First, here's a question for you: how much money do you really need?

Who doesn't need money? What's more, we want a lot of it. And we are always looking out for ways to earn more.

Have you asked yourself how much is that 'more'? Just how much will satisfy you? Because, beyond a certain point, any amount will not matter.

If you are satisfied with Rs 5 crore (Rs 50 million), the pleasure you derive from Rs 20 crore (Rs 200 million) or Rs 25 crore (Rs 250 million) is no different.

In economics, this is known as the theory of diminishing marginal utility. You may be excited at making your first million, even more at making Rs 5 million. It may climax at Rs 40 million (Rs 4 crore).

Thereafter, for each additional million you make, the excitement reduces. And, beyond Rs 500 million, it hardly makes a difference.

Here it is graphically:

So what is my point?

There is only one Bill Gates, Richard Branson or L N Mittal in the world. Everyone is not as lucky to have the same fortune. Though we still tell ourselves secretly, "I wish it were me."

Think about it. You need much lesser, perhaps just a fraction of what these legends own. You don't need to worry and feel bad if you don't have the mansions, the private jets or the fleet of Mercedes. Perhaps, you just don't need it.

Say I give you Rs 5 crore (Rs 50 million). What would you do? Make a list. How would you spend it? Do this exercise very seriously.

Perhaps that was easy. What if I gave you Rs 10 crore (Rs 100 million)? Perhaps you managed to make a list again or enhance your existing list?

Now how about Rs 50 crore (Rs 500 million)? The more the amount rises beyond a certain point, we tend to run out of options, right? Unless, of course, you plan to set up petrochemical plants.

If you think crores is too big to work with, apply the same to your monthly salary. If it were Rs 25,000, you would do a few things. If it were Rs 75,000, you would do a lot more. Once it crosses Rs 200,000 or Rs 400,000 per month, you run out of options.

So how much is really enough?

In my view, if you earn, say, Rs 3-Rs 4 lakh (Rs 300,000-400,000) per month, you could live luxuriously, and match the lifestyle of the wealthiest you know. This is not to say you cannot derive satisfaction from Rs 40,000-Rs 50,000 per month.

It depends on where you live, how you live and what you want your life to be. For example, you could buy the best dinner in town for two at Rs 15,000 in Mumbai. The same in Madurai could cost you Rs 1,500 and you would be equally happy.

The secret is, know your critical or optimal level. Once you know that, you know that, no matter what, life is never compromised on anything. You will have ample. And you will love whatever you do, feel complete and have an optimal level of satisfaction and accomplishment.

Anything beyond your critical level is money you can splurge. Critical level is that quantum of money you need to have. Aim to touch that threshold. Else, nothing will change, life will be just the same.

The author is an expert at Financial Planning, is a Certified Financial Planner and a Chartered Wealth Manager. He may be reached at kartik.jhaveri@transcend-india.com.

Disclaimer: The contents of the above articles are the intellectual property and copyright of the author, Kartik Jhaveri. No part may be used or reproduced in any form or manner. If you choose to act upon the information contained in the above article it is at your own risk. This article is purely educative and you are strongly advised to consult an expert prior to taking any significant decision.