Americans are growing more likely to associate being financially comfortable with a defined net worth threshold. They want to feel as though they had $839,000 tucked away. Personal finance experts warn that this view is often skewed. Financial advisor Joy Slabaugh believes that financial comfort extends past having just enough money to make it. It means having good emotional health and being able to manage all the various parts of personal finance.
According to recent surveys, members of Generation Z are comfortable with a net worth of $329,000 on average. This figure is much lower than what a typical American would like to see. This gap reveals the differing ways that demographics identify ideas of what financial security and wealth-building look like. Slabaugh’s clients frequently refer to the wealth they’re building as a feeling of security. This security goes beyond simply saving and investing – it’s a multi-faceted component.
Financial comfort goes beyond a dollar amount to what’s in their bank account. Slabaugh encourages the need for sufficient wiggle room. This newfound financial stability helps people pay down debt, build emergency savings, and invest for their future, improving their overall sense of well-being in the process. She highlights the importance of examining the money coming into and going out of everyday life. Rather than getting hung up on one metric like net worth, she suggests expanding your view.
“These questions are often more revealing — and more actionable — than a net worth target ever could be.” – Joy Slabaugh
Slabaugh goes on to detail how net worth can act as a “snapshot” of your current financial situation at any given time. This frame opens someone up to the idea that two people with the same net worth could be living two very different lives in financial terms. Wealth locked in retirement accounts doesn’t provide any direct cash flow. This makes it more difficult to achieve a sense of financial security.
Emotional well-being is strongly associated with feeling financially secure. Slabaugh is adamant that most of his clients miss this vital link. She says tracking net worth as a goal without understanding values or lifestyle aspirations won’t work.
“Tracking net worth without tracking values or lifestyle intentions is like watching your pulse without knowing if your heart is healthy.” – Joy Slabaugh
The value of liquidity is perhaps even greater in conversations around financial health. Being cash rich Liquid cash gives you immediate access to funds which promotes an individual’s long-term liquidity and overall health by helping them plan for expenses and emergencies. On the flip side, money locked up in illiquid investments can severely constrain your financial flexibility. This illustrates the need for a more holistic approach to managing wealth.
People who take concrete steps to meet their goals are more likely to report being financially comfortable. This notion is indicative of Slabaugh’s deep faith. He believes that knowing your values and intentions can lead to a richer financial experience.
“In nearly every case, the comfort isn’t just financial — it’s emotional.” – Joy Slabaugh
Her mission with clients is to help them reassess how they spend their money and make financial decisions that actually support their goals instead of undermining them. For example, someone might realize they are spending excessively on streaming services as an escape from feeling stuck in their current life situation. Redirecting some or all of those funds into a vacation savings account could bring savers serious financial returns and emotional returns, too.
Ultimately, Slabaugh’s observations turn the conventional understanding of net worth on its head. Use a more practical definition. She pushes for a more holistic understanding of financial health, one that prioritizes emotional well-being in addition to money goals.