What does it take to build significant wealth? Time? Hard work? Commitment to a strategic financial plan? For our 2023 Planning & Progress Study, we interviewed Americans with at least $1 million in investable assets to learn more about the choices they’ve made that helped them build and preserve their wealth.
And while a million dollars certainly isn’t what it once was, obtaining a million-dollar net worth continues to be an elusive goal for most Americans. In fact, as recently as 2021 just 9.7 percent of American adults were millionaires.1
Whether you’re already a member of this exclusive group or aspire to be one day, you might be wondering the same thing we were: “What financial habits set millionaires apart from everybody else?” In our study, we set out to answer that question.
7 Financial Habits of High-Net-Worth People
While we all have our preconceived ideas about the characteristics and actions required to build this kind of wealth, our research reveals seven financial habits that American millionaires tend to employ. And while you are likely practicing some of these already, there is a good chance you’ll want to make a point of building some new habits, too.
1. Focus on the Big Picture
When it comes to money, wealthy Americans see beyond the challenges of today and plan for a brighter tomorrow. In fact, 84 percent say their financial plans are designed to help them navigate long-term risks like the ups and downs of the market. When compared to the rest of the population, only 52 percent could say the same.
of American millionaires have financial plans designed to mitigate long-term risks.
Key takeaway: As life expectancy continues to increase, millions of Americans will live long lives. In another recent study, finance experts recommend that financial plans be designed to last until age 100.2 The financial changes that are likely to occur over such a long life include recessions, periods of high inflation, higher taxes, rising health care costs, and more. And while no one has a crystal ball, by anticipating and planning for key financial risks, you can position yourself for long-term financial security and success.
2. Act but Don’t Overreact
Affluent people are not complacent about their finances. They know the value of a sound financial plan, and 77 percent describe themselves as disciplined or highly disciplined planners. These individuals have specific financial goals and act on the steps required to achieve them.
of American millionaires are disciplined or highly disciplined financial planners.
Key takeaway: Having a financial plan in place helps you assess where you are today, identifies goals for tomorrow, and lays out the necessary steps to get there. Together with an experienced financial advisor, you can build a comprehensive financial plan that does just that. Once it’s in place, by following it and using your advisor as a sounding board during times of change, you can help ensure that your actions are both in line with your plan and supportive of your long-term wealth-building objectives.
3. Be Open to Improvement
About half, or 47 percent, of high-net-worth Americans see opportunity for improvement in their own financial plans.
of American millionaires see opportunity for improvement in their own financial plans.
Key takeaway: Your financial plan should be treated as a living document. As you continue to build wealth, your needs and goals will change. As they do, it’s important to educate yourself on and employ new financial strategies to achieve them.
4. Don’t Take Chances
The wealthy don’t take chances when it comes to money. In fact, 91 percent of millionaires we surveyed say their financial plan incorporates the possibility of an unplanned financial or health emergency, while just 60 percent of the general population could say the same.
of American millionaires plan for unexpected financial or health emergencies.
Key takeaway: Having a backup plan is important. Two key components of that backup plan include an emergency fund and disability insurance. With somewhere between three and 12 months’ living expenses (depending on your personal situation), your emergency fund gives you the flexibility and financial security needed when facing financial uncertainty. And should that uncertainty involve a health emergency resulting in permanent disability, disability income insurance can help you protect your most valuable asset: your ability to earn an income.
5. Stay Optimistic About What You Can’t Control
Inflation. The economy. Social Security. None of these issues are in any one person’s control, and those with a high net worth tend to stay optimistic on these issues thanks to having well-thought-out financial plans that are designed to withstand key risks. According to our data, 84 percent of wealthy Americans have a financial plan in place compared to 52 percent of the general population.
of American millionaires have a financial plan.
Key takeaway: While you can’t control the future, a good financial plan helps you anticipate and plan for key risks. Getting yours in place can help you look to the future with confidence no matter what is going on economically or politically.
6. Stay Connected With Others
Wealthy people focus on strong relationships, with 87 percent saying they feel strong or very strong about their friendships.
of American millionaires feel strong or very strong about their friendships.
Key takeaway: While at the surface level staying connected with others may not seem like a financial habit, according to research from the Harvard Study of Adult Development, warm relationships, happiness, health, longevity and wealth are all interconnected, so it’s no coincidence that high-net-worth people are relationship focused. Our advice: Pay attention to and nurture your connections with others, as it’s a key component to long-term flourishing personally and financially.
7. Seek Professional Finance Advice
Of high-net-worth individuals, 70 percent work with a financial advisor. You can compare that to just 37 percent in the general population. What’s more, far and away, wealthy people consider financial advisors to be their most trusted source of financial advice—more than four times any other source.
of American millionaires work with a financial advisor.
Key takeaway: It’s no coincidence that most American millionaires use a financial advisor. With an experienced financial advisor on your side, you are more likely to take the strategic actions necessary to achieve your long-term goals.