It now takes less to be “wealthy”
Survey says residents rethought priorities after “difficult” year
Denver residents have lowered the bar on what they say it takes to be wealthy, financially happy and financially comfortable, but they are more motivated to improve their economic situation, according to the latest Modern Wealth Survey from financial services firm Charles Schwab.
In early 2020, the 500 Denver residents participating in the survey estimated it would take, on average, a net worth of $2.4 million to be wealthy, matching what they said it would take in 2018. But when Logica Research conducted the survey again in February, that average had dropped to $2.3 million.
An even bigger shift occurred in the net worth Denver residents said would be required for them to achieve “financial happiness.” That number fell from $1.3 million last year to $931,000. The amount needed to be “financially comfortable” dropped from a net worth of $805,000 last year to
$635,000 this year.
Net worth is the sum of assets owned minus the liabilities owed. It isn’t entirely clear why people felt they needed less money, not more, after coming through an economic shock, but it likely represents a re-shifting of priorities.
“After a difficult year, many Denver residents reflected on what’s important to them and recalibrated what is takes to be financially comfortable or even wealthy,” said Joanna Hackman, a Denver-area financial consultant with Schwab, in an email. “Denverites took a closer look at their lives and finances, with many placing a renewed importance on their mental health along with the health of their relationships.”
The survey delved into the financial impact the pandemic had on individuals, with nearly four in 10 saying it had strained their finances. Just over a third, 36%, had pay or hours at work cut. And three in 10 said they suffered through a layoff or furlough.
Nearly three-quarters of those participating in the survey said they had reprioritized what matters most to them because of COVID-19. About seven in 10 have made their mental health a higher priority, followed by their financial health, 57%; relationships, 56%; and physical health, 40%.
In order to improve their financial situation, about 56% of Denver respondents plan to save more, 41% plan to reduce debt, 35% plan to build an emergency fund, and 20% said they plan to invest more in the stock market.
But it isn’t all about preparing for the next rainy day. As the city begins to reopen, 45% of Denver residents surveyed look forward to things getting back to the way they were, while 21% admit they want to make up for lost time.
Among the most popular “splurge” items were jetting off on a vacation, 33%; buying tickets to a live concert, 19%; dining out at a fancy restaurant, 15%; and hosting a party, 13%. About half of respondents said they dreamed of traveling again and 38% were looking forward to socializing more.
About six in 10 of Denver residents surveyed said they remain optimistic about the U.S. stock market, and a little more than half said they feel positive about the U.S. job market, the overall economy and the country’s role as a global economic power.