The pandemic has tempered the expectations of younger generations about what it means to be rich. (Getty Images)
What was a lot of money for my grandfather when he was my age is not so much for me. And that happens because expectations about the accumulation of wealth vary depending on the country in which you live, the generation to which you belong and who is assessing your economic status.
Americans have adjusted the amount of money they deemed necessary to consider themselves “wealthy” in 2021.
The average thinks that to reach that category it is enough to have a net worth of 1.9 million dollars, a figure considerably less than the 2.6 million they needed to feel rich in 2020, according to investment firm Schwab.
The most recent edition of your survey Modern Wealth Survey showed that the youngest in 2021 would settle for less to belong to the elite of the rich. Millennials, who are now between 24 and 39 years old, believe that with 1.4 million dollars is enough, the 40 and 50 of Generation X would need about 1.9 million, while the expectations of wealth of the Baby Boomers, who are between 56 and 74 years old, are around 2.5 million dollars.
Schwab analysts believe that this moderation in monetary ambition is the product of the attacks of Covid-19. At least half of the 1,000 people surveyed said they had suffered some kind of financial impact from the pandemic. One in five were fired or suspended from their jobs, and 26% had cuts in their wages or hired hours.
A drop in income negatively impacts the net worth, which is calculated by adding all of a person’s assets (savings accounts, checking, financial investments, the value of properties such as real estate and vehicles), less debts (such as balances of the credit card, student loans and mortgages).
But even before the coronavirus crisis, most Americans were far from rich. Average US household net worth is $ 748,800 according to Federal Reserve data. But the median, which is the mean value of the data if ordered from lowest to highest, barely reached $ 121,700 in 2019.
The advantages of shaking
Some Americans decided to take the positive side of the decline in their economies and reorganized their financial priorities. The personal savings rate has reached its highest levels in decades, and more people now have more money in emergency savings than credit card debt. Contributions to pension funds have also increased.
Those changes show that Americans are taking steps to ensure their financial well-being.
The Schwab report establishes 3 levels to measure perceptions about the slack in personal finances.
The first is how much money is needed to reach the “financial comfort”. In the 2021 survey, Americans said they would be comfortable with a net worth of $ 624,000 compared to the $ 934,000 that would provide them comfort in 2020.
The second level is that of financial happiness and to reach that rung you have to accumulate $ 1.1 million this year, up from $ 1.75 last year.
And the third level is that of the rich, which we already mentioned at the beginning, and for which we now require 1.9 million.
But to belong to the wealthy who represent the top 1% of the US population requires adding $ 11 million.
Worldwide, the pandemic did not hit millionaires so hard and of the 5.7 million people who rose to that select group in 2019, only 1%, or 56,000 thousand, stopped being so in the first half of 2020, according to the report on world wealth from the Institute for Research on the Credit Suisse. The firm calculates that On the planet there are some 51.9 million people with a net worth of more than one million dollars, who own 43% of the world’s wealth.
The lesson of the Covid
Regardless of how close or far you are from financial comfort or happiness, the lesson that the pandemic has left us is that you have to have some plan to overcome the unforeseen.
The specialists consider that if you do not have saved between 3 and 6 months of your salary, you should start right now. Don’t despair if you can’t do it right away, but plan a budget and include a portion for savings.
Other suggestions are pay debts, curb expenses or even try to obtain an alternative income they are smart practices in these uncertain times.
Another recommendation is to put a figure on your financial stability so that you can live without waiting to arrive with a positive balance in the bank by the end of the month.
The publication Bussiness Insider invited its readers to consider 4 basic factors to reach a state of financial tranquility: living below your means, not having any type of debt, enjoying 100% of each day, and having the facility to make changes in your life.
“Living abundantly does require an inside job. Of course, you need to be financially stable, but that’s about it. Prepare to stay burdened: automate your savings and find a way to love what you do for most of the day.” .
Other stories you will like:
(VIDEO) What is the value of financial self-care?