How much do you need to Actually Feel Wealthy? (This will Shock You!)

Transcript:

On this episode of the Personal Finance Podcast, how much do you actually need to feel wealthy? And the answer might shock you.

What's up everybody, and welcome to the Personal Finance Podcast. I'm your host Andrew, founder of Master money.co. And today on the Personal Finance Podcast, we're gonna be talking about how much do you actually need? To feel wealthy. If you guys have any questions, make sure you hit us up on Instagram or TikTok or Twitter at Master Money Co.

And follow us on Spotify, apple Podcast or whatever podcast player you love listening to this podcast on it. If you want to help out the show, leave a five star rating and review on Apple Podcast or Spotify. And if you wanna watch this, Podcast, you can watch it on the Androgen Cola YouTube channel. Just search Androgen Cola or the Personal Finance Podcast, and we should pop up via YouTube as well.

And we show charts and different things that we're talking about as we go through this. Now, today we are gonna be going through. How much do you actually need to feel wealthy? And there was a Charles Schwab study that just came out recently, uh, and it is called the Modern Wealth Survey of 2023. We will link that up down below in the show notes so that you can check this out and follow along if you want to, or if you're watching on YouTube, you'll be able to see some of the things that we're talking about here today as well.

And we're gonna talk through some of the things, uh, money psychology in terms of. What does wealth actually mean to you? And how much do you actually need to feel wealthy? And we're gonna go through the study that they did with a bunch of different generations, and they talked through how much they actually need to feel wealthy and how much wealth they actually have.

And then we're gonna talk through some of the roadblocks that a lot of generations are having currently and how you can actually solve some of those problems and what people value when they think about wealth. You hear me talk about this all the time when I have guests on this podcast. The last question I always ask them is, what does wealth mean to you?

And the reason why I do this is because this question fascinates me, and sure we get a lot of the same answers with some folks where they'll say freedom time, some of those different things. At the same time though, we get some really unique answers, and those are the true ones that fascinate me because so many people think about wealth in so many different ways.

And so I wanna kind of go through some of these studies and I think these studies can be really helpful on your wealth journey as well, because you can actually change certain things that were ingrained in you. So today we're gonna go through this study. I am going to get. Give you some of my thoughts on this study, and in addition, I'm gonna give you some actionable steps that you can take if you feel stuck in some of these situations.

Without further ado, let's get into it. All right, so the first thing we are gonna dive into is this study. And this study was conducted online from March 1st to March 13th, and they had a. Sample size of folks from age 21 all the way up to age 75. So they sampled people from Gen Z, millennials, gen X, and they also sampled boomers.

Now, the interesting thing about this is, is they asked, what do you actually think that you need to have available to you to feel wealthy? And what Americans said was that they need 2.2 million. That's how much they needed to feel wealthy. In 2023 and 48% of the people that they surveyed said that they actually feel wealthy.

And the. Average net worth of those folks who actually feel wealthy is $560,000. So we're gonna actually go into this, and this is an in really interesting piece because the net worth of folks who feel wealthy was much lower than it actually said, needs to be available to feel wealthy. Now let's get into that 2.2 million piece First.

If you had 2.2 million, which I think is a great retirement goals for a lot of people, especially if you're in a median cost of living area, if you include home equity, if you had a 2.2 million net worth that would put you in the 94th percentile of households in the United States, which would mean that only 6% of households would make the cut to actually be considered wealthy.

Now, this is the interesting thing about if you listen to this podcast or you have watched a YouTube channel or anything else along those lines, we teach you that you can definitely get to this 2.2 million net worth and be in the top 6% of households just by doing this over time and putting together a compound interest and time to get to that point.

But here's the interesting thing is that millennials were the most likely to feel wealthy today. 48% of folks throughout all generations feel wealthy. So Gen Z, 46% said they feel wealthy. Millennials, 57% of them said they feel wealthy. Gen X 41% said they feel wealthy. And boomers, 40%. Said they feel wealthy, which is a very interesting thing to think through here because most of the time when I talk to millennials, they usually say they don't feel wealthy.

So looking at this survey, it is very different from the folks I actually talked to day in and day out. Now, the average net worth of those who felt wealthy was much lower than that 2.2 million. It is $560,000, whereas Gen Z, the average net worth was $414,000. Millennials. The average net worth was $531,000.

Gen X, the average net worth was $410,000. And boomers, the average net worth was $692,000. So this is a very interesting piece of this because if you look at how much net worth these folks actually have in comparison to what's gonna make them feel wealthy, it almost seems like it's an arbitrage number.

Now, one key to this that I want everybody to think about is how do you actually find how much money you need to feel wealthy? To me, what wealthy means is that you have enough money available to have your time freedom. You could do whatever you want at any point in time during the day. So how do you find that number?

Let me show you how you find that number. You're gonna utilize what is called the 4% rule. We've talked about the 4% rule a number of times on this podcast, but this is the key to finding how much money you need to be able to have that time freedom. So say for example, you wanna live on $80,000 per year.

Well, if you wanna live on that $80,000 per year, you need to take 80,000 and multiply it by the number 25. 80,000 by 25 is gonna get you 2 million. 2 million is gonna allow you to spend $80,000 a year. Which is why these folks in that 2.2 million range are very close in their mind to probably what you need to get to invested.

This is the money you have invested. This is not the money that you have in equity in your house or anything outside of that. This is just your invested dollars. This is what's gonna to allow you to retire with that same amount. Now, if you have additional. Income coming in. Maybe you have a business that's generating income, maybe you have a pension, maybe you have some other things that generate income, and this could be lower.

In addition, social security can also help you if you are at that retirement age, but if you're trying to retire early and get to the point where you wanna be wealthy and have that freedom with retire, then that is exactly how you can do that. The next one is a little disappointing for me, and this is one that I want to help a lot of people change, which is why we originally created this podcast.

So only about a third of Americans have a documented financial plan, and those who have one feel more in control of their finances. So only one third of Americans have an actual documented financial plan. This is a major problem for most people. This is why we created The Stairway to Wealth. The reason why we created the Stairway to Wealth was so you could have a step-by-step guide on exactly what to do.

This is. Is your financial plan. It's your financial roadmap that you can do on your own. You don't have to hire someone who's gonna take 2% of your assets. You can go out and get that financial plan. Now, if you do not feel comfortable enough to go through the Stairway to Wealth, which is a very simple system, it's step-by-step, what to do in most situations.

You can still hire a C F P A certified financial planner and they will charge you by the hour. Instead of taking a percentage of assets under management, what you don't want them to do is take a percentage of your money. What you do want them to do is create a financial plan for you based on your specific scenario.

I am all for that. What I am not all for is them taking a percentage of your investments because that will be taking hundreds of thousands, if not millions of dollars. Out of your wallet, depending on how much you're investing. So this is very, very important to understand. But having a financial plan is one of the most imperative things that you do.

That is what we are here to do at the Personal Finance Podcast and Master Money is to teach you how to master your financial plan. That is the entire goal. So 65% have no financial plan. 40% have thought a bit about financial goals, but still need to document them in a formal plan. And 26% don't have a financial plan of any kind Now.

Not having money and complication are the two reasons why people say they do not have a financial plan. Now, let me say this to you right now. If you're a person who has no wealth, yet you have no money, we have a lot of folks listening to this podcast who are just getting started out. If you are just getting started out and you have no money, You need to have a financial plan, and this is the most powerful thing that you can learn very early on.

I'm so excited that you're hearing it right now because if you put this financial plan together, this is going to be your roadmap. This is going to be your why on giving you the best life that you've ever had. Now, a financial plan is not restrictive whatsoever what it is. It is going to map out the exact steps that you need to take so that you can do exactly what you want in your life and do exactly what you value in life.

This is powerful stuff and if you start to follow your financial plan, it'll absolutely change your life. It'll change your family's life, and you can build that generational wealth that you can pass down for generations and generations to come. I don't care how much money you make, what's gonna happen here is if you follow your plan, you will build wealth.

Mark my words on that. The Stairway to Wealth is a great place to start. Master money.co/the Stairway to Wealth. It's going to help you give that step-by-step roadmap. But if you need even more help, no issues hiring a CFP on an hourly rate, they're gonna cost you, you know, two, three, $4,000 to put together a financial plan.

But they can also help you as well. So these barriers, 44% said they don't have enough money to need a plan. This is not true. Everybody needs a financial plan in place, even if you don't make enough money. Now, if you are someone who is living paycheck to paycheck and you are really struggling, I get it.

You're just trying to figure out how to eat food the next day, but putting together something simple. And just a goal of, Hey, I wanna make sure that my money can last me an entire week instead of an entire day is the first start to this. I know the last thing you wanna think about sometimes is money, but this is truly gonna help you as you get through this.

The second reason is that seems too complicated to create a plan. The third one is, you don't have enough time to develop one. Now, this is one, there is no excuses for not having enough time. You can put together your financial plan within an hour a month, and you can do it way less once you have it set up.

So once that plan is set up, you can completely automate your finances and you don't really have to do anything past that. Now we get a lot of questions on automating your finances. We are gonna put together a course on exactly how to do this so that you can put your money on autopilot. You don't have to think about it.

I'll show you step-by-step on exactly how I do it, and that way your finances are set up automatically and you don't have to think twice about it if you haven't had a major life event that met. Requiring a plan is the next one, and the last one is probably too expensive to get help. Getting a plan.

Listen, there are so many people out there who can help you put together a financial plan, so you definitely need to do one. Now, here's why financial plans are important. A, they help you set and achieve your goals. So putting together your goals is one of the most important factors when it comes to financial planning.

They help you with budget management. Meaning that once you put your budget together, your budget is not restrictive. Your budget is allocating your dollars towards the things that you value and cutting back on the things that you do not value. That is the exact goal of a budget. That is exactly what it does.

It also helps you plan for emergencies. Putting together your emergency fund is part of putting together a financial plan, so it gives you preparedness so that you never lose. Pace when it comes to building wealth, the last thing you wanna do is interrupt compound interest unnecessarily, and your financial plan helps you do that.

Number four is it helps you with wealth creation. It helps you build generational wealth and create wealth so that you can utilize that wealth for time freedom, which is what we all want. It helps you with retirement planning so that you can retire as fast as you possibly can. If you don't like your job or if you love your job, it helps you put together that retirement plan that is gonna be on the right pace for you.

It helps you with inflation protection. It helps you protect yourself against inflation so that your buying power is preserved over time. It helps you manage risk out there. The last thing you wanna do is start investing with no financial plan, because you're gonna buy a bunch of crypto and you're gonna listen to what the news says and what the latest hot stock is of the day, and your rate of return is gonna be so incredibly low that you're gonna get extremely frustrating.

Just say, Hey, this stuff is not for me. Financial planning. Once you have the plan in place, you can have complete peace of mind when it comes to building wealth. It also helps you save money on taxes and helps you build your legacy. So all of these different pieces, these 10 different pieces are what one single financial plan can help you do, and that's why it's so incredibly important to have that in place.

Now, one interesting piece to this is that I truly believe that wealth is so much more than money, which is why we are truly, truly advocates of wealth because there's so many other pieces in life that matter just as much as money does when it comes to building wealth. And when they surveyed folks in this survey, more Americans reference wellbeing over money and assets.

So wellbeing is the number one thing that they describe as what being wealthy is. So let me put this into perspective for you. If you are an individual, Who is just starting to build wealth, and you are beating yourself up about this. You are really working hard to try to build wealth, but you just don't make enough money to really accelerate your path to wealth.

But you're a healthy individual. You are still on your path to building wealth because as you improve your wellbeing over time, most people would rather have wellbeing than they would rather have money. If you had asked a billionaire who is 80 years old, if they'd rather be 20 years old and healthy, most of the time they would say yes.

And so you have a. Amazing gift right now that you need to be enjoying as you start to build up your wealth and your assets. Number two was money. So 32% said money was the most important piece of wealth. The third set said 26% said assets, and 25% said just covering necessities. So this is another interesting piece that a lot of people have.

Now, another interesting one is 11% said luxury and 9% said giving Now. As they continue the survey, Americans generally choose non-financial assets when asked to choose, which better describes wealth. So they went through a bunch of different things and said which of these matter more when it comes to building wealth?

So having a fulfilling personal life versus working on my career, 72% said having a fulfilling personal life instead of working on their career. Not having stress over money, 70%, and then having more money than most people I know was 30%. So here's an interesting one here, not having to stress about money.

Most people want to not have to stress about money, and so they don't really care as much about having more money than everybody else. This is a problem that you can absolutely solve yourself if you wanna have less stress with money. This is a powerful thing that you can do with your wealth. We have an episode coming out very soon on how to reduce your stress around money.

We've already done one in the past, but we are going through actionable steps on this new one on how you can reduce that stress around money. This is a very powerful thing that you can do with your money and one of the best things that you can do with your money, cuz if you can reduce that stress and anxiety, that means you can make way better decisions when it comes to building wealth and your money.

70% said they would rather enjoy experiences than owning many nice things. So the question is, would you rather have experiences with people you love or would you rather own that Rolex in that fancy car? 70% said they'd rather enjoy experiences work-life balance. What about work-life balance? Well, 69% said they'd rather have a healthy work-life balance, and 31% said they'd rather maximize their earnings.

Even if it impacts their work-life balance. I think a lot of times when it comes to this, it depends on where you start. Because if you're starting from nowhere, then you are willing to do whatever it takes to earn more money so that you can have a better life for you and your family. But if you're starting from a place where maybe you even started with privilege and what you want is to have a work-life balance.

Then that may make sense, but a lot of this depends on where you start. And as we go through some of these, I want you to think through, how would you feel about some of these? Because I want you to build out your own wealth statement. What does wealth actually mean to you? Because what you can do is once you build out this wealth statement, then you can actually tailor your finances to what actually matters to you.

Because what we're trying to teach you here, as I go through this, Study is how to build out your values. Most people still don't know what their values are when it comes to building wealth, but once you have those values in place, it becomes so much easier to allocate your dollars towards the things that you value.

The next one being generous with loved ones. Now, 67% said they'd rather be generous with loved ones now, and 33% said they'd rather leave an inheritance. After they pass away, which is interesting. So they wanna be generous with loved ones when they're alive instead of passing over the inheritance when they pass away, which is a very, very cool thing to do because you can see the fruits of your labor and some of the things that you've done, and you can enjoy some of these experiences with people that you love.

What about experiences paying for experiences to spend time now with my family now, or leaving a larger inheritance for my family? So would you rather spend more time with your family now or leave a larger inheritance? And then 63% said they'd rather be in good health and 37% said they'd rather be.

Successful. There is a key here and something that is really happening where most people care more about things outside of actually building that wealth, but they actually want what wealth can provide. And these are the things that wealth can provide are the non-monetary things, which is why we do what we do.

This is why we all wanna build this generation of wealth so that we can spend more time with our family so that we can do things that we have less stress over our money. We can enjoy these experiences. We can have a healthy work-life balance. We can be generous with our loved ones. Now these are all things that money provide, and if you follow the steps in things like this, stairway to Wealth.

If you don't know what the Stairway to Wealth is, it's the step-by-step guide on what to do with your money. You can download it for free in the show notes right now if you want to go check that out. Master money.co/stairway two wealth. If you follow these steps, it's going to allow you to get to the point where money will provide you these things.

Money is a tool. That's all it is. That's all it's there for. And so you can actually have these things if you go through that process. Now, how do you have more flexibility with your time? Because most people want that time back and that's one of the keys that you definitely wanna be looking into to feel wealthy.

Well, the first thing you could do is you can look for more flexible jobs and having more flexible jobs. Can really give you a lot of time freedom. Say for example, you go into work every single day, you drive for an hour. You're grinding through that commute. Then you get to work and you finally start your day.

You're working for your 8, 9, 10 hours, however many hours you're working at the office every single day. Then you drive another hour to come back. That gives you zero work life balance over time. If you can work from home, maybe have that flexibility. First of all, if you're working from home, you get two hours back, but then maybe you're avoiding all the extra small talk that happens in the office that keeps you there for that extra hour, hour and a half, and maybe you're avoiding in-person meetings.

That really could just have been an email. And there's so many different things that you can do with that work-life flexibility. So look for a flexible job that either allows you to go into the office if you're a. Extrovert and you like going to the office. Then look for one that's flexible enough to give you both, or look for one that's gonna allow you to stay home and have some of that worth life balance.

Another way is entrepreneurship. If there's a business that you wanna start, you can set your own hours with entrepreneurship. That is one of the biggest pros when it comes to owning your own business. The third one is coming up with something like barista fire or a part-time work. If you started to build up some assets already and you know that all you have to do is make up a certain amount, you can retire early by making up a certain amount.

So lemme give you an example of this. Say for example, you know you need a million bucks to retire, that's probably a low number for most people. But let's say you need a million dollars to retire and you've already saved up $750,000. Well, at $750,000, you can live on roughly about $30,000 per year at $750,000.

But let's say you need $45,000 to cover all of your expenses. Well, can you make up that other $15,000 with a side job or a part-time job? That may be something that you enjoy. So if you love yoga, for example, maybe you can go be a yoga instructor and make an additional $15,000 a year if you love.

Fishing, maybe you can go be a fishing captain and make an additional 15, 20, 20 $5,000 a year, whatever you need. Can you make up the difference around something you enjoy? This gives you flexibility with your time, your energy, and when you're working, you're doing something that you love. Are there other things that you can do?

Maybe starting an online business? Can you do consulting with folks? Can you do teaching or tutoring with folks? There's so many different other flexible ideas out there, especially in the age that we are in today. How can you give yourself a better work life balance and or if you develop that side hustle, maybe all of that income from that side hustle goes towards your investments and it gives accelerates your path and your timeline to financial independence.

Most people want flexibility. This study shows that, and so those are some ideas to give you in order to kind of find time for that flexibility. Because the next part is Americans feel that having time is way more important than having money. These are some ways that you can gain back that time so that you can have it available for whatever you want.

58% of Gen Z says time is more important. 56% of millennials, 59% of Gen X and 67% of boomers said that time is way more important than having money. So I want you to think about this. Is time more important to you than having money? If it is, Act accordingly and do some things to make those shifts so that you can get some of your time back.

There is nothing, there is no better feeling than having control over your time, especially when you're someone who has been grinding for a long time. I know how it is. I know how that feels, where you're grinding for years and years and years and it feels like it's never going to end. But once you get control, Over that time is one of the most powerful things that can happen to you in your life.

Alright, so the last thing they surveyed was that Americans value their relationships with family and friends, but how they compare to family and friends impacts how wealthy they feel. Now here's a key thing here. And I want you to kind of think through this as you go through this process, but comparison to other people and their wealth building journey is the thief of joy.

And this is something that I definitely do not want you to do because every person's journey is drastically different. You may have learned about personal finance in your thirties, where some of your other friends learned about it, maybe in their twenties. And so what I want you to do is I want you to kind of think through some of these things that I'm gonna talk about here, because they say 47% of the people said Being able to afford a similar lifestyle as my friends and family makes me feel wealthy.

But it's drastically different for the younger generations than it is for the older generation. So 61% say that for Gen Z, 61% for millennials, 39% for Gen X, and 31% for boomers. Then 37% said, I compare my lifestyle to my friends and family on social media. Sure, it's normal to do stuff like this. It is normal to try to keep up with the Joneses and look at their neighbor next door, all these different things.

But building wealth is partially your own journey. So understand that everyone's financial journey is different. Everybody is at a different stage when it comes to their financial journey, but it's never too late. That's the number one thing I want you to understand. It is never too late to start building wealth.

Number two is you need to focus on your own goals. When it comes to this stuff, your goals are what truly matters. Your family's goals are what truly matters, and don't look at anything else around you. You wanna have tunnel vision. When it comes to building wealth, it's very difficult. I know when you see people go on these fancy vacations or they buy these fancy cars, but guess what?

A lot of times, if you look at the numbers of how wealth is built in this country, most people are in debt when they go and buy those different things. So you gotta focus on your own goals, your own net worth, and sure. Your financial plan is truly gonna help you do that. So creating that financial plan is gonna be one of the most important things.

Now, if this stuff really bothers you, if this really gives you stress and anxiety with the comparison to other people, then you probably need to limit your social media consumption because this is where a lot of people get trapped in some of this stuff. And your financial education. The more you know about money, the more you learn about money.

If you continue to listen to this podcast, if you continue to watch the YouTube channel or other podcasts and YouTube channels out there, or you start to read more books, or take courses or coaching or any of those different things, once you start to learn how to do some of this stuff, your financial education is actually gonna reduce that stress and anxiety, cuz you're gonna understand how people spend their money and you're gonna understand how this all actually works.

And the interesting part of this is Americans use social media to see how others around them are doing, but also use it for financial advice. So 43%. So they follow influencers who share financial advice on social media, and they feel that their views of wealth are influenced by people who post on social media.

That's 38%, so it's much lower for the older generations, but for the younger generations, that's how they consume their knowledge when it comes to wealth. So as we go through this, there's a couple of things that I really want you to do when it comes to learning how to build wealth, is putting together your financial plan is the most important thing.

Learning how to invest your dollars so that you can actually retire because you cannot retire if you do not invest your dollars. And learning about your money. Psychology, which is actually 90% of how building wealth is and how you master your money. Psychology is learning more about money and learning how money works and learning how all this stuff actually comes together.

So listen, the purpose of this episode, Was for you to learn. A, you need to put together your financial plan if you have not. B, you need to understand how money psychology works and how people actually think about money and how to spend money. And C, you need to learn what true wealth is and what your true wealth is and figure out what your values are.

If you can do those three things, you'll become incredibly. Successful with money, and I'm so excited to share all of these different things with you. I'm really excited for you to kind of go through this process with us. If you are new to this podcast and if you've been with us for a very long time, you know that what our goal here to do is teach as many people as possible how to build.

Well. Thank you so much for listening to this episode. I truly appreciate each and every single one of you, and we will see you on the next episode.