What Can Millionaires Teach Us About Financial Planning?
What does it take to build significant wealth? Time? Hard work? Commitment to a strategic financial plan? Getting to a million-dollar net worth is an elusive goal for most of us, but there is hope for aspiring millionaires.
“For most Americans, feeling like a million bucks is less about feeling rich and more about feeling clear and confident about the future,” says John Roberts, chief field officer at Northwestern Mutual. “But for many millionaires, money alone doesn’t create clarity—financial plans do.”
For our 2024 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. Here’s what we discovered about the financial habits that set millionaires apart.
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7 financial habits of high-net-worth people
You might think becoming a millionaire is all about getting that executive job or launching a wildly successful business. But the reality is that many of the financial habits of millionaires are things all of us can replicate in our own lives. And while you may be practicing some of these already, there’s probably an opportunity to up your game—after all, even millionaires can improve their money habits.
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.
of American millionaires have financial plans designed to mitigate long-term risks.
Key takeaway: It’s easy to get caught up in the here and now. After all, life is happening today. A financial plan can help you step back and to balance your needs today with what you want in the future. Your financial advisor will ask deep questions that often uncover blind spots and opportunities for your money. Knowing that you have a plan that addresses these is key to having the confidence that you’re prepared to navigate long-term risks. And you don’t have to have a million dollars to have such a plan.
2. Act but don’t overreact
Affluent people are not complacent about their finances. They know the value of a sound financial plan and describe themselves as disciplined planners. These individuals have specific financial goals and act on the steps required to achieve them.
of American millionaires consider themselves to disciplined financial planners.
of the general public feel the same.
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. Working with your Northwestern Mutual financial advisor, you can build a comprehensive financial plan that does just that. Then, by following it and using your advisor as a sounding board during times of change, you can help ensure that your actions align with your plan and support your long-term goals.
3. Create a plan for retirement
Wealthy Americans don’t just save for retirement—they know how much they need to save.
of American millionaires know how much money they will need to retire comfortably.
of the general public know how much they will need.
Key takeaway: Good financial planning isn’t just about saving for retirement. It’s about knowing how much you need to save. And it’s OK if you don’t know exactly what you need when you’re in your 20s and 30s (when most people start saving for retirement). But you can think a bit now about how you envision your lifestyle in retirement. Are you the type of person who likes to stay home with a great book? Or do you want to explore every inch of the planet? Do you want to live in a mansion that can comfortably hold all the grandkids? Or will you downsize to a condo? Answering these questions can help you put a rough number on your retirement. As you go through life, you’ll be able to refine your number. But knowing it helps you know how much savings you need to target.
4. Prioritize your spending
This tip goes hand-in-hand with No. 3. Once you know what you’ll need for retirement (and other future goals), you’ll know what you need to save and what you’ll have to spend today.
of American millionaires know exactly how much they can spend now vs. what they need to save for later.
Key takeaway: It can be easy to spend what you have today and then attempt to save whatever is left over. But this approach tends to result in neglecting your needs for the future. You don’t have to be a millionaire to save for the future. In fact, a lot of millionaires likely got there by saving diligently. The takeaway here is to prioritize saving for the future based on what you need. When you have a financial plan that helps you define what you need for the future (and how much to regularly save to get there) you’ll know exactly what you need to save and what you have to spend today.
5. Control what you can control
Inflation, the markets, the economy and Social Security: These all impact our money, but are outside our control. But a good financial plan helps you prepare for these unknowns with tools that you can control. Perhaps that’s why so many millionaires have a financial plan.
of American millionaires have a financial plan.
Key takeaway: Consider a financial plan. People often think they don’t have enough money or that they have too much debt to get one. But waiting until your finances are in good shape would be a bit like waiting until you get yourself to the pinnacle of health to go see the doctor. Having a plan may be what gets you to millionaire status (it’s not the other way around).
6. Plan for the people most important to you
It may not be surprising that the research shows American millionaires are more focused on creating intergenerational wealth than the general population: 71 percent of them have a will compared to just 38 percent of the general public. But our study also shows that when it comes to discussing their inheritance plans with their families, the numbers aren’t quite as far apart: 67 percent of American millionaires have had conversations with their families about their inheritance plans as compared to 55 percent of the general public.
of American millionaires have had conversations with their families about their inheritance plans.
of the general public have had these talks.
Key takeaway: Whether you plan to or not, everyone will leave some type of legacy—so you may as well be intentional about it. Even if you don’t plan to leave an inheritance, everyone can benefit from having an estate plan to make sure your wishes for yourself, your family and, yes, your assets are carried out in the event of your illness or death.
7. Seek professional advice
Of high-net-worth individuals, 69 percent work with a financial advisor. Compare that to just 33 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.
“When people have a comprehensive plan that’s custom-built for their life, and an advisor who helps them to see their opportunities and blind spots, feelings of anxiety fall and feelings of security rise.” Roberts says. “It’s about having a plan to enjoy today without sacrificing tomorrow. These feelings are not reserved for only wealthy Americans. It’s accessible to everyone.”
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