Do you consider yourself wealthy?
Probably not. In fact, most people don’t. According to the Fidelity Investments® 2024 State of Wealth Mobility Study, only 11% of Americans currently consider themselves wealthy. And only 35% believe that they will become wealthy at some point in their lifetime.
Maybe that’s not surprising. What you might be surprised by, however, is that 57% of Americans who have more than $1 million in investible assets don’t consider themselves wealthy. And yet close to 10% of Americans who have less than $1 million in investible assets do consider themselves wealthy.
Obviously, there are many factors that contribute to an individual’s feelings of financial security—where they live, for instance, or the size of their family. But when you ask people how they define wealth, you’ll find that they will often speak of it in terms that go beyond money.
For some, it may be the ability to think beyond their day-to-day needs and expenses so they can put their money to work in more satisfying ways. Giving to charitable causes that they care about, for instance, or taking a well-earned family vacation. For others, it may be about creating a legacy and having the ability to leave something behind for their children and grandchildren to help ensure that they’re taken care of well into the future.
However you define it, feeling wealthy is about more than just the numbers. It’s also about the confidence that comes with knowing what you want—that is, having a clearly defined goal—and knowing you have a plan in place that can help you achieve it.
So what’s the secret? What are those who consider themselves wealthy doing that has helped give them that sense of confidence? Here are 3 things that respondents to the 2024 Fidelity State of Wealth Mobility Study told us helped them.
1. Start early
37% of Americans who consider themselves wealthy said that saving from a young age was an essential part of achieving wealth. “We never know when the unexpected will become a reality,” says Rich Compson, head of Wealth Solutions at Fidelity Investments. “The best thing you can do to prepare for that is to start planning as early as possible and engage in conversations with your family.”
If you’re a parent or grandparent, take the time to help your children or grandchildren get comfortable with managing their financial lives. Involving them in your own financial planning and empowering them to take steps to begin their own financial journey could be a beneficial step toward their future financial goals. Over 80% of survey respondents said they would’ve benefited from some financial education at an earlier age, but more than half (56%) say their parents never discussed money with them.
“Planning together as a family is such a personal experience—it’s no surprise that, historically, people have felt uncomfortable about it,” says Compson. “It’s important to start these conversations early to help ensure you’re prepared before things get more complex. Too often, we see families who have waited until a crisis occurs to have these critical discussions. And the result is that the conversations you have and the decisions you make may be more difficult than they might have been otherwise.”
2. Save consistently
Maximizing and optimizing your savings can potentially have a big impact on your long-term financial prospects. 32% of Americans who consider themselves wealthy said that consistently saving a portion of their paycheck helped them reach a level where they were comfortable with their finances.
“Getting a handle on your day-to-day spending and savings is key,” according to Gina Gillespie, Vice President, Financial Consultant, Fidelity Investments. “You should look for any chance to save more. Perhaps you’ve received a bonus or recently exercised some of your some stock options—if you have money on hand, you may be able to take advantage of this opportunity and save in your tax-advantaged accounts. Health savings accounts, if you are eligible, can be beneficial, as they may offer triple tax savings.”2
3. Invest strategically
40% of Americans who consider themselves wealthy attributed their success to investing strategically; that is, making investments that were based on clearly articulated goals and aligned to their personal tolerance for risk. Investing strategically can be a significant factor in wealth accumulation.
Strategic investing begins with a firm understanding of your wants, needs, and concerns. With those elements in mind, you can determine an appropriate asset allocation that gives you enough exposure to risk that you may benefit from long-term, compounding growth, but not so much that you end up deviating from your plan in the face of uncertainty or market volatility.
Investing strategically involves more than just finding the right asset allocation, however. “There are 3 components to managing your assets efficiently,” says Gillespie. “Deferring taxes, managing taxes, and reducing taxes.”
“Using retirement accounts, such as 401(k)s, IRAs, and HSAs, you can potentially defer taxes and help your wealth grow faster by keeping more of it invested,” says Gillespie. “Outside of those accounts, you can manage your exposure to taxes by making strategic decisions about when to buy and sell your investments or by choosing investments that are more tax-efficient. Finally, you can reduce taxes by implementing charitable giving strategies that can benefit the causes you care about and give you the opportunity to deduct those donations from your taxable income.”
It all starts with a plan
Having a financial plan in place can play a big role in helping you apply these lessons to your own finances. 78% of those who have a financial plan say they are confident that they’ve taken the right steps to build and protect their wealth; only about 26% of those who do not have a plan can say the same.
A financial professional may be able to help you build and maintain a plan that works for you. They can work with you to develop and test an investment plan that’s personalized for you and your family. With their knowledge of your financial circumstances and your attitudes toward wealth, they may be able to identify new opportunities to help grow your assets, opportunities that may have not been immediately obvious if you were managing everything yourself. “With a better understanding of you and your family, a professional can work with you to develop a set of financial planning strategies that are well aligned to help meet your needs,” says Gillespie.
However you manage your finances, the important thing is that you’re making an effort to implement these 3 strategies in your own life. “When it comes down to it, this is about protecting your family and preserving their assets,” says Compson. “The conversations you have with your family are an important step toward helping the next generation feel confident and prepared to take on future challenges.”