We all want to do well financially, and that's why many of us are willing to sacrifice our personal lives to keep plugging away at our jobs. But when it comes to achieving financial success, we clearly have our priorities misaligned.
Discover recently conducted a study to gauge how Americans define success, and according to its results, these are the three things we associate with that concept:
- Taking nice vacations
- Buying expensive electronics
- Eating at fine dining establishments
Of course, these are nice little treats that we all deserve once in a while. But what's disturbing about this list is that we seem to be missing one key component of success: financial security.
Most Americans lack financial stability
It's one thing to dream of luxuries and hope to one day get close to affording them. But the fact that so many people regard these luxuries as a measure of success speaks to our collectively skewed perspective.
Rather than fixate so much on luxuries, we should instead be focusing our efforts on attaining something even more important: financial security. Because most Americans aren't there yet. Not even close. A whopping 57%, in fact, have less than $1,000 in the bank, and 39% have no savings at all. And let's not forget that the majority of Americans are behind on retirement savings as well.
Not only do most adults lack the savings to be financially secure, but they're clearly not shy about borrowing money. Consumer debt has reached an all-time high of $1.0217 trillion, with the average household carrying a credit card balance totaling $16,000. All of this borrowing, in fact, has resulted in another very sad statistic: Over 16 million U.S. households have a negative net worth, meaning the sum of their debts exceeds their total assets. And while student loans are partially at fault, credit card and mortgage debt are key players as well.
Of course, we can't just snap our fingers and make our savings and debt crisis go away. But what we can do, as individuals, is start rethinking what it means to be financially successful, and take steps to work toward that sense of stability we ought to crave.
Getting our priorities straight
If you're the type who considers fancy restaurants and vacations the definition of success, here's a newsflash: Your photos and memories of those fabulous outings won't make one ounce of a difference if you encounter a financial emergency and need a way out of that jam. The only thing that will help if you come to suddenly need money is a healthy savings account -- one with at least three months' worth of living expenses, and ideally, a lot more.
Fancy electronics won't help pay the bills either, unless you're willing to sell them off to scrounge up cash when you need it. And even if you are open to that possibility, that's really no way to live.
So here's a better way to exist: Live below your means consistently, establish a financial safety net, and aim to continue saving not just for the present, but for the future. In fact, your goal should be to set aside 15% of your income for retirement. You may need to work your way up to that threshold, but if you commit to a more frugal lifestyle, you'll get there over time.
Now this isn't to say that you must live a life devoid of luxuries. If you can afford the occasional treat, so be it. But your real goal should be to go to sleep at night knowing that if you were to lose your job or fall ill the very next day, you'd be covered. That's how you should define financial success, and the sooner you realize that, the more content you're likely to be with the life you've created for yourself.
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