We’re in our 40s with $5 million and we’re stressed out in our jobs and our friends think we don’t smell the roses enough – are they right?

A Reddit user is in good shape financially, but he is feeling a lot of stress and his friends think that he is putting so much pressure on himself that he’s not enjoying life. Unfortunately, despite having enough money, he grew up with financial insecurity so giving up the mindset of stressing about money and planning for a worst-case scenario is really difficult. 

So, can he stop worrying about money, feel confident that he is on the right path, and relax enough to smell the roses?

When can you relax about your finances? 

Determining when you have enough money to relax about your finances can be difficult, but running the numbers can help. The Reddit user is 42 with a 40-year-old wife, and the couple currently has a combined annual salary of $800,000. They have two kids under the age of seven, one of whom attends a $25,000 per year daycare and another of whom is in private school because the local public schools are poor quality. 

His net worth is $4.8 million right now, including $4,3 million without his primary residence and $4 million after he subtracts the amount of money that he has in 529 accounts to pay for college for his kids. This includes $1.5 million in retirement accounts and $1.9 million invested in equities in a taxable brokerage account. He also has $200,000 in cash in high-yield savings accounts, as well as some money invested in real estate and venture capital. His household spending is around $150,000 to $180,000 annually. 

With his $4.8 million and his $150K to $180K annual spending, the Redditor is actually well on his way to being financially independent. If you follow a conservative 3.7% safe withdrawal rate, his $4 million (after subtracting for home equity and college savings) could produce around $148k per year in income for him. That’s very close to his target range. And, since he has compound growth working for him, that money could easily grow into a big enough nest egg to support him entirely in a few years even if he never invested another dime. 

Since he makes $800K a year and only spends around $180,000, though, he has plenty of money to invest. In fact, he could probably put away another $500K easily in the coming year. If he invested that much for just two more years, allowed his money to grow, and earned a 10% average annual return, he’d be at around $5.9 million. That would provide him with $218,000, or more than enough to cover his spending needs. 

Since he’s done everything right, has a high net worth, and doesn’t spend much, he should definitely be able to relax about his finances and, as his friends suggest, stop to enjoy life more. 

Overcoming long-standing money fears

Based on the numbers alone, it’s very clear that the Redditor is in great shape and should no longer be worried. However, money isn’t just about the numbers. He said he is an immigrant who grew up financially insecure, so doing the math alone isn’t likely to break established habits and make him feel better about money. He’s going to need to work on changing his mindset

Talking with a financial advisor could help put his mind at ease, both because the advisor can reassure him that he is in great shape and because the advisor can also help him make those worst-case scenario plans he says he is always thinking about. If he has those plans in place to protect himself, he may be able to stop worrying so much.

He’ll also have to make a conscious effort to start spending, perhaps by creating a budget with line items for things he enjoys. As he practices spending money over time, he can hopefully relax and enjoy all the wealth he has worked so hard to create. 

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