The pandemic is changing the way people think about money, and how much they feel they need to be wealthy. The Charles Schwab 2020 Modern Wealth Survey (1) was taken in January of this year, before the U.S. was hit by the pandemic, and again in June, several months after the pandemic began. The results reveal changes in both attitudes and behavior, when it comes to money.
More than half of the people who participated in the survey say COVID-19 has had a financial impact on them or a close family member. But the sudden economic uncertainty that the pandemic has created, is also having a good effect on how people are handing their money.
2020 Modern Wealth Survey
According to the survey:
- 40% are more likely to be saving more
- 36% are more likely to have money available for emergencies
- 30% are likely to invest more of their money right now, in stocks or something else, like real estate
- 24% are more likely to have a financial plan
Those are some good numbers.
How Much Is Enough?
The survey also shows that Americans have begun to think differently about the value of money and how much they need to feel comfortable or wealthy. In January, survey participants said they would need to have an average net worth of $934,000 to feel comfortable, and $2.6 million to feel wealthy. Five months later, in June, in the midst of the pandemic, they said they’d only need to have a net worth of $655,000 to be financially okay, and $2 million to be wealthy.
Schwab’s Jonathan Craig talks about the impact of the pandemic. He says, “The uncertainty it’s causing (is) changing how people think about their wealth and planning for the future, but we’re seeing a very productive investor reaction in many ways.”
Generational Impact of the Pandemic
Although people of all generations are reporting a financial impact on themselves or a family member, Millennials are getting hit the hardest. The survey shows that pay cuts, reduced hours, and layoffs have affected 25% to 30% of survey participants overall. If you only look at the results for Millennials, 41% say they or a family member have been impacted.
The pandemic’s financial fallout is also raising stress levels for people. The survey shows that Americans are almost 15% more financially distressed now than they were at the beginning of the year. Millennials are also suffering the most financial stress, while Baby Boomers are suffering the least.
Even though many people are hurting for money right now, the survey found that relationships and health remain at the top of the happiness list.
- Relationships were number one, with 39% of the people saying it was the most important part of their overall happiness.
- Next on the list was health, with 27% choosing that factor as most important.
- Third was money, with just 17% of the vote.
- Fourth was lifestyle, with 14%.
- And fifth was career.
Here at Real Wealth, we define wealth as having enough money to live life on your own terms, because when you have that freedom, you have more time for things like relationships or a jog on the beach for your health. But that doesn’t make money more important than relationships. It makes it more of a tool that helps you buy the time you need for other more important things, like your family or friends.
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