by Dana George | Jan. 5, 2020
About 48% of those surveyed consider this achievement a sure sign of success.
How do you define success? When Northwestern Mutual conducted its 2019 Planning & Progress Study, it asked people to pick five attributes that they feel are signs of success. The top two answers came as no surprise: spending quality time with family and being healthy.
What you may find a bit surprising is that more people did not include "earning a high income" in their top five. In fact, only 13% of those surveyed considered raking in the big bucks as a sign of success. In contrast, nearly half of respondents (48%) considered being financially prepared for the future as a sure sign of success.
And these people have the right idea.
Of all the attributes associated with success, it makes sense that so many Americans would value financial preparedness. People want to be ready for anything that comes up, and they don't want to be worried about money all the time. Being financially prepared means having savings, a budget, and an emergency fund so you know you can handle anything that comes along.
Another survey by PricewaterhouseCoopers asked workers to describe what financial wellness means to them, and 34% said that it means not being stressed about their finances. That fits with responses from 62% of millennials and 55% of Gen Xers, who said they worry about not having enough money put aside for unexpected expenses. Of the baby boomers surveyed, 52% were concerned about being unable to retire when they want to.
Research by The Ascent on time spent on personal finances found that Americans have some work to do before they can feel in control. Only 21% of respondents say they are confident they could miss more than three paychecks without having to borrow money or skip paying a bill, and on average, Americans spend less than two minutes a day managing their household finances.
There's no reason to wait until you're making more money or in less debt to take control of your finances. Today is the day to begin preparing for your financial future.
If financial planning sounds daunting, it shouldn't. It all begins with a financial hierarchy of needs. You may remember the food pyramid from elementary school or Maslow's hierarchy of needs from a psychology class. In both cases, your basic needs are met first, and then you're ready to move on to the next level.
You won't accomplish all your financial planning in one sitting. But by breaking it down into stages, you can tackle a single issue at a time and eventually get you where you need to be. If we didn't love pachyderms so much, we might compare it to eating an elephant "bite by bite."
There are no official rules as to what your financial pyramid should look like, but here are some suggestions. You should re-evaluate your budget and emergency fund at each stage as your financial circumstances change.
If your idea of success is being financially prepared for the future, but you're intimidated by the process, it may be time to consider a visit with a certified financial planner (CFP). Be aware that financial planners are compensated in a number of ways, including commission-only and fee-based; the latter is preferable. If you prefer to know up front how much it will cost, some financial planners work with clients who prefer to pay an hourly fee. You should expect to pay about $150-$300 an hour. If you're worried about the money, consider it an investment in your future.
You know it's time to make an appointment when:
Whether you consult a financial planner or go it alone, you're never too young or old, too broke or in debt, or too lacking in knowledge to become financially prepared. The biggest hurdle for many people is actually sitting down and making a budget. But once you start, you'll be one step closer to financial wellness.
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