Does Net Worth Determine Wealth?

Wealth is determined differently by different people but from a financial perspective, people often ask: Does net worth determine wealth?

Research shows that while net worth specifically doesn’t determine wealth for most people, having enough money to do many of the things that do determine wealth requires financial assets. Net worth measures the amount of financial assets an individual has. Therefore, net worth determines wealth for many people.  

Charles Schwab led a study called The Modern Wealth Survey asking participants if they considered themselves wealthy, and just what determined wealth for them.

In this post, I’ll address the findings of that study in more detail to see how study participants determined wealth and what level of net worth was needed to feel wealthy.

Wealth Study Participants

1200 adults aged 21 to 75 participated in the study.

The results revealed that Americans believe you need a $2.2 million net worth to “be wealthy”. There was a slight contradiction, though, because, as you’ll see ahead,  the 48% of Americans who said that they feel wealthy have a significantly lower net worth than 2.2 million dollars.

Let’s explore why this large disconnect may exist.

How Is Net Worth Determined?

what determines wealth

Many people exclude their homes in net worth while others include homes in net worth calculations. The study asked participants to exclude real estate in their responses but this may have been missed, or participants felt that real estate investments should be included in net worth calculations. (I certainly agree.)

There may have been some inconsistency here which helps explain the discrepancy about the amount of net worth that determines wealth vs the actual net worth of the participants that felt wealthy.

Also, the study categorized investors by generation. Someone in the younger generations may feel wealthy because they anticipate decades of opportunities to build wealth.

On the other hand, an investor over 50 or 60 may be less likely to feel wealthy because they are near the end of their traditional earning years. (Regular readers know I encourage others to build wealth later in life vs falling prey to the wealth depletion mindset prevalent in our society! )

Net Worth of Wealthy Investors

The average net worth of those who reported that they feel wealthy was $560,000.

Millennials reported that they felt wealthy much more than other generations at 57%. Their average net worth was $531,000.

46% of Gen. Z participants reported that they felt wealthy. Of that 46%, their average net worth was $414,000.

41% of Gen. X reported that they felt wealthy and had an average net worth of $410,000.

40% of boomers reported that they feel wealthy. Yet boomers had the highest average net worth at $692,000.

How Do You Determine Wealth?

40% of the participants determined if they were wealthy by whether or not they had a feeling of well-being. This was followed by only 32% that defined wealth as money. Only 26% of participants described wealth as assets.

Here’s my take. Money is an asset. The words money and assets are frequently interchanged. Therefore, some form of financial asset was the most common way that wealth was determined in the survey.

If we add 32% that described wealth as money and the 26% that described wealth as having assets it totals 58%. This is significantly over the 40% that determined wealth by wealth being.

Money and assets are totaled to calculate net worth. This means that, in essence, net worth determined wealth for most of the investors in the study.

The study results state that Americans chose non-financial assets when asked what determines wealth. For example, 72% said that having a fulfilling personal life was wealth.

70% said not having to stress over money was how they define wealth.

How Was Wealth Determined in the Schwab Study?

Having wealth has taken on a negative vibe in recent years, and I get it having lived through economic cycles of greed.



When asked, it just feels better to tick the boxes indicating wealth is determined by life and family experiences rather than the boxes defining wealth as a certain level of net worth.

But let’s face it: If you have enough money, then you don’t have to stress about money so I cannot agree that non-financial assets were how study participants defined wealth.

Also, 70% of participants selected “enjoying experiences” as a way to determine wealth.

The reality is that many experiences such as travel or even taking your children or grandchildren out to eat cost money, and increasingly so in this time of $18 hamburgers!


A very high percentage of study participants determined wealth as:

  • Having a healthy work life balance
  • Being generous with loved ones
  • The ability to pay for experiences to spend time with my family

Again, all these endeavors require having extra money beyond just paying for basic living expenses, and having a high net worth helps provide these desirable endeavors.

Comparing Your Net Worth to Others

We all know that comparing ourselves to others is a losing game but it was a factor in determining how wealthy many participants felt.

61% of Gen Z and Millennials said that how they feel about being wealthy was influenced by how they compared to friends and family.

Interestingly, older adults felt differently. Only 39% of Gen X’ers and 31% of boomers admitted to feeling the same way.

Wealth and Financial Plans

Only one third of the participants indicated they have a financial plan. Those who do reported feeling more in control of their finances. That’s no surprise.

The reasons reported for not having a financial plan are not having enough money to get a plan, not enough time to develop a plan, and avoiding the expense of creating a financial plan.

Here’s a quick shameless plug. I made a course to create a financial plan that is under $300 right now. It covers the many ways you can invest to help you select the best way for you to invest. I did this because the financial industry and most influencers teach that there is one way to invest and that just happens to be their way.

That is so incredibly incorrect. There are many ways to invest in stocks and bonds, as well as invest in alternative assets. This is what I teach in my course after investing many different ways over the decades.

The course is not about me trying to get you to purchase financial advisory services from me because that is not what I do. It will however help you decide if you should hire a financial advisor and what to look for in a financial advisor or invest yourself. Everything I teach I’ve done or am doing.

At the end of the course, you’ll know your net worth in addition to what determines wealth for you personally.




Charles Schwab Study:

The information on this website is for education only and is not to be construed as personal financial advice.