What Can Millionaires Teach Us About Financial Planning? (2024)

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.

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 100.2The 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.

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.

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.

What Can Millionaires Teach Us About Financial Planning? (2024)


What Can Millionaires Teach Us About Financial Planning? ›

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.

How do rich and wealthy people differ in their rich approach to investments and financial planning? ›

Rich people may focus more on spending and maintaining a certain lifestyle, while wealthy people may prioritize accumulating assets that produce income or appreciate in value.

How important is financial planning for living a good life? ›

Financial planning allows you to achieve your financial goals, be it buying a family home, saving for children's education, having a comfortable retirement, or going on a dream vacation. It also prepares you for unforeseen situations and emergencies like falling sick, losing your job, or having to renovate your house.

Why financial planning is important at all income levels? ›

A financial plan can help you to establish and plan for fundamental needs, such as managing life's risks (e.g., those involving health or disability), income and spending, and debt reduction. It can provide financial guidance so that you're prepared to meet your obligations and objectives.

Is financial planning for rich people? ›

By taking control of your finances and making smart financial decisions, you can achieve your financial aspirations, no matter your income level. In other words, financial planning is for everyone, not just those who are struggling.

Why do rich people have financial advisors? ›

High Net Worth Individuals (HNWIs)

HNWIs often have complex financial situations and require specialized financial advice and services. Advisors should work closely with HNWIs to assess their goals, risk tolerance, and time horizons.

What are the key differences between rich and wealthy people? ›

But while everyone in this group is rich, it does not mean they are wealthy. To be considered wealthy, your assets must be more substantial than your liabilities, with them generating an income large enough to cover your fixed expenses (such as rent or mortgage payments, car payments and insurance premiums).

What is the value of financial planning? ›

People who work with a financial planner report a better quality of life, enjoy more financial confidence and resilience and are more satisfied with their financial situation. Money can be a source of stress and worry, and the rising cost of living is the top financial concern for people around the world.

What is the main goal of personal financial planning? ›

The main goal of personal financial planning is to achieve a financial plan. The financial goal includes: 1. The creation of wealth: Wealth creation will be a significant financial goal for every individual.

What are the 5 key areas of financial planning? ›

In this blog, we explore the five key components of a financial plan and how they work together.
  • Investments. Investments are a vital part of a well-rounded financial plan. ...
  • Insurance. Protecting your assets—including yourself—is as important as growing your finances. ...
  • Retirement Strategy. ...
  • Trust and Estate Planning. ...
  • Taxes.
Feb 9, 2024

What is the most important part of financial planning? ›

Budget and cash flow planning

Your budget is really where the rubber meets the road, planning-wise. It can help you determine where your money is going each month and where you can cut back to meet your goals.

What are the four main points of importance of financial planning? ›

Managing income and expenses to achieve financial goals and ensure financial security. To manage existing investment to earn maximum return. It includes managing monthly expenses, tax saving, tax planning, retirement planning, etc. It includes making new investments, asset allocation, portfolio balancing, etc.

What is the most important step in financial planning? ›

Establish Clear Goals

In order to kickstart the financial planning process, the first crucial step is to establish crystal-clear goals. This entails identifying your financial objectives, be it saving for retirement, creating an emergency fund, or eliminating debt.

How do rich people manage finances? ›

Wealthy individuals put about 15% of their assets into fixed-income investments. These are stable investments, like bonds, that earn income over a set period of time. For example, some bonds, like Series I Savings Bonds, pay 4.3% right now and pay out the interest every six months.

How many millionaires use a financial advisor? ›

The wealthy also trust and work with financial advisors at a far greater rate. The study found that 70% of millionaires versus 37% of the general population work with a financial advisor.

Do millionaires use financial advisors? ›

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 is the difference between wealth and financial planning? ›

A key difference between financial planners and wealth managers is that wealth managers manage literal wealth, while financial planners manage the finances of everyday clients who want to get ahead.

What is the difference between financial and wealth planning? ›

While wealth managers concentrate on optimizing investment portfolios, financial planners consider broader factors such as budgeting, retirement planning, tax optimization, estate planning, insurance coverage, and even education funding for your children.

What is the difference between wealth management and wealth planning? ›

Financial planning deals with day to day aspects of planning your cash, while wealth management deals with preservation and increase of wealth. Here, cash is not the constraint. Assets like land, property, business corporate offices, high-end furniture, etc. are taken into consideration.

What are the differences between the rich and the poor with regard to money? ›

Rich people see money as an opportunity, poor people see it as something to be earned. Rich people are said to make money work for them. Instead of just working and relying on income, a rich person would take a proportion of their income and invest it. Compounded interest works in favour of the rich.

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