It takes a lot less money to feel rich than to be, according to a survey

It takes more than $2 million to be rich, according to a new survey of ordinary Americans. But it only takes a quarter of that number for them to feel rich themselves.

That’s one of the takeaways from Charles Schwab’s seventh annual Modern Wealth Survey, which polled 1,000 Americans on saving, spending, investing and wealth.

When asked how much they consider rich, survey respondents came up with an average of $2.2 million. Yet among the 48% of Americans who already consider themselves wealthy, their average net worth was $560,000, according to a survey.

The results reveal the changing public perception of what it means to be wealthy, with many associating wealth with well-being rather than just net worth. But financial planning still plays a role in feeling wealth, however defined, experts said.

Valerie Daval reacts to receiving a $100 bill from Secret Santa, right, a Kansas City man who prefers to remain anonymous, at a Salvation Army thrift store in Los Angeles’  Neighborhood of Lincoln Heights on Friday, December 13, 2013. He is a wealthy businessman who walks around anonymously on Christmas, handing out $100 bills to people he spies on in places such as thrift stores, laundromats, health clinics, assistance centers and shelters.  He gives tens of thousands of dollars every year without tax benefits.  (AP Photo/Nick Ut)

Valerie Daval reacts to receiving a $100 bill from Secret Santa, right, a Kansas City man who prefers to remain anonymous, at a Salvation Army thrift store in the Lincoln Heights neighborhood of Los Angeles on Friday, December 13, 2013. (AP Photo/Nick Ut)

“People define wealth differently when asked how to define a dollar amount or when asked what it means to be wealthy,” said Rob Williams, managing director of financial planning, retirement income and wealth management at Charles Schwab. Yahoo funds. “I think the concrete point we’re suggesting is thinking carefully about what wealth means to you globally.”

More than 3 in 5 Americans said having a healthy relationship with loved ones is a better way to describe wealth than “having a lot of money.” The survey also found that 40% of Americans mentioned “well-being” when asked about wealth, compared to 32% who answered “money” and 26% who answered “assets”. “.

For example, when asked to describe what money means to them, 70% of Americans said they “enjoy experiences” rather than “own beautiful things.” Additionally, 69% of Americans have chosen to “have a healthy work-life balance,” while less than half of that share — 31% — have chosen to maximize their income. About 63% chose good health, while 37% chose success.

“I think COVID probably caused some of that,” Williams said. “[We’ve] all reassessed what it means to be healthy, to be wealthy, to be confident in our financial lives and a bit more about our current lifestyles.”

Stack of gold coins, money growth and success concept

Stack of gold coins, money growth and success concept

Some financial planners have also observed this shift in perception among their clients.

“Clients don’t come to me asking, ‘How can I get a million or two in my wallet?’ part-time?,” Kassi Fetters of Artica Financial Services told Yahoo Finance.

“They ask, ‘How can I reduce my expenses, so I can spend time with our new baby instead of working all the time?’ Time and flexibility are considerations that go hand in hand with the term wealth. NOW.”

The survey also revealed that only a third of Americans have a financial plan, which Williams says is essential to cultivating the lifestyle that matters most to them.

“We all feel like we have a plan. You can say, ‘I thought about it, I guess, sure, I plan to retire someday.’ But it’s not very tangible. It’s not written,” he said. “So it’s like, ‘I want to run a marathon.’ Well, okay, that’s a great aspiration. What have you documented? What steps do you plan to take to get there? [It] requires discipline, requires patience.

Sean Lovision, a financial planner with WJL Financial Advisors, LLC, explained that a detailed financial plan can also make clients “feel rich” because it highlights “the long-term sustainability of their portfolio and shows how it can support their desired lifestyle”.

“By showing clients how many years their portfolio can last, the plan quantifies the value of their assets in terms of longevity and builds a sense of financial security,” Lovison said. “It makes the value of assets more ‘real’ and helps clients better understand the true value of their portfolio, helping to foster a sense of abundance and confidence in their financial future.”

Wes Battle, a financial planner who works with federal employees, said a financial planner can tailor a plan to the individual needs and wants of Americans. For example, a financial plan could help someone balance the goals they want to pursue while caring for their aging parents.

“If we can talk and come up with a plan to get them to maximize their own retirement first and then work on additional savings, they can find peace. [and] wealth in the fact that, firstly, they won’t need to rely on anyone else in the future, and secondly, they are fulfilling a duty that is important to them,” Battle said.

According to the survey, 70% of Americans who made a detailed financial plan said they “felt more in control of their finances” and 90% said they were confident they would “achieve their financial goals”. .

“Financial planning helps clarify what you want your current and future life to look like and how we’re going to get there,” Fetters said. “I believe the pursuit of financial planning is akin to the pursuit of intentional living.”

Dylan Croll is a reporter for Yahoo Finance.

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