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A new study conducted by Ameriprise Financial shows that even when Americans have stashed sizable sums of money into their investment accounts, they still might not see themselves as wealthy.
The financial group surveyed hundreds of Americans with $1 million or more in assets and found some surprising results, including that 31% say they are "middle class." That may come as a shock to many Americans who have assets worth far less than that. Among the group of millionaires, 60% say they are "upper middle class," and just 8% consider themselves "wealthy."
Why is there a difference in how the respondents defined their personal finances? It may be because everyone has a different perspective on what they think wealth is. The survey showed that most investors (85%) define wealth as financial security. Others thought wealth was being able to provide for themselves and their family, while some said it was the "freedom to do what I want."
Definitions of the middle class vary
You might excuse the surveyed millionaires for not knowing whether they're middle class, partly because there are many different ways to define it.
For example, the Pew Research Center says someone is middle class if they have an annual household income that is two-thirds to double the national median income. The national median household income was $74,580 in 2022, which means a middle-class household earns between $49,720 and $149,160 under this definition.
However, the Brookings Institute says there are three separate definitions of the middle class, and it doesn't even require a household to earn a specific income. Instead, it says the term can refer to a person's professional credentials, their culture, or the amount of money they have.
How millionaires recommend building wealth
No matter how you define being middle class, there are some practical lessons all of us can take from those who've accumulated substantial wealth. The Ameriprise survey respondents mentioned three top factors that helped them accumulate more than $1 million.
- Financial planning and investing: 80% of respondents said this was the most important driver to building wealth. Thankfully, you don't have to be an investing wiz to do well financially. Owning low-cost index funds in an investment account can help you build wealth over time.
- Earning a good income: 71% of respondents cited this as a key driver of their wealth. But finding a few ways to boost your income can go a long way to helping you achieve your financial goals as well. Gig workers earn an average of $5,700 annually, and many of these jobs can be done in addition to your day job.
- Living within your means: 69% said living within their means contributed to their financial success. The high cost of living has made this suggestion difficult for many Americans, but it's a good reminder to keep tabs on your purchases. Debt payoff apps can be an excellent way to get your finances back on track if you need help.
You don't have to accumulate $1 million to be on the right financial track; for some people, that might not be the best goal. Instead, think of one financial goal you want to achieve. It could be stashing $1,000 in your savings account, putting money aside for buying a home, or paying off your credit card balance. It all starts with setting a goal and creating a financial plan to get there.
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