The age old question of whether or not money can buy happiness seems to have once again be answered with a resounding yes, and we even have a number. And, predictably, the amount of money that the younger generation says it will will need to be happy has risen again.
Bloomberg reports the results of an annual survey used to determine how much “wealth“ people feel they need to be happy.
Many Americans cite leading a stress-free life and having “peace of mind” as their personal definition of wealth. That doesn’t sound too money-centric on the face of it—until you consider that money, or specifically the lack of it, is a major source of stress.
Americans don’t like to admit that assets can buy happiness—just 11 percent of those surveyed for the second annual Modern Wealth Index from Charles Schwab chose “having lots of money” as their definition of wealth. But while most respondents selected more high-minded concepts as their keys to contentment, they weren’t afraid to put a number on what they needed to get there.
Aside from the fluff, the survey asked for specific dollar amounts, and the monetary targets that the younger generations seek to be “comfortable” have moved higher, up to $1.4MM from $1.2MM, while those hoping to be happy with their wealth, will need to have at least $2.4MM to their name:
To be financially comfortable in America today requires an average of $1.4 million, up from $1.2 million a year ago, according to the survey. The net worth needed to be “wealthy”? That’s an average $2.4 million, the same as last year in the online survey of 1,000 Americans between age 21 and 75.
There were some heartening signs amid the numbers. While 18 percent defined wealth as being able to afford anything they desired, 17 percent said it was “loving relationships with family and friends.” That jibes with how Joe Duran, chief executive officer of money manager United Capital, said he likes to think of “wealth.” After building and selling his first company, “I realized that money is nothing more than fuel,” he said. “It is a resource that lets you have choices, but if you don’t think about what you are working for, you will die rich but not live rich.”
The survey asked people to choose which of the below statements came closest to their personal definition of wealth. When asked about what made respondents feel “wealthy” in their daily lives, the survey found that spending time with family was most commonly cited, at 62 percent overall. That was followed by what can be the most elusive of things, cited at about the same level across generations: “taking time for myself,” which came in at 55 percent. Hard to do either of those without some bank, though.
Which, of course, is ironic, considering that money is required to do all the things list above like travel and live stress-free. You’re going to be hard pressed to find anyone who can “live stress free”, “afford anything they want” or “enjoy life’s experiences” without having the giant wallet needed to fund all these expensive plans. But still, the American dream seems to still be in tact, at least in the minds of younger generations:
Millennials displayed some youthful optimism when it came to their financial future. Some 64 percent of twenty- and thirty-somethings believe they’ll be wealthy (the cash kind) at some point in their lives, compared with 22 percent of boomers. Maybe better financial habits will help that happen, since more millennials than boomers said they regularly rebalance their portfolio—49 percent compared with 43 percent, respectively. The same percentage of millennials and boomers, 24 percent, felt “very confident” about reaching financial goals.
This is also ironic, as we just reported weeks ago that millenials with student debt have negative net worth for the first time ever. Recall that the Young Invincibles released an update to their report, “The Financial Health of Young America: Measuring Generational Declines Between Baby Boomers & Millennials”, which included a cross-generational study of the financial well-being of Millennials today versus Baby Boomers when they were in their adolescence. The update covered the economic challenges facing millennials age 25 to 34 between 2013 and 2016.
What it found was shocking: despite the fact that this has reportedly been the second longest economic expansion/central bank-induced channel of financial capital into speculation and financialization, the update showed how the millennial generation has transformed into the lost generation, as their financial security has eroded late in the business cycle.
For the first time, young adults age 25 to 34 with college degrees and student loans have a median net wealth of negative $1,900, said the advocacy group.
So while it may be true that you don’t need to be a billionaire in order to find happiness and/or freedom for yourself, getting past a certain point of savings and wealth is certainly paramount in achieving “happiness” – regardless of how you define it.
As for most of today’s youth, stuck in a negative net worth prison, the goal to reaching the “magic number” between $1.4 and $2.4 million seems virtually unachievable.