What does it take to be considered wealthy? Most people have a set figure in mind that would define wealth in terms of net worth. However, new insights reveal that the feeling of being wealthy happens at a much lower number than the abstract amounts we tend to associate with wealth.
This eye-opening data comes from the latest Modern Wealth Survey by Charles Schwab. The survey asked Americans two revealing questions – what level of net worth do they think it takes to be considered wealthy, and do they feel wealthy currently?
The findings uncovered a surprising disconnect between the net worth people conceptually link to wealth and the net worth associated with feeling wealthy. Factors like health, work fulfillment, relationships, and financial security all contribute significantly to a sense of wealth.
This article will explore the Modern Wealth Survey results in depth, examining the difference between abstract wealth versus feeling wealthy. You’ll learn about the outsized importance of non-financial factors for a sense of wealth. Discover what steps you can take to feel wealthy long before hitting the coveted millionaire net worth number. Let’s dive into the surprising realities around what makes people feel genuinely rich.
The Net Worth Level that is Considered Wealthy
The Modern Wealth Survey conducted by Charles Schwab asks Americans what level of net worth they believe is required to be considered wealthy. The latest results found that, on average, people think you need a net worth of $2.2 million to be considered rich. This number has remained relatively consistent over recent years, according to the annual survey. While $2.2 million represents the abstract number people associate with wealth, more profound insights from the survey reveal feeling wealthy happens at a much lower net worth.
Feeling Wealthy Happens at a Much Lower Net Worth
When survey respondents were asked if they feel wealthy currently, the net worth of those who said yes was around $560,000 – far below the $2.2 million abstract number. This suggests that the feeling of being wealthy is not solely tied to one’s net worth. Many other factors contribute to a sense of wealth. The survey uncovered that good health, strong relationships, a fulfilling job, and financial security are all critical components that make people feel they are wealthy at much more modest net worth levels.
Health and Work-Life Balance Matter More Than You’d Think
In particular, good health topped the list of non-monetary factors that contribute to feeling wealthy. Having the ability to enjoy life without health limitations is genuinely priceless. Work-life balance and a job you find meaningful also ranked very highly in terms of influencing day-to-day feelings of wealth. The survey shows that money alone does not determine how wealthy or well-off someone feels.
Develop a Financial Plan to Feel Wealthy and Confident
An interesting finding from the Modern Wealth Survey is that 92% of people with a detailed financial plan feel confident about reaching their financial goals. Having a clear plan mapped out, with specific targets and steps to get there, provides a significant sense of control and security. Critical elements of a financial plan include budgeting, accounting for expenses, saving for goals, managing debt, and having proper insurance. Financial peace can make people feel wealthy regardless of income and net worth.
High-Interest Debt Can Prevent Feeling Wealthy
One area that can detrimentally impact feelings of wealth is high-interest debt like credit cards. These not only create stress, but high double-digit interest payments can make it very difficult to get ahead financially. A financial plan should prioritize eliminating high-interest debt to provide a feeling of control.
Insurance Coverage is Vital for Protecting Your Finances
Most Americans are just one major medical event away from potential bankruptcy without proper insurance. Comprehensive insurance coverage provides financial security and peace of mind. Understanding what policies you need, from health, disability, home, auto, and life insurance, helps protect you from massive unexpected costs.
Make a Retirement Plan Based on Your Unique Vision
Retirement planning is also a key element of feeling financially stable. You can determine your vision for retirement and calculate the savings and income needed to make your goal. Retirement can mean different lifestyles and costs for each person, so planning for it requires identifying your personal goals.
An Estate Plan Ensures Your Assets are Handled As You Wish
Finally, having legal documents like wills and trusts dictating how your assets should be managed if something happens to you helps provide a feeling of control over your financial legacy. Everyone’s estate planning needs differ, but most people should at least have basic wills stating their wishes.
Wealth is More Than Just Dollars and Cents
As the Modern Wealth Survey demonstrates, feeling wealthy is more than just accumulating millions in net worth. It also comes from living a balanced, fulfilling life using money as a tool to enable good life experiences and security. Don’t simply strive for an abstract net worth number, but instead, determine what makes you feel content on a day-to-day basis.
Take a Holistic View of What Makes You Feel Wealthy
True wealth is achieved when you feel confident in your financial situation, experience joy in relationships, and have good health that allows you to thrive. You have a purposeful job aligned with your values. You can take a holistic assessment of all the elements contributing to your feelings of wealth, not just your bank account balance.
Key Takeaways
- The Modern Wealth Survey found people think you need a $2.2 million net worth to be wealthy, but feeling wealthy happens around $560,000.
- Health, work fulfillment, relationships, and financial security are central to feeling wealthy.
- Making a comprehensive financial plan gives confidence in reaching goals.
- High-interest debt creates stress and prevents building wealth.
- Insurance protects against financial catastrophes from unexpected medical costs.
- Custom retirement planning lets you match lifestyle costs to your vision.
- Estate planning provides control over the handling of your assets.
- Wealth is a holistic assessment of life balance, purpose, health, and finances.
Conclusion
True wealth derives from flourishing in all areas – financial, physical, social, and emotional. While a high net worth provides financial security, it does not neglect other vital components of a life well-lived. Assess lifestyle, relationships, work, health, and your larger purpose when evaluating what makes you feel genuinely wealthy. The most fulfilling state of wealth comes from achieving balance and confidence across money, health, community, and meaning.