A research conducted by Charles Schwab among 1,000 Americans aged between 21 to 75 reveals that it takes $1.4 million to be considered financially comfortable in America today. To be considered truly “wealthy,” that number increases to $2.4 million.
Modern wealth: It’s not all about money
Schwab also asked about their personal definitions of wealth in their lives, and the survey revealed a wide range of perspectives. Based on the survey, two of the top three most popular descriptors aren’t about money at all.
Many Americans cite leading a stress-free life and having “peace of mind” as their personal definition of wealth. That doesn’t sound too money-centric on the face of it—until you consider that money, or specifically the lack of it, is a major source of stress.
According to the survey, half of Americans (49%) believe saving and investing is the way to achieve wealth over time. But in the short-term, they say that other things make them feel wealthy in their day-to-day lives. The survey found that spending time with family was most commonly cited, at 62% overall. This is followed by having a personal time at 55% and owning a property at 49%.
Life’s little luxuries matters too. According to the survey, 41% respondents cite eating out or having meals delivered makes them feel wealthy. Subscribing to Netflix, Spotify or Amazon Prime also made life feel richer for an overall 33% —particularly for Millennials.
Other things that make Americans feel wealthy in their daily lives include owning the latest tech gadgets, having a gym membership or personal trainer, and using a home cleaning service.
Leading the way: Millennials outpace older generations in planning
The 2018 Wealth Index also reveals that 3 in 5 Americans live paycheck to paycheck and that only 1 in 4 have a written financial plan, but those who do exhibit positive investing and saving behavior.
The Schwab survey found that people who have a written financial plan feel more stable and are more on top of their daily finances. Some 45%, however, said they didn’t have a plan because they don’t think they have enough money to merit a formal plan – the top roadblock according to Schwab’s study. 20% say getting a financial plan simply never occurred to them, and another 20% say they wouldn’t know how to go about getting a plan.
“The idea that financial planning and wealth management are just for millionaires is one of the biggest misconceptions among Americans, and one of the most damaging,” said Joe Vietri, senior vice president and head of Schwab’s retail branch network.
Although this common misconception will eventually deter Americans from achieving long-term financial success, there’s still hope. The survey found that the Millennials displayed some youthful optimism when it came to their finances. Some 64% of 20- and 30-somethings believe they’ll be wealthy (the cash kind) at some point in their lives, compared with 22% of Boomers.
Maybe better financial habits will help that happen, since more Millennials (31%) have a written financial plan compared to Gen X (20%) and Boomers (22%). 36% of Millennials also have specific savings goals compared to 25% of Gen X and 17% of Boomer.
When it comes to investing, nearly three-quarters regularly rebalance their investment portfolios compared to 66% of Gen X and 64% of Boomers. Millennials and Boomers are more likely to work with a financial advisor (22% and 25%, respectively) while Gen X lags (16%).
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