What is a good life? For some it’s spending lots of time with family members and friends, or buying & selling your own home or going on luxury holidays. Other times you have to be able to foot the bill yourself
U.S. Bank conducted a survey of 3,000 active investors and 1,000 aspiring investors, which found that the definition of wealth is vastly different across different generations. The study compared wealth-building priorities and attitudes among the oldest and youngest adult age groups. While Gen Z has fewer gaps in their understanding of what wealth means, boomers have largely agreed on defining wealth differently.
During the survey, respondents were asked to choose three different ways to define “wealth.” 61% of baby boomers believed that it meant only having financial security. They seconded on this topic with “having good health” (33%), and thirdly, they preferred being able to afford what they want (28%).
Gen Z was divided on what security meant, with 38 percent defining wealth as having “a better quality of life,” and another 28 percent using “living life how I want” in the second position.
The definition of “better quality” varies depending on the individual, but Gunjan Kedia, vice chair of Wealth, Corporate, Commercial and Institutional Banking, at U.S. Bank, stated in the report that the deck is heavily biased against younger generations as they strive to accumulate wealth amidst inflation, high interest rates, and recession concerns. According to her findings, college tuition fees have increased by 169% since 1980, home prices have surged by 540%, while the average debtor has $37,000 under their belt.
Young workers are prone to comparing themselves to others and even going into debt to keep up with their spending friends, amidst macroeconomic pressures. U.S. Bank reports that only 6% of Gen Z investors don’t compare their wealth and investment goals to anyone else, which can vary significantly.
The abundance of lavish vacation pictures and extravagant weddings can make it difficult to distinguish between wealthy and poor individuals, as more than half of Americans are living paycheck-to-dollar. This is due to the fact that many people who spend excessively have credit card debt built up to keep up with their appearance. They also feel a heavy burden of regret for purchases made to impress others or avoid spending money they need, which should be emphasized when building wealth.
A recent report by Bankrate senior economic analyst Mark Hamrick found that Americans are more likely to be comfortable with spending $233,000, which includes being able to pay for ongoing expenses, save for retirement and emergencies, clear debt, and have extra cash for occasional purchases.
According to a study conducted by Purdue University, happiness levels off as soon as most needs are met and some money remains. For most people, $100,000 is the magic number, which speaks to the interdependence of money and happiness across cultures.
Boomers seem to have learned this lesson from ancient times.