Do you feel the same?
- There is no single number that defines wealth.
- Ultimately, your best bet is to come up with a number that makes sense to you.
When you imagine the richest person you know, what does their lifestyle look like? Do they live in a big house? Do they drive a luxury sports car? Or do they just seem financially content, meaning they have plenty of money in savings and aren’t stressed out every time an unexpected bill hits them?
The reality is that the word “rich” is hard to define. It’s easy to argue that someone who makes $500,000 a year is rich. But if that same person spends their entire salary, does that count?
And then let’s think about the cost of living. Someone making $500,000 a year might live in a part of the country where a small apartment costs $3,500 a month to rent and the average price of a two-bedroom starter home is $1.2 million.
In any case, there really isn’t an easy way to list what it means to be rich. But new data shows what Americans are saying about it.
What is wealth to you?
In a recent survey conducted by Edelman Financial Engines, 57% of respondents said they would feel rich if they had $1 million in the bank. But for many it is not enough.
Among those with between $500,000 and $3 million in assets, 53% said it would take more than $3 million in the bank to feel rich, and 33% said it would take more than $5 million. Given that these are sums that some people will never come close to accumulating in their lifetime, it may be difficult to wrap your head around these answers.
But it actually leads to a really important point about wealth. As much as we tend to put a number on wealth, the reality is that it’s probably more of a mindset than anything else.
You can have $300,000 in assets and be more than happy with your life, while someone with $1.3 million in assets is not happy with their home or lifestyle. Also, sometimes the more money people have, the more financial stress they open up to.
People with a lot of money tend to buy more expensive things like houses and cars. Maintaining those items can be very expensive. So often, people who start out rich end up losing their wealth because they don’t force themselves to spend wisely.
Focus on your personal goals
You can aim to be rich one day. But instead of forcing yourself to accept the idea that it will take $1 million to get there, find a number that works for you. one that can buy you the lifestyle you want and the peace of mind you deserve.
If you save $300,000, that might be enough to put a down payment on a nice house, have enough money to indulge in your hobbies, and have enough savings so you don’t have to worry about your checking account. For someone else, $300,000 may not be enough. But that’s okay.
Americans in general may think that it takes $1 million to be rich. But if you land on a different number, whether it’s higher or lower, go with it and make that the number you’re working towards.
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