This is a question that many people ask themselves in quiet moments but would never have enough nerve to say out loud.
What does “being rich” mean? As it turns out, the definition seems to be changing.
What’s the Dollar Figure for Being Rich?
How much money do you need to be considered rich? Well, according to Schwab’s 2021 Modern Wealth Survey, Americans believe it takes a net worth of $1.9 million to qualify a person as being wealthy. (Net worth is the sum of your assets less your liabilities.)
To get a clearer picture of where you rank, check out this wealth report card:
- People with the top 1% of net worth in the US in 2022 had $10,815,000 in net worth.
- The top 2% had a net worth of $2,472,000.
- The top 5% had $1,030,000 and the top 50% had $522,210.
- The top 10% had a net worth of $854,900.
If you still want to picture where you fit, consider that there are 6.7 million people with a net worth between $1 million and $5 million.
A Different Measure of Wealth: The American Dream
This was so imbedded into the American psyche that the dictionary deems it to be a “noun phrase.” The definition is: “A happy way of living that is thought of by many Americans as something that can be achieved by anyone in the US especially by working hard and becoming successful.”
Successful was not defined, but the American Dream also typically includes the idea of owning your own home, being married and having 2.3 children.
Figures in the Racial Wealth Gap
Unfortunately, the American Dream is not available for everyone. Housing equity makes up about two-thirds of all wealth. We know that there is discrimination in employment and wages. But even for African-American families that do earn decent incomes, housing policies, redlining and other discrimination has prevented them from acquiring land and housing to achieve the American Dream. The average wealth for white families is seven times higher than the average for wealth for black families. More than one in four black households have zero or negative net worth, compared to fewer than one in 10 white families.
It’s shocking when you look at the US wealth gap with minority groups. Net worth is more than just the dollars and cents. It also needs to be looked at through a kaleidoscope of education, race, ethnicity, homeownership, family size and access to credit, among other things.
The New American Dream for the Next Generation?
Gen Y and Gen Z seem to be more excited by quality of earning and not by quantity of money. Even the Schwab survey “found that respondents are lowering the bar for what they consider wealthy. Compared to 2021 ($1.9 million) standards, respondents to the 2020 survey described the threshold for wealth as being a net worth of $2.6 million.”
The next generation is redefining the American Dream, but some of the basics we still hold. According to a survey conducted by Echelon Insights in 2020, 81% of this next generation does believe that hard work will allow them to achieve success, as they define it. They want freedom to choose what to be, financial well-being, family, a good job and housing. They also really value work/life balance.
What makes this generation very different than boomers is that they are willing to leave a job to find the freedom and the job quality they want.
My generation “sucked it up” when we worked for a tough boss. But this generation is quitting when they work for a jerk. Employees today are feeling stressed and tired. More than one in three Gen Zers find it difficult to cope with pressures at work. They are looking for a sense of purpose in their work and want real social and interpersonal connections. A recent McKinsey study also found that, “Yes, they want pay, benefits, and perks, but more than that they want to feel valued by their organizations and managers.”
This is proven out by the numbers. More than 19 million US workers have quit their jobs since April 2021. Most of the people quitting are Millennials. But it’s important to note that a study by Adobe found that “more than half of Gen Z respondents reported planning to seek a new job within the next year.” The “woke” world has deemed this phenomenon the Great Resignation. This goal of seeking quality of life changes the definition of what it means to be “rich.”
The new American Dream is yet to be firmly defined. It appears as if it will include a shift from in-office work to a hybrid schedule that includes some remote work. Technology will obviously have a lot to do with this shift. If you have a hands-on job, remote work may not be an option.
Do You Want Money to be Your Life’s Report Card?
Is more really better? I raised my kids to believe as I do: that rich means that you will never worry about being hungry or having a safe place to live and also have enough give to charity. It seems like after saying this, you should be clasping hands and singing Kumbaya. But this definition may relieve many people from looking over their shoulders to figure out what “the Joneses” are doing and always feeling like a failure. Wealth, however, is in the eye of the beholder. It is also a generational thing.
It’s hard to avoid waxing philosophical when talking about being rich. My mother had told me that, “If you look up, you will always find people who have more and when you look down, you will always find people with less. So, be thankful for what you have and see how you can help those who are not so lucky.”
I guess the best piece of advice came from David Rockefeller. He was the CEO at Chase Bank when I was a budding executive. I was fortunate to work with him on occasion. One day we were talking about wealth. I asked him how it felt to be one of the richest men in the world. He basically told me that it’s not about the money, it’s about the legacy you leave behind. Then he quipped, “Let’s face it, you will never see a hearse with a luggage rack.”
President & CEO, Children’s Financial Network Inc.
Neale Godfrey is a New York Times #1 best-selling author of 27 books, which empower families (and their kids and grandkids) to take charge of their financial lives. Godfrey started her journey with The Chase Manhattan Bank, joining as one of the first female executives, and later became president of The First Women’s Bank and founder of The First Children’s Bank. Neale pioneered the topic of “kids and money,” which took off after her 13 appearances on “The Oprah Winfrey Show.” www.nealegodfrey.com