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According to a survey by digital wealth manager Personal Capital, people have different views on what it means to be “wealthy.”
Yet most people – 74% – never see themselves fitting into this category.
When 2,209 adults were asked what they would consider wealthy, the median average of all responses was $400,000.
Meanwhile, 32% of respondents agree with the commonly accepted definition of high net worth as having $1 million or more in investable wealth.
Only 23% of survey respondents believe they will ever achieve high net worth status.
Only 35% of people are confident they know what net worth means, although 91% say they’ve heard of it.
Knowing your net worth is the first step to creating a good financial plan that will help you achieve your financial goals, said Michelle Brownstein, board-certified financial planner and vice president of the Private Client Group at Personal Capital in San Francisco.
“Having a good bird’s-eye view of your financial situation is such an important exercise,” Brownstein said.
“There’s no better time than now to sit down and say, ‘Where am I?'” she added.
How to calculate your net worth
To determine your personal net worth, first add all of your assets — checking and savings accounts, 401(k) and other retirement savings, other investments, and the value of your home.
Then subtract all of your debt, including credit card balances, student loans, and mortgages.
The result is your personal net worth.
If your net worth is negative, it means you have more debt than assets. In that case, you should prioritize paying out high-yield balances first, Brownstein said.
If your net worth is positive but lower than you want, you can identify goals that can help you improve it, such as: For example, building an emergency fund or saving for retirement or buying a house.
Even small tweaks, like reducing daily expenses by eating at home instead of at a restaurant, can add up to big savings over time, Brownstein said.
Additionally, by prioritizing your goals, you may be able to put yourself on track to achieve them faster, such as: B. retiring earlier than expected, she said.
According to Personal Capital data, retirement accounts account for 55% of wealth among high net worth individuals.
The survey was conducted in March by Morning Consult on behalf of Personal Capital.
Correction: Michelle Brownstein is Vice President of Private Clients Group at Personal Capital in San Francisco. An earlier version mistyped its title.
https://www.cnbc.com/2022/04/22/74percent-of-people-dont-think-they-will-ever-achieve-high-net-worth-status.html 74% of people don’t believe they will ever achieve high net worth status