How Much Money Should I Try to Make?

The value system I’ve probably had the toughest time establishing as an adult is my attitude and philosophy towards money.

The only real monetary goal I’ve settled on is that “I don’t want to excessively worry about money”, but that’s more of a guiding principle / cop-out than it is a coherent and well thought-out system. 

I find money to be a really confusing metric to solve for because it weaves together several sensitive factors: ego, risk tolerance, quality of life. I find that these factors are hard to decisively pin down because they tend to fluctuate throughout your life and are susceptible to peer influence.

As I’ve started to build out my career prep business, one of the questions I keep asking myself is – how big should I try and build this business?

The reason I ask is because this venture is at least philosophically designed to be a lifestyle business. I am not interested in raising money from investors, going public or responding to a board.

My primary career goal is not wealth, which has forced me to be more thoughtful about what amount of money is “enough money”.

When I was working a junior finance job, additional effort did not always lead to making more money or saving more time. There was an upper limit to how much I was going to earn based off of merit (because I did not yet have equity). And there was also a minimum amount of time I had to spend at the office (because of “face time” and interdependent work schedules).

But under the guise of self-employment, every hour I don’t spend on work is an hour I get to myself to enjoy. 

And every dollar I earn now is a direct function of how much effort I put in.

The Marginal Utility of Money

Theoretically, there should be a point on all of our personal utility curves where we have “enough money”. I would describe this as the point in which we can cover all of our reasonable needs and desires while having a comfortable buffer for savings. This was my favorite concept from my intro to microeconomics course.

The specific point of the “marginal utility of money” might change over time as we hang out with richer friends, have kids, etc., but theoretically, there should always be a point.

Over the years, there have been several studies on this topic and one recent study posits that this amount is $95,000 for individuals:

We found that the ideal income point is $95,000 for life evaluation and $60,000 to $75,000 for emotional well-being. Again, this amount is for individuals and would likely be higher for families

The study also found once the threshold was reached, further increases in income tended to be associated with reduced life satisfaction and a lower level of well-being. This may be because money is important for meeting basic needs, purchasing conveniences, and maybe even loan repayments, but to a point. After the optimal point of needs is met, people may be driven by desires such as pursuing more material gains and engaging in social comparisons, which could, ironically, lower well-being.”

2019 study and article via Purdue University

This study suggests that people may become less happy above this level because they tend to compare themselves to others. I agree!

Now money values tend to be incredibly personal and vary wildly, so $95,000 could very easily sound like a lot or not a lot to you. But for context, $95,000 would put you in the top 20% in Toronto and top 10% in Canada.

And if you graduated into a field like finance, consulting, software engineering, or medicine, you would pretty easily smash that $95,000 income within a few years of graduating. Of the top 1% (>$190,000) in Canada, ~90% of people come from business, health and engineering.

My Budget

It’s never quite satisfying to just trust a study at face value, so let’s try and dive a little bit deeper.

I will try to examine the point of marginal utility by devising a loose budget for my current life.

This budget calculates expenses assuming that I live in downtown Toronto. I predict that I will spend most of my adult life in Canada. For what it’s worth, financial freedom seems materially harder in the U.S. (primarily due to medical costs and education costs). 

A quick disclaimer: I realize how fortunate I am to be in a position where I can even wistfully dream about being in a worry-free financial situation. I had extremely great fortune to be born in Canada, to graduate without student debt, and to be able to live with my parents while starting my business. I don’t want to come off as tone-deaf because I know how much financial inequality there is in the world and I am lucky to be a beneficiary of the system.

That being said, I think it’s also really important to talk candidly and openly about financial goals. It’s obviously uncomfortable and can be embarrassing, but I’ve always found it to be extremely helpful when people have shared their financial goals.

I would estimate my current point of marginal utility to be ~$160,000 (CAD). I think this is the level where any additional money would either be earned for competitive reasons or for relatively joy-neutral luxuries (for me).

In the budget below, I assume that I will rent and live by myself in downtown Toronto and not be raising kids. I think this is a reasonably accurate foundation for the next 4 or 5 years of my life.

For reference, I included a column for Toronto cost of living estimates by Lowest Rates

  • Rent / Mortgage: $2,650 per month. 
    • I apply a ~15% buffer to the average 1 BR cost in Toronto to arrive at this. This is the biggest input and is actually pretty variable for me because I will probably buy a home (potentially up to $4 or 5,000 per month) and soon live with my significant other (potentially down to $1,500 per month).
    • I think this figure is pretty reasonable for my current life stage and there seems to be an abundance of average to pretty good condos in Toronto. I guess you could argue that I would benefit from an additional room so I have a designated music / YouTube studio, but I honestly think this is sufficient.
  • Healthcare: $350 per month.
    • This is probably the only non-standard cost I have. Because I’m self-employed, I have to pay for more things out of pocket, e.g. dentist and doctor appointments.
  • Purchases: $1,000 per month.
    • I typically spend $500 in monthly maintenance purchases (e.g. new Uniqlo v-necks, Chinese lessons, Netflix) and $500 in luxury purchases (e.g. music gear, gifts for loved ones, video games)
  • Everything Else: $2,280 per month.
    • It’s not very interesting to go over every line item, so I won’t, but I think this is reasonable based on my spending habits in New York. This includes items such as transportation, groceries, eating out and entertainment.
  • Monthly Total Expenses: ~$6,000 per month.
  • Annual Vacation Budget: $10,000 per year.
    • This is my egregious utility-seeking expense. In an ideal world, I would take a long multi-month vacation every year in the spirit of the 4 Hour Work Week. I’ve never been one for great luxuries, but I definitely do like long, lazy trips. If I can’t scuba, then what’s this all been about?
    • My three-month trip last year through Europe and the Middle East was about $10,000, so I’ll use that as an anchor point.
    • I’m double counting expenses a bit because during the months I’m on vacation, I wouldn’t be spending some monthly calculated expenses. I’ll treat any delta as a conservative buffer.
  • Savings: $25,000 per year.
    • I am not certain what level I should be targeting, but I think accumulating savings of $25,000 every year seems good enough to build wealth. Financial Samurai (the pre-eminent financial blogger) often cites a 20-35% post tax savings rate.
    • A side lesson from this exercise was realizing how difficult it is to save money unless you’re earning an obscene amount of money. Living in popular cities is absurdly expensive.
  • Annual Total: $105,000 per year, implying pre-tax earnings of ~$160,000 CAD per year (using a tax rate of 33%, per SimpleTax).
    • If you assume no savings and no vacation, this budget would amount to ~$100,000 pre-tax / ~$70,000 post-tax annually.

I think this is a reasonable budget and serves as a good target for what I should strive to reach with Peak Frameworks.

I’m also fortunate that Peak Frameworks earns revenue in USD, which at a 1.3x exchange rate implies that I should target ~$120,000 USD in business profits (which is about 350 private equity courses in case you were wondering). I also have some savings from working in finance and can conservatively budget some investment income.


It’s actually a bit sobering and funny to run this budget as a late-20-year-old.

Before I decisively knew what things brought me joy and what kind of life I wanted to have, I picked wealth maximization as my default goal.

There was a time not so long ago in university when I dreamed of owning a sports team (the amount of NBA teams owned by private equity founders is insane).

Then of course, I worked for a few years and quickly realized how boring and demotivating the corporate world can be.

The Destructive Power of Comparison

I think the truth is, if you’ve structured your life around earning lots of money, you’ll probably get there at some point.

Probably not sports-team rich, but if you pick a high expected value career and don’t take your foot off the gas, you’ll probably get to a point where you don’t have to worry about money. The hard work and steps to carve one of those paths is discrete and knowable.

However, I think lots of people still hold grand money motivations well after they’ve obliterated their utility threshold.

Having worked in investment banking, where the starting salary exceeds $120,000 USD, I believe that most high earners are primarily motivated by comparison and competition. Yes, many people are ensnared by financial commitments, luxuries and the duties of raising a family, but I think that the most successful and hungry people are primarily motivated by a desire to win. Money is an extremely effective and convenient scorekeeper.

I did an “Ask me Anything” a few months ago on Instagram with @WallStreetConfessions to promote my career prep service. My favorite question that I got asked was about money goals:

Finance is an obvious example of a field where most people generally obliterate the salary at which they would reach their marginal utility.

Yet it’s almost impossible to convince someone still in finance that they have enough money, because they don’t view their own salary through the lens of utility, they view it through the lens of competition.

Upon self-reflection and after observing the career choices of my peers, I think that people’s money goals are most highly anchored based on the following factors (in order):

  • How much money your parents have and how hard they had to work.
  • How much money your social peer group makes.
  • How much money people at similar firms make.

I think your parents’ income and career prestige can set a sort of “floor” for what you tend to want (because people don’t want to feel as though they’ve squandered the opportunity they’ve been given). After that “floor”, I think people are motivated by their immediate friend group, because of money’s association with status and because your specific friend group dictates the cost of social activities. Lastly, I think people determine if they are being compensated fairly based on how much their industry peers earn.

Competitive people will always have the tendency to compare themselves to others in order to know where they stand. And comparison is way too powerful of a force that it will steer you to chase mimetic goals even if you don’t genuinely want them.

I think that it is really, really hard to ever fulfill your money goals unless you give it careful thought and stay disciplined.

I was reading Anything You Want, which follows Derek Sivers’ entrepreneurial story, and enjoyed the following quote.

Even from the start, I didn’t want this website hobby to take away from my career as a musician, but it did. I didn’t want it to have more than a couple employees or outgrow my house, but it did. When I had twenty employees, I vowed to keep it that small, but customer demand kept growing, and I had to keep the customers happy. When I had fifty employees, I swore that was enough, and we needed to curb this growth, but the business kept growing.

When people would ask, “What are you doing to grow your company?” I’d say, “Nothing! I’m trying to get it to stop growing! I don’t like this. It’s too big.” They thought that was the weirdest thing. Doesn’t every business want to be as big as possible? No. Make sure you know what makes you happy, and don’t forget it.

Derek Sivers, Anything You Want

I’m not in a position where Peak Frameworks is growing like crazy, but this quote generally captures the business and life philosophy I hope to keep. My business and vocation should primarily be a vehicle that enables me to be “happy”.

2 thoughts on “How Much Money Should I Try to Make?

  1. This is a great post, Matt. You have a gift breaking-down complex topics in such simple manner.

    “I believe that most high earners are primarily motivated by comparison and competition”

    I was watching an NBA playoff game a few weeks ago and Jeff Van Gundy said one of the best quotes I have heard in a long time: “Comparison is the thief of joy”. I think this is why a lot of young professionals, especially in big cities, are not happy.

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