Despite a recent boom in the number of millionaires, a high net worth doesn’t always translate to feeling wealthy. A recent surge in the number of millionaires, with estimates placing the number at over 23.8 million in the U.S., has created a paradox: a large number of people have crossed the millionaire threshold, yet a majority still don’t feel financially secure.

The Illiquidity of Net Worth

One of the biggest reasons for this disconnect is that wealth is often tied up in assets that are not easily spent. As one might find, a significant portion of a person’s net worth is often locked in their home’s equity or their retirement accounts. A high 401(k) balance, for example, is money you can count, but since it’s designated for a future that is years away, it doesn’t provide the tangible feeling of having expendable wealth today. For many, a high net worth feels more like a responsibility to be managed than a fortune to be enjoyed.

The Impact of Inflation

The recent period of high inflation, even with prices having come down from their post-Covid peaks, has also contributed to a sense of financial insecurity. While the rate of price hikes has slowed, the overall cost of living remains significantly higher than before. This erosion of purchasing power means that a dollar of wealth buys less today than it did a few years ago, making even high-net-worth individuals feel less secure about their financial future.

The Biggest Barrier to Wealth Building

For those actively working to build wealth, high-interest credit card debt is a primary threat. It acts as a “savings killer,” with recent data showing the average credit card interest rate above 21% and the average household carrying over $9,000 in debt. Discretionary income that could be used for investments is instead directed toward paying down this high-cost debt, creating a significant barrier to long-term financial progress.

What it Takes to Actually “Feel” Wealthy

There is a significant gap between what people have and what they feel they need to achieve financial security. Recent polls reveal a wide spectrum of what people believe constitutes true wealth:

• Financial Comfort: Nearly half of those surveyed say they would need to earn at least $100,000 annually to not worry about everyday living expenses.
• Financial Security: A significant portion of respondents say an income of at least $200,000 is required to feel truly secure.
• Feeling Wealthy: When it comes to a lump sum, a majority of people say they would need to have between $1 million and $5 million in the bank to feel truly wealthy.

Ultimately, feeling wealthy is not about hitting a specific number; it’s a psychological state built on financial confidence. It comes from having the security to manage daily expenses, having a plan to eliminate debt, and knowing that your savings and investments are strong enough to protect your future.