Key Points
-
A Reddit user with over a $1 million net worth doesn’t feel wealthy.
-
The issue is that a good amount of his money is tied up in illiquid assets.
-
While he may not feel rich now, he’s setting himself up for a secure future later.
-
Are you ahead, or behind on retirement? SmartAsset’s free tool can match you with a financial advisor in minutes to help you answer that today. Each advisor has been carefully vetted, and must act in your best interests. Don’t waste another minute; get started by clicking here here.(Sponsor)
Once upon a time, you were considered rich if you had a million-dollar net worth. Now, while being worth seven figures is still enviable, it doesn’t necessarily mean you’re living a life of luxury.
In fact, one Reddit user posted a thread recently complaining that while he has more than $1 million, he doesn’t actually feel rich since a good amount of the money doesn’t “count.” Here’s why that’s the case, along with some advice on what the poster can do to feel better about his financial situation.
You can have a $1 million net worth and not feel wealthy
If you’re wondering how it is possible to have a million-dollar net worth and not feel wealthy, the poster explains exactly why his money doesn’t make him feel rich. He said the funds are in his 401(k), his IRA, and individual stocks in a brokerage firm. He also said his house is paid off, and that he has an emergency fund in a bank account. All of this means he’s in reasonably good shape when it comes to his financial situation.
However, while he may be on track to a very secure retirement given the fact that he has a good amount of money saved already and has reduced his housing costs substantially through early loan payoff, the reality is that right now, he doesn’t have a lot of money to spend. In fact, if he is aggressively saving money and devoting a good portion of his income to it, he may be living on very little. It’s hard to feel wealthy if you’re devoting so much to savings that you have to watch your pennies.
This is why it is so important to play the long game when it comes to your money. If you can live like you are broke for as long as possible, or at least be reasonable in your spending and avoid large splurges, you can build real wealth that gives you financial independence and the freedom to live your life exactly as you want it later.
The sacrifices you make in the short term will set you up to make compound growth work for you, so instead of living like you are wealthy when you really aren’t yet, you can build true wealth that gives you peace of mind for the rest of your life.
Work with a financial advisor to design your financial goals
The fact that the Reddit poster here doesn’t feel rich, even though he’s building wealth, puts him at risk of making questionable financial choices. If he decides he’d rather start living that luxury lifestyle now, he could miss out on opportunities to invest that he regrets later.
The best way to make sure this doesn’t happen is to work with a financial professional to find a good balance. Based on his goals for when he wants to retire and what he wants that to look like, his advisor can help him determine exactly how much to invest now and what splurges he can enjoy to enhance his lifestyle in the future.
With that advice, the poster can both enjoy his earnings and feel a little more comfortable now, and can set himself on the path to become so wealthy later that money is no longer something he has to think about. That’s an enviable position many don’t achieve, but this Redditor is on his way if he gets the advice he needs to stay the course.
The post I Have Well over $1 Million But I Feel Poor Because Most of the Money Doesn’t Count. appeared first on 24/7 Wall St..
