-of-life care. I’m constantly tempted to save more just in case. But planning for the worst-case scenarios comes from a place of fear and anxiety. I want to make financial decisions from a place of contentment and joy.

When I die, a big bank account balance won’t be the legacy I leave behind. I’ll be most proud of what I achieved with the money entrusted to me during my lifetime. Financial finish lines will guide me there, and help me find the balance between saving and generosity.