What would make you feel wealthy?
A lot of people struggle with that question. Itís hard to know how you would feel about something youíve never had, like say a robust stock account or a mortgage-free house.
To help, Charles Schwab has come out with a hard number: $2.4 million. Thatís what it takes the average American to feel wealthy, according to the investment companyís annual Modern Wealth Index.
The numbers vary depending on the area of the country. In San Francisco, it was $4.1 million. In Philadelphia, it was closer to $2.7 million. Houston, $2.5 million. The report didnít pull out Tampa Bay, but the Miami-Fort Lauderdale area pegged wealth at $3.1 million.
Donít have that level of net wealth? Not all is lost. It only takes $1.4 million to feel "financially comfortable," according to the survey.
Still too frothy?
More than 62 percent of those surveyed said spending time with family made them feel wealthy. Other ways they felt well off: Having time to themselves (55 percent), owning a home (49 percent) and eating out or having food delivered (41 percent).
Owning the latest tech gadget and even paying for a gym membership or personal trainer made people feel less like financial rabble, according to the survey of 1,000 Americans, which had a margin of error of 3 percentage points.
For the goal-oriented, the report suggested one simple way to nudge closer to the magical $2.4 million threshold: Write a plan.
Admittedly, financial planning isnít sexy. Itís on the list with kale and sensible shoes. But it makes a difference.
Planners scored far higher on the wealth index than nonplanners. They had a higher tolerance for risk, were far more aware of the fees they were paying, had more diversified portfolios and were more likely to regularly rebalance those portfolios.
"Planning is critical to achieving any goal," said Terri Kallsen, executive vice president and head of Schwabís investor services. "Itís like establishing an exercise regimen to get in shape. We need to take the same approach to keep our finances in good health and on track."
Why donít people plan? About 45 percent said they didnít think they had enough money to bother.
"The idea that financial planning and wealth management are just for millionaires is one of the biggest misconceptions among Americans, and one of the most damaging," said Joe Vietri, senior vice president and head of Schwabís retail branch.
Another 20 percent said it didnít occur to them to write a plan. Twenty percent more said they didnít know where to start, and about 15 percent said they didnít think they would stick to a plan.
Millennials appear to get it.
They are more likely to have a written plan than Gen X and Baby Boomers. They also are more likely to rebalance investments and to have specific goals. They know they need to save for the long term but they also invest to fund near-term passions like travel.
Millennials arenít as good at telling good debt from bad, and they tend to be overly optimistic about their financial future.
But as Vietri said: "We can learn something from them."
Contact Graham Brink at [email protected] Follow @GrahamBrink.