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Here's how much money Americans say they'd need to feel 'financially happy'

Charles Schwab's Modern Wealth Survey gauges how money habits and attitudes changed over the pandemic.

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Money may not be able to buy happiness, but accumulating a certain net worth can get you close. To feel "financial happiness," Americans now say they'd need to accumulate $1.1 million on average. That's according to Charles Schwab's 2021 Modern Wealth Survey, which polled 1,000 U.S. adults to gauge how their money habits and attitudes changed during the pandemic.

Net worth is the sum of all your assets, like cash savings, investments, and/or real estate, minus the total debts you owe, such as student loans, credit card debt, or your mortgage. Here's the average net worth the Schwab poll respondents said they'd need to feel good about their money situation:

  • To feel "financially comfortable": $624,000 (down from $934,000 pre-pandemic)
  • To feel "financial happiness": $1.1 million (down from $1.7 million pre-pandemic)
  • To feel "wealthy": $1.9 million (down from $2.6 million pre-pandemic)

Post-pandemic priorities: Mental health over cash

While a net worth of over a million dollars may seem like a high bar for financial happiness, it's more than half a million dollars less than what people said they needed to be happy last year. The study points to the financial stress caused by Covid as one of the main reasons why many people chose to reprioritize and adjust their goals.

More than half of poll respondents were financially affected by the past year: Of the Schwab poll takers, 31% said the economic strain hurt their finances, 26% faced slashed wages or hours, and 20% were furloughed or laid off. That seems to have affected their priorities. Two-thirds (68%) of poll respondents said they have reconsidered what matters most to them, with 69% saying mental health is more important than it was before. That's followed closely by relationships (57%), financial health (54%), and physical health (39%).

"Even if this discipline has not yet resulted in tangible financial results, the value of awareness and clarity should not be understated," says Cody Garrett, a certified financial planner and the owner of Measure Twice Financial. It's a sign that "newfound habits will stick after the crisis subsides."

Americans want to save more, tackle debt in 2021

The pandemic changed most Americans' financial lives. Those who lost income had to tighten their belts, while those who weren't affected had fewer luxuries on which to splurge. The personal savings rate hit its highest level in decades, contributions to 401(k)s and other retirement accounts reached new highs, and more than half of Americans surveyed by Bankrate in February had more money in emergency savings than credit card debt.

As a result, it's not surprising that 64% of Americans surveyed by Schwab say they were savers as opposed to spenders in 2020. They hope to keep that momentum going, too. For 2021, a full 80% of respondents plan to save more than they spend in the coming year. Around a third, 34%, are aiming to reduce their debt.

That's a good thing, Garrett says, particularly when it comes to credit card debt. "Prioritizing the elimination of credit card debt like your hair is on fire will effectively improve your position on the path to financial stability."

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How to achieve your net-worth goals

The median net worth of all families in 2019 was $121,700, according to the Federal Reserve's 2019 Survey of Consumer Finances. Even if you don't feel anywhere close to being a millionaire, boosting your net worth may be easier than you think. Look closely at your spending patterns to track where your money is going, and don't wait to make needed changes.

"Be proactive in the review of this information," Garrett says. "List your expense categories [from] largest to smallest, then list them again but by how much subjective value they provide for your life. Start by reducing expenses that have the greatest misalignment when you compare the lists side-by-side. You may realize that you are spending on categories that do not add much value to your life, whereas that cup of coffee you buy may be your favorite part of the day."

While it can be tempting to cut all excess spending out of your life, "if you do, the habit is unlikely to stick," Garrett says. Making room for some little luxuries can help keep you focused on the bigger picture.

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With so many people taking stock of changed finances and a changed outlook on life, it's worth taking the time to reevaluate your money situation and your hopes for the future, experts say. A written plan can serve as a useful blueprint. More than half, 54%, of Schwab survey respondents who put their financial plan on paper feel "very confident" about reaching their goals, versus 18% without a paper plan.

"Creating a plan requires an understanding of your complete financial ecosystem," says Garrett. "It is important to know where you are before determining where to go and how to get there."

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