Well-being Trumps Money and Assets as Key Measure Of Wealth, Survey Finds
Editor's note: This article was originally published on June 15, 2023.
Wealth is never solely measured by dollars and cents. Your overall well-being is more important than money. And now, more than ever, well-being is the measure of wealth for most adults, according to the Charles Schwab Modern Wealth Survey. While financial success certainly plays a role, it is not the sole determinant of one's sense of wealth and prosperity.
The survey, which involved 1,000 adults, revealed an interesting discrepancy between perception and reality. Approximately 48% of respondents claimed to feel wealthy, despite having an average net worth of $560,000. Interestingly, this amount is only a fraction of what they believed others needed to be considered wealthy. It appears that individuals have higher expectations for others' financial status than for their own.
Generational Difference in the Perception of Wealth
Millennials, individuals aged 26 to 41, were most likely to consider themselves wealthy, with 57% expressing this sentiment. In contrast, only about 40% of Gen Z, Gen X, and baby boomers felt the same way. The average net worth of millennials who considered themselves wealthy was approximately $530,000. These findings indicate that millennials may have a different perspective on wealth, placing greater emphasis on factors other than monetary value.
The Personal Definition of Wealth
Preston D. Cherry, a certified financial planner and founder of Concurrent Financial Planning, emphasizes that wealth is a highly personal concept. He believes that one's definition of wealth should be based on their individual experiences and desires. Cherry stresses the importance of developing a financial plan that aligns with personal goals and aspirations.
Changing Perspectives on Wealth
American perceptions of wealth have evolved in recent years, particularly in light of the COVID-19 pandemic. Prior to the pandemic, the average net worth considered necessary to be considered wealthy was $2.6 million. However, this figure decreased to $1.9 million in 2021 before rising to $2.2 million in 2022, where it has remained this year. These shifting views reflect the economic uncertainties brought about by the pandemic and the reassessment of what truly constitutes wealth.
The Intersection of Wealth and Well-being
When respondents were asked to describe what being wealthy meant to them, the majority (40%) mentioned well-being, surpassing money (32%) and assets (26%). This marks a significant change from 2017 when the top response was money (27%). Financial psychologist Brad Klontz of Your Mental Wealth Advisors in Boulder, Colorado, highlights the importance of well-being and its role in overall wealth.
Klontz suggests that the pursuit of an arbitrary monetary figure may lead individuals to sacrifice what truly matters to them. He warns against the misconception that a specific amount of money will automatically bring happiness, peace, and improvement in various aspects of life. Klontz's insights shed light on the growing recognition that wealth encompasses more than financial prosperity alone.
A Holistic Perspective on Wealth
According to the Schwab survey, 62% of adults believe that enjoying healthy relationships with loved ones better defines wealth than having a substantial amount of money. Furthermore, seven out of 10 adults consider wealth to be about freedom from financial stress rather than accumulating more wealth. These responses reflect a shift towards a more holistic understanding of wealth, focusing on emotional well-being, personal relationships, and freedom from financial worries.
Ultimately, the concept of wealth is deeply subjective and varies from person to person. While financial stability is undoubtedly important, individuals are increasingly recognizing the significance of overall well-being in defining their sense of wealth. As societal perceptions continue to evolve, it is crucial to embrace a broader definition of wealth that encompasses personal happiness, fulfilling relationships, and a life free from financial burdens.