59% of Americans say this is the top indicator of success—it’s not wealth

Platinum Stock | Moment | Getty Images

When Americans measure success, they typically don’t consider their net worth or account balances.

According to one survey, about 59% of Americans surveyed said that happiness—specifically, the ability to spend money on things that make them happy—is the most important benchmark for success. new report Provided by financial services company Empower. Respondents were asked to select the three types of success they valued most.

Meanwhile, 35% of respondents reported having free time to pursue their interests. Physical health was also mentioned by the same interviewees.

More from the FA Handbook:

Here are other stories impacting financial advisor businesses.

Rebecca Rickert, director of communications at Empower, said, “Few people think of wealth itself as the best benchmark.”

The report found that only 27% of people believe wealth is the highest measure of success.

Empower surveyed 2,203 U.S. adults in September.

“You have to strike a balance”

“In terms of what money can buy, Americans equate success with happiness,” Richter said.

This is not surprising, as many people live paycheck to paycheck – meaning current expenses take up the majority of their income, without much savings.

In the third quarter of this year, nearly half of survey respondents agreed that “I live in paycheck to paycheck,” according to a recent report By Bank of America.

Analysis of internal bank data found that 26% of households live paycheck to paycheck. This includes 35% of households with an annual income of less than $50,000 and 20% with an annual income of more than $150,000.

Other factors, including rising inflation and interest rates, make it harder for people to make ends meet. The Empower report found that about 35% of Americans surveyed cited the economy as the biggest obstacle to success, followed by income instability (30%).

Richter said these challenges are essentially “forces outside of your control.”

Why Americans can't stop living paycheck to paycheck

But in some ways, “people’s secret to success is themselves,” she said.

Creating a financial plan can help you save for long-term goals and make room in your budget for near-term needs.

“You have to strike a balance,” says Clifford Cornell, a certified financial planner and associate financial advisor at Bone Fide Wealth in New York City.

“It’s great to save money for retirement,” which is a top priority in financial planning, he said. “But at the same time, we need to live in today. Tomorrow is not a given.”

Cornell said happy shopping can be as small as going to a coffee shop once in a while instead of making coffee at home.

“For some people, it’s almost medicinal,” he said. “They really enjoyed the whole experience.”

How to find room for happiness on a budget

Oftentimes, buying items and experiences that make you happy comes down to making the most of your cash flow, experts say.

Some people recommend The 50-30-20 rule, a budgeting framework that allocates 50% of your income to necessities like housing, food, and utilities, 30% to “needs,” or discretionary spending, and the remaining 20% to savings and investments.

This structure can be a good starting point, but can be difficult to follow, especially given the high costs of things like housing and childcare. For example, data from the Joint Center for Housing Studies at Harvard University shows that by 2022, half of renters in the United States will face “cost burdens,” meaning they will spend more than 30% of their income on rent and utility bills.

According to Cornell University, if a young person is starting their career right out of college, saving 20% of their income may not be feasible.

“Maybe we’re really straining the dollar to save 5% or 10%,” he said.

“I’m not a big fan of the 50-30-20 rule, and almost no one follows it,” agrees Shaun Williams, a private wealth advisor and partner at Paragon Capital Management in Denver, which ranks No. 1 on CNBC’s 2024 Top 100 Financial Advisors list. 38 bits.

Instead, find the ratio that works best for you and your current financial situation.

Another way to find room for happy spending in your budget is to take a cue from “cash stuffing” and divide your spending money into different envelopes. Decide how much you plan to spend on a specific activity within a specific time frame, whether it’s months or years, and set up a savings account toward that goal, Williams says.

For long-term planning, Williams says, try to think about the lifestyle you want and figure out what needs, wants and dreams might cost.