{"id":1280,"date":"2020-11-09T10:00:00","date_gmt":"2020-11-09T10:00:00","guid":{"rendered":"https:\/\/finfree.com\/what-does-it-mean-to-be-wealthy\/"},"modified":"2020-11-09T10:00:00","modified_gmt":"2020-11-09T10:00:00","slug":"what-does-it-mean-to-be-wealthy","status":"publish","type":"post","link":"https:\/\/finfree.com\/what-does-it-mean-to-be-wealthy\/","title":{"rendered":"What Does It Mean To Be Wealthy?"},"content":{"rendered":"

What does it mean to be wealthy? There\u2019s no shortage of answers, and frankly, it means different things to different people. High net worth retirement planning<\/a><\/span> not only encompasses investments and money but it also includes less tangible factors such as life experiences, charity, and legacy.<\/p>\n

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Take advantage of Financial Freedom\u2019s free initial consultation. Click here to schedule a time to talk with us.<\/span><\/em><\/strong><\/a><\/h2>\n<\/p>\n

Money as a Marker of Wealth<\/strong><\/h3>\n

One definition of wealth is the amount of money one has. But even there, definitions vary. Another measure of wealth could conceivably be a person’s annual income. According to USA Today, the top 1 percent of earners in the United States have incomes above $500,000 annually.<\/a><\/span><\/p>\n

But is that a true measure of wealth? Frankly, it may not be, because earnings are intimately tied to expenses. It\u2019s quite possible to earn that amount and much more, and still be cash-strapped. <\/p>\n

An individual with that income or much more could have several homes in areas where real estate prices are high, steep private school expenses for children, expensive cars and high debts \u2013 and more; these are just some examples. <\/p>\n

In short, you have to look at the checkbook for high-earning individuals to see if they are wealthy or not.<\/p>\n

The truer measure of wealth may be net worth. How high a net worth does one need to be wealthy? According to an article by ThinkAdvisor, being wealthy is defined as a net worth of $2.3 million or more.<\/a><\/span><\/p>\n

Here, too, though, definitions vary. High net worth (HNW) is defined by various criteria, including net assets. Some advisors define HNW individuals as those with assets of $5 million or above<\/a><\/span>.<\/p>\n

Measuring by assets may provide a much more useful definition of wealthy. HNW individuals clearly own significant assets. As a result, wealthy people often need tax, estate, and wealth management strategies that people with lower net assets may not have. <\/p>\n

The wealthy may also invest in a broader array of vehicles than people with average means. Stocks and bonds, yes, just as people with average net worth. But HNW individuals also invest in real estate, commodities, precious metals, private market investments, and hedge funds, to name just a few potential vehicles. Some investments may be open to wealthy people but not to those with assets below a certain threshold.<\/p>\n

But the wealthy as measured by net worth do not necessarily have a high degree of spending capacity. Their net worth can be placed in vehicles inaccessible to them, such as trusts, or investments that aren\u2019t liquid, such as real estate or businesses. <\/p>\n

This leads to one more definition of wealthy. By nearly universal agreement, wealth means the ability to save and invest money<\/a><\/span> \u2013 in whatever asset you choose. It does not <\/em>necessarily mean spending on luxuries (although the wealthy may have the means to do so). The wealthy save and invest their money, making it work for them and their heirs if they choose.<\/p>\n

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Other Markers of Wealth<\/strong><\/h3>\n

Yet intriguingly, when people are asked \u201cwhat does it mean to be wealthy?\u201d the answers often don\u2019t center around income or <\/em>assets. They center around what money can buy \u2013 and how it makes people feel.<\/p>\n

Many people polled in surveys, for example, cite ordering food or meal delivery as something that makes them feel wealthy \u2013 41 percent, to be precise. One-third cite subscriptions to streaming services (such as Netflix or Hulu) as a boost to their feelings of wealth. <\/p>\n

Yet we all know that these don\u2019t require high expenditures or, certainly, high net assets. Why, then, do people associate them with feeling wealthy?<\/p>\n

Because they provide experiences or convey qualities that people associate with wealth. Delivered or provided meals, for instance, may give people the gift of time and care. Having more time to yourself and freedom from duties like cooking or cleaning are qualities many people associate with wealth. Similarly, streaming services may provide a sense of luxurious choice, prestige viewing, and ease. <\/p>\n

In short, many people associate the word \u201cwealth\u201d with <\/p>\n