Wealthy vs. Wealthier: How Millionaires and Less Affluent Investors Prioritize Finances

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A late 2023 Ameriprise survey reveals only 13% of affluent Americans attribute their prosperity to luck. There’s a prevailing belief among the wealthy that strategic planning and disciplined financial habits are the primary drivers of wealth accumulation.

80% of respondents attribute their ability to amass over $1 million to meticulous financial planning and astute investing. A significant portion, 71%, insist on the importance of earning a substantial income, while 69% emphasize the significance of living within their means as contributing factors to their financial achievements.

“There is no standard definition of what it means to be wealthy, but in general, investors associate it with having the means to live life on their terms,” says Marcy Keckler, Senior Vice President of Financial Advice Strategy at Ameriprise.

“Whether that means having $1 million, $10 million, or any other figure, building wealth requires planning, prioritization, and taking steps to protect your future.”

Surprising Perception of Wealth Among Millionaires

Wealth perception varies among different population groups. Three of five investors whose assets total $1 million or more, identify as upper middle class. An additional 31% consider themselves part of the middle class. A minority — 8% — view themselves as wealthy.

Respondents with assets ranging from $25,000 to $999,000 have a different perspective. About 25% identify as upper middle class, around 58% as middle class, and a mere 2% regard themselves as wealthy.

Schwab’s Modern Wealth survey notes shifting attitudes toward wealth in America. The 1,000 survey respondents saw $2.2 million as the threshold for wealth. However, the net worth of 48% of Americans who self-identify as wealthy is only about $560,000 — about a quarter of the perceived benchmark

Wealthy vs. Everyday Investors: Different Financial Goals

Nonfinancial factors, like health and family, hold more significance in defining wealth than monetary assets alone. These findings contrast conventional notions of wealth and reflect evolving perspectives on rich living.

Millionaire’s financial priorities vary greatly compared to those of less affluent investors. Investors with over $1 million in assets prioritize “protecting accumulated wealth” as their top concern (62%), followed by “saving for retirement” (43%) and “managing market volatility” (32%).

In contrast, investors with assets under $1 million currently prioritize “saving for retirement” (49%), followed closely by “managing day-to-day living expenses” (42%). Notably, “increasing income” and “paying down debt” are tied for third place at 35%.

Decoding Millionaire Strategies: How Affluent Individuals Build and Preserve Wealth

A Northwestern Mutual study notes wealthy Americans’ forward-thinking financial approaches and proactive strategies for long-term financial security and risk assessment.

Eighty-four percent of affluent individuals tailor financial plans to address long-term risks, like market fluctuations, while only 52% of the general population act similarly.

Of American millionaires polled, 77% percent recognize the importance of financial planning, describing their planning habits as disciplined or highly disciplined. These individuals demonstrate a commitment to achieving specific economic goals by starting work early and taking proactive steps toward their realization.

Ninety-one percent of millionaires say they have provisions in their financial plans to address unforeseen financial or health emergencies to avoid relying on cash advance apps like Dave. Only 60 percent of the general population takes similar precautions.

Prakash Kolli of Dividend Power and Jonathan Sanchez of Parent Portfolio emphasize the importance of appreciating asset ownership as a primary pathway to wealth accumulation. Kolli stresses the significance of investing in assets that gain value over time, citing real estate and undervalued equities with dividends as viable options. Sanchez, who achieved millionaire status in his 30s through real estate investments, cites property equity as an overall net worth booster. The pair express that owning appreciating assets, whether real estate or business ownership, is a step toward achieving financial prosperity.

Anika Jindal, CPA and founder of What Anika Says, adds, “Remember, becoming a millionaire isn’t just about earning income; it’s about managing, growing, and preserving that wealth over time through informed decision-making and strategic planning. Furthermore, augmenting one’s income through additional streams, whether through side hustles, investments, playing games in your free time, or entrepreneurship, can significantly expedite the journey to millionaire status.”

Compound interest is a potent force in wealth accumulation, demanding patience and commitment. Consistently saving throughout one’s career is a dependable route to millionaire status. R.J. Weiss, a Certified Financial Planner and founder of The Ways to Wealth  says, “The math does work when it comes to compound interest. Though it does require patience and dedication, saving money consistently throughout your working life is one of the most reliable ways to become a millionaire.

This article was produced by Media Decision and syndicated by Wealth of Geeks.