74% of people have said that they don’t think they will attain the super rich status in their lives’ time, a new survey revealed.
Conversely, only 23% of people believe they will ever be rich.
Meanwhile, only 3% say they already are rich.
But the question remains: What does it mean to be rich?
In this report, we may start by saying that to know if you are rich, you need to know your net worth.
Meanwhile, when you know your net worth, you need to check if your net worth is high or not.
Also, you equally need to know what it means to have high net worth.
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It is when you have known these that you can know if you are truly rich or not.
Meanwhile, a recent survey has revealed that different people have wide-ranging views of what it means to be “high net worth.”
According to a survey from digital wealth manager Personal Capital, most people — 74% — don’t see themselves ever fitting into that category.
How much is high net worth:
The report surveyed 2,209 adults on what they would consider high net worth and the median average among all responses was $400,000 (about 169, 152, 000).
Meanwhile, 32% of respondents agree with the broadly accepted definition of individual high net worth as having $1 million or more in investable assets.
Just 35% of people are confident they know what net worth means, though 91% say they have heard of it.
How to calculate or know your net worth:
To know or calculate your net worth, you should start by adding all your assets — checking and savings accounts, retirement savings, other investments, and the value of your home.
Then, subtract all your debts, including credit card balances, student loans and mortgages from the total worth.
Whatever remains is your net worth.
So, if your net worth is negative, that means you have more debts than assets.
Meanwhile, vice president of the Private Client Group at Personal Capital in San Francisco, Michelle Brownstein has this advice for you if your net worth is negative.
According to her, if you happen to have a negative net worth, you should prioritize paying off high-interest balances first.
She continued by saying thus:
“Having a good bird’s-eye view of your financial situation is such an important exercise.
“There’s no time like the present to sit down and say, ‘Where am I at?’” she added.
Positive net worth but less than expected:
Meanwhile, if after calculating your net worth, you are in the positive but lower than where you want it to be, you may identify goals that can help you improve it, such as by building an emergency fund or saving for retirement or to buy a house.
Even small tweaks, like cutting down on daily expenses by eating in instead of dining out, can add up to big savings over time, Brownstein said.
What’s more, by prioritizing your goals, you may be able to put yourself on track to achieve them faster, such as retiring earlier than you had anticipated, she said.
Retirement accounts represent 55% of the wealth of high net worth individuals, according to Personal Capital data.
What Helps You Become High Net Worth Individual:
The report highlighted top six factors the adults think are important to achieving a “high” net worth:
1: Frequently checking in on and tracking their finances (65%).
2: Having a high salary (64%).
3: Having high earning potential from multiple sources (63%).
4: Maintaining a diversified investment portfolio (59%).
5: Being very frugal with spending (57%).
6: Investing in property (55%).
Also, the survey found that most of the people believe earning high income will help you become a high net worth individual.
“Those we surveyed place a high value on earned income.
“In order to achieve a high net worth, respondents say a person needs to earn $100,000 a year.”
Income can certainly help, but it’s not everything.
“Making money is only part of how a person builds wealth,” says Brownstein, who works with high-net-worth clients with at least $1 million (and up to $30+ million) in their portfolios.
“It’s also important to make sure your money is working as hard for you as you work to earn it.”
Similarly, although most survey respondents (59%) agree that it’s important to maintain a diversified investment portfolio, fewer (46%) prioritize maxing out retirement accounts.
Implications:
This report therefore highlights the importance of ensuring you keep note of your net worth and ensuring that you grow your net worth.
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