This concept was made popular in the The Number: What Do You Need for the Rest of Your Life, and What Will It Cost? by Lee Eisenberg, published back in 2006.
Some new research from Lloyds Bank has found that this number might not be as high as we originally thought.
In fact, those who feel wealth aren’t always earning a fortune.
The research found that people that feel wealthy on average earn £65,810 a year and have a household income of £86,170.
These average salaries are significantly higher than the average UK salary which stood at £34,576 in July 2016, but the research showed that there are more factors that contribute to a feeling of being wealthy than just income.
However, many people who feel wealthy have significant levels of equity in heir homes and own an investment property, which probably contributes towards this feeling of wealth.
The research also found that there is a correlation between income and the perception of wealth, as we might expect to see.
According to Sarah Deaves, Private Banking Director at Lloyds Bank:
“Feeling wealthy is about more than just the amount of pounds people have in their pocket to spend. We know that in particular homes, but also cars, investments and lifestyle also play a part.
“Those that feel wealthy today tend to be middle aged. They have perhaps benefited from better pensions, large house price inflation, no university fees and have lived through a number of years of a low inflation, low interest rate environment.
“Given the wide range of uncertainties faced today with, amongst other things, stretching affordability for housing, education and care in later life, taking financial advice can help people feel more in control of their options.
“Making a considered plan for monthly income and expenditure can help to improve people’s perception of their wealth and how they allocate their money, no matter their income level.”
The research also uncovered some interesting findings around property ownership and feeling wealthy.
The biggest monthly expense for many people in their mortgage payment.
For those who say they feel wealthy, more than three quarters own their property with no mortgage.
This compares to around a third nationally.
In addition, more than two in five respondents who felt wealthy own an investment property, compared to closer to one in ten for the national average.
Half of all those who feel wealthy have a detached house, this is more than twice the percentage for the average population.
Their average property value stands at £737,220, with an average of £606,670 of equity in the property as a result of modest outstanding mortgage debts.
Financial holdings also tend to be more common among those who feel wealthy.
47% of those that are wealthy hold stocks and shares compared to just 16% nationally.
However, there is a divergence of views amongst those that are wealthy about how they manage their investments.
Just under one in four get professional advice about their investments at least every three months, but a further quarter have never sought any financial advice.
Most people say they are either financially ‘managing’ (36%) or ‘comfortable’ (37%) and just 2% of the UK population feel that they are ‘wealthy’.
Those that do feel they’re wealthy are generally male (59%), 47 years old on average and significantly more likely than the national average to be in full time employment (59% vs 36%).
How much do you need to feel wealthy?