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Americans believe a net worth of more than $2 million makes a person wealthy. Read on to find out which age group feels the most rich.
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The concept of wealth may be subjective, but Americans still have a specific dollar amount in mind for how much money they think makes a person wealthy — and it’s a lot. A recent survey by Charles Schwab found that Americans believe you need a net worth of $2.2 million to be wealthy.
Curiously, nearly half of the survey’s respondents said they feel wealthy and yet have an average net worth of just $560,000. Among the four age groups surveyed, millennials (aged 26-41) were the most likely to view themselves as wealthy, while baby boomers (aged 58-75) had the highest net worth at $692,000 — yet were the least likely to say they felt wealthy.
One more interesting result of the survey was that just one-third of respondents said they had a formal financial plan, and among those that did, 92% of them are confident they’ll achieve their financial goals. If you’re among the two-thirds of Americans without formal financial goals, here’s how to get started.
Be specific about your financial goals
While it may not seem as if it matters, being very specific about what financial goals you want to achieve and writing them down can help you achieve your goals. A popular study by Dr. Gail Matthews, a psychology professor at Dominican University of California, found that people are far more likely to achieve their goals when they write them down.
Being specific about your financial goals — like paying off debt, raising your credit score, or buying a house — will help remind you to stay on track when you’re tempted to veer off your financial goal path. There are even some great budgeting apps you can use to help you progress towards your goals.
Set a deadline for yourself
If you’re anything like me, you need a deadline to finish things. I’m in the early stages of house hunting and I have a rough timeline set. I recently noticed that talking about a potential timeline (which I need to write down!) with my wife has helped me focus more on what practical steps I need to take to make my house-buying goal a reality.
If you want to pay off debt or build an emergency fund, break your specific goal into smaller milestones, each with a deadline. For example, if you want to build your retirement savings, a simple first step would be opening an online brokerage account.
Setting small goals and giving them a deadline will help you track of how well you’re progressing and keep you focused on your long-term financial plans.
Keep your eyes on your own paper
The Schwab survey found that nearly half of the respondents said that being able to afford a similar lifestyle as their friends and family made them feel wealthy. That means more than half of the respondents may not feel wealthy because they’re too busy looking at their neighbor’s new car or latest fancy vacation.
While it’s always tempting to try and keep up with what friends and family are buying, doing so can distract you from your own financial goals. Instead, apply a simple rule you likely learned in grade school when taking your tests: Keep your eyes on your own paper.
Most importantly, remember that your personal finances are, well, personal. Someone’s definition of wealthy may not match your own personal definition anyway, so there’s no need to try to keep up.
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The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Charles Schwab is an advertising partner of The Ascent, a Motley Fool company. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool recommends Charles Schwab. The Motley Fool has a disclosure policy.
