While the definition of wealth may be up to interpretation, the average American has a very concrete number in mind for what it would take to consider themselves affluent. According to a recent poll by Charles Schwab, Americans consider someone with a net worth of $2.2 million to be affluent.
Strangely, even though the average net worth of the survey’s respondents was just $560,000, over half of them reported feeling affluent. Baby boomers (those between the ages of 58 and 75) had the highest net worth ($692,000) but were the least likely to say they felt affluent. Millennials (those between the ages of 26 and 41) were the most likely to consider themselves wealthy.
It’s also worth noting that just a third of respondents claimed to have a formal financial plan, but 92% of those do have faith in their ability to do so to reach their goals. Here’s how to get started if you’re one of the 66 percent of Americans who still need a written financial plan.
Establish concrete monetary objectives.
Although it may appear insignificant, putting out your exact financial objectives will help you work towards them. According to a widely cited study by Dr. Gail Matthews, a psychology professor at the Dominican University of California, people are more likely to attain their objectives if they write them down.
Suppose you have particular financial objectives, such as eliminating debt, improving your credit score, or saving for a down payment on a home. In that case, you will be more likely to resist the temptation to stray off the route toward achieving those goals. You may make significant strides toward your objectives with several excellent budgeting tools.
Establish a time limit for yourself.
You could be like me in that you work best under pressure. I have a general schedule in place and am currently house shopping. Discussing a possible schedule (which I need to write down!) with my wife has helped me concentrate more on the specific actions I need to take to make my goal of purchasing a home a reality.
If you want to get out of debt or start an emergency fund, set smaller, time-bound goals. Creating an online brokerage account is a straightforward first step for those who wish to start saving for retirement.
You may measure your progress toward your long-term financial objectives by setting and meeting short-term objectives.
Focus on your work.
Nearly half of those surveyed by Schwab said they felt affluent if they could afford the same standard of living as their closest friends and family. That suggests that more than half of the respondents could not feel affluent because they are too preoccupied with their neighbor’s new car or last costly vacation to focus on their financial situation.
Keeping up with what your loved ones spend money on might be a tempting distraction from your financial objectives. Instead, remember a guideline you probably learned in elementary school: Focus on what’s written before you.
Keep in mind that your particular financial situation is just that: yours. There’s no use in trying to keep up with what other people consider affluent if your standards differ.
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