48% of Americans Feel Wealthy, But Not for the Reasons You'd Think

There are plenty of famous quotes to support the idea that money won't make you happy. Benjamin Franklin said, "Money never made a man happy yet, nor will it." And Franklin D. Roosevelt said, "Happiness is not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort."

But reality is more complicated. Particularly if you feel like inflation keeps eating into your paycheck faster than the very hungry caterpillar. There are certainly times when money could make life easier -- such as when you're not sure how to cover your bills or pay this month's rent or mortgage.

It may come as a surprise, then, to learn that 48% of Americans feel wealthy, according to a recent Schwab survey. That's in spite of the sky-high prices we've seen recently. And it's at odds with another part of the survey. People's average net worth is much lower than the amount they think they'd need to be wealthy. The reason? A lot of people feel wealthy because they have healthy relationships and a fulfilling personal life.

What is net worth?

Net worth is different from income. You can have a low income and a high net worth, and vice versa. It's a useful snapshot of your finances and can be a good yardstick if you're trying to build wealth.

To calculate your net worth, add up everything you own (your assets) and subtract what you owe (your debts). For example, in the following scenario, the total assets come to $559,000. If we subtract the liabilities of $267,000, this person's net worth would be $292,000.

Knowing your net worth is a good way to track your financial situation. In an ideal world, as you head toward retirement, your net worth will increase and you'll have more value in the assets column than you do in the liabilities one.

Does net worth equal wealth?

What's interesting about the Schwab survey is that the average net worth of Americans who feel wealthy is $560,000. In contrast, people think they need a net worth of $2.2 million in order to be wealthy. That big disconnect makes more sense when you dig deeper into the numbers because people feel wealth is about more than money.

Many respondents say well-being and experiences are more important than the amount of money in their bank account or owning nice things. Over 60% said they view having healthy relationships with family and loved ones as a better description of wealth than having a lot of money. A similar percentage of Americans think that having time is more important than having money.

Valuing non-monetary aspects of life is important. Indeed, paradoxically, it can even help people to build wealth. If you feel wealthy because you have strong relationships, you're less likely to spend money on things you don't really need so you can keep up with the Joneses.

This isn't to say that people aren't trying to keep up with their peers. A third of survey respondents said they buy things based on what they see friends and influencers doing on social media. For Gen Zers, that number shoots up to 55%. It's also concerning to see that only 35% of respondents have a formal financial plan.

Bottom line

Friends, family, health, and how you spend your free time are all important aspects of a wealthy life. But it is rarely an either-or scenario. Unless you're filling in Schwab's survey, you're unlikely to have to choose between money and your loved ones. You can build wealth and build a meaningful life, particularly if you have a plan on how you'll do it.

Indeed, there are many situations where money can alleviate stress and cushion you and your loved ones. For example, having money in a savings account to cover a family crisis. Or having enough in your retirement account for a comfortable old age. Or simply knowing you can put food on the table for your family and keep a roof over your heads. As Denzel Washington is quoted as saying, "Money doesn't buy happiness. Some people say it's a heck of a down payment, though."