Defining Financial Success
In an extensive survey, the financial services company Empower sought to quantify what financial success means to Americans. The survey results provided
key insights into the income and wealth benchmarks that people associate with financial achievement. The definition of success for the surveyed individuals equated to an average annual salary of approximately $270,000 and a substantial net worth of around $5.36 million. These numbers reflect the high bar that many Americans set for themselves when evaluating their financial status. This aspirational view of financial success underscores the importance of understanding the factors that can help individuals achieve their financial goals, and what can hold them back.
Obstacles to Prosperity
While a high income and substantial net worth are often viewed as the pinnacles of financial success, several barriers can prevent individuals from reaching these goals. Among the most significant obstacles are overspending, the burden of debt, prevailing economic conditions, and a general lack of financial knowledge. Overspending can quickly erode savings and prevent wealth accumulation, while debt – especially high-interest debt – can become a significant drain on income and a barrier to financial progress. Economic fluctuations, such as recessions or periods of inflation, can also impact financial stability and the ability to grow wealth. Finally, a lack of financial literacy, including a poor understanding of budgeting, investment strategies, and financial planning, can prevent individuals from making informed decisions about their money, thus impeding their progress toward financial success.
Generational Shifts Emerge
The survey also revealed important shifts in how different generations perceive financial success. Younger generations, in particular, appear to have a higher threshold for what they consider financial achievement. This suggests that the criteria and expectations for financial success are evolving, influenced by factors such as rising costs of living, the increasing prominence of digital financial tools, and changing attitudes toward work and wealth. This evolving mindset suggests a need for financial strategies that adapt to the changing landscape of financial goals and aspirations, acknowledging that what was considered successful in the past may no longer be the standard of financial accomplishment for future generations.
