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It takes much less money to feel rich than to be rich, the survey finds




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

That’s the takeaway from Charles Schwab’s seventh annual Modern Wealth Survey, which asked 1,000 Americans about saving, spending, investing and wealth.

When asked what amount they considered rich, respondents returned an average of $2.2 million. Still, among the 48% of Americans who already consider themselves wealthy, their average net worth was $560,000, the survey found.

The results reveal the public̵[ads1]7;s changing perception of what being rich means, with many associating wealth with well-being rather than simple net worth. But financial planning still plays a role in feeling rich, no matter how you define it, experts said.

It takes much less money to feel rich than to be rich, the survey finds

Valerie Daval reacts to receiving a $100 bill from Secret Santa, 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, May 13. December 2013. (AP Photo /Nick Ut)

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

More than 3 in 5 Americans said that 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 said “money” and 26% who said “assets”.

For example, when asked to describe what money means to them, 70% of Americans said “enjoying experiences” over “owning nice things.” Also, 69% of Americans chose to “have a healthy work-life balance,” while less than half that share – 31% – chose to maximize their income. Around 63% chose good health, while 37% chose success.

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

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 change in perception among their clients.

“Clients don’t come in and ask, ‘How do I get a million or two in my portfolio?’. They ask, ‘How do I have enough so that work is an option, or so that I can go part-time?'” Kassi Fetters said from Artica Financial Services to Yahoo Finance.

“They’re asking, ‘How do 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 concept of wealth now.”

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

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

Sean Lovision, a financial planner with WJL Financial Advisors, LLC explained that a detailed financial plan can also make clients “feel wealthy” because it highlights “the long-term sustainability of their portfolio and demonstrates 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 over their lifetime and reinforces a sense of financial security,” Lovison said. “This makes the value of the assets seem more ‘real’ and helps clients gain a better understanding of the true value of their portfolio, helping to create 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 Americans’ individual needs and wants. For example, a financial plan can help someone balance the goals they want to pursue while caring for aging parents.

“If we can talk through and build a plan to get them to maximize their own retirement first, then work on additional savings, they can find peace [and] wealth in the fact that one, they don’t have to rely on anyone else in the future, and two, that they’re fulfilling a duty that’s important to them,” Battle said.

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

“Financial planning helps clarify what you want your current and future life to look like and how to get there,” Fetters said. “I believe that pursuing financial planning is akin to pursuing an intentional life.”

Dylan Croll is a Yahoo Finance reporter.

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