Earning a six-figure income was once a major benchmark for people trying to improve their finances and become wealthy in the U.S. Today, though, only 23% of Americans believe that earning $100,000 or more annually makes someone wealthy, according to a recent LendingTree survey.
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So if earning six figures isn’t what Americans think makes you wealthy, what is?
Now, people are placing a greater emphasis on more personal, flexible financial goals, like eliminating debt and feeling financially secure.
Living Comfortably Without Financial Concerns
When someone says they want to be wealthy, they probably aren’t picturing bank accounts with specific balances or bars of gold. Instead, they’re most likely thinking about the problems that having plenty of money could solve for them. One of the biggest signs of wealth is simply not having to worry about money anymore.
That was the No. 1 answer Americans gave when asked what being wealthy meant to them: being able to live comfortably without financial concerns [1].
Most people aren’t in that position. More than 70% of Americans point to money as a significant source of stress in their lives [2]. Many have also had to cut their spending in categories like travel, home improvements and clothes to be able to stick to their budgets [3].
Wealth would mean not having to worry about having enough money to cover all of the essentials, and some extras that make life more comfortable.
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Feeling Financially Secure
Americans also responded that feeling financially secure is what it really means to be wealthy [1]. But how much money does it take to feel financially secure?
The answer naturally varies from person to person, depending on their expenses, financial goals and perspective. Around half of U.S. adults surveyed said earning $100,000 or more would be enough to make them feel financially secure [4]. So in that way, a $100,000 salary does mean being wealthy to many people.
However, many Americans disagreed with the idea that earning $100,000 annually would be enough to feel financially secure. Around 25% said they’d need to earn at least $150,000 per year, and another 16% said they would need to make at least $200,000 [4].
Ask yourself what feeling financially secure means to you. How much would you need to earn? Would any of your expenses or other circumstances need to change for you to reach that feeling of security? Once you have a concrete idea of what you’d need, you can better focus your efforts toward achieving financial security.
Being Debt-Free
Nearly half of the survey respondents viewed being debt-free as a sign of wealth, too [1]. After all, having no debt means you have more control over your money and your life. You don’t have to worry about paying back lenders or losing money on interest payments.
Most people aren’t in that position, though. The average American has more than $90,000 in debt across credit cards, car loans, mortgages, student loans, personal loans and other lines of credit [5].
Large loan balances can feel insurmountable, especially if you’re still accumulating interest. Eliminating your debt is possible, though. It may just take some time.
Start by listing all of your debts, including the total balances, minimum payments and interest rates for each one. Then, create a budget and try to find areas where you can cut back your spending. The more money you can free up to put toward your debt, the sooner you’ll eliminate it.
Pay the minimum balances on each account except one. This is the account you’re going to focus on — either the lowest balance or the debt with the highest interest rate. Pay as much as possible toward that account every month until you eliminate that particular debt. Then, choose another account to focus on and repeat this process until you’ve paid off every account and you’re entirely debt-free.
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This article originally appeared on GOBankingRates.com: 6 Figures Won’t Make You Wealthy — 3 Money Milestones That Matter More
