You have a great career and a solid and growing investment portfolio. You have a spacious home and maybe even a cottage. By most measures, you’d be called affluent. So, why do you still worry about money?
You’re not alone. Many high net worth people think of themselves as having less than they do. According to a U.S.-based study, when asked to assign a dollar amount to being wealthy, 60 per cent of investors said it takes $5 million. Nearly 70 per cent of investors with one million in investible assets didn’t consider themselves wealthy, although that’s a healthy nest egg by most measures. Another study found that many millionaires have an ever-present fear of losing it all.
One of the reasons why higher net worth individuals worry about money is that they spend a large chunk of it on a myriad of expenses. “Millionaires often carry much higher debt than the average person – a large mortgage, payments for toys like big boats and summer residences – so they constantly need more money to sustain their lifestyle,” says Aurele Courcelles, assistant vice-president of tax and estate planning for Investors Group. “That’s stressful. And so is the pressure to keep up with their peers; to maintain the image they’ve built.”
Meanwhile, the suddenly affluent, especially ones who receive money from a previous generation, worry about frittering their newfound wealth away. “Many Boomer inheritors become instantly wealthy and, if they’re not prepared, they worry about how they’ll sustain those assets,” says Courcelles.
Fortunately, you don’t have to worry all your life. There are steps you can take to better appreciate your financial status, says Courcelles. The first one is to create or update a financial plan. Having a detailed plan that includes looking at your entire portfolio, from investments and real estate to a business you might own, will give you a better idea of how much you have. Creating a budget is key, too, even for wealthier Canadians.
Securing sufficient insurance, such as life, disability, critical illness and long-term care, can also help remove some financial uncertainty, says Courcelles.
This kind of planning may not radically change your already healthy financial landscape, but seeing the numbers written down on paper may make you feel more comfortable.
The planning process might also reveal some portfolio pitfalls. Perhaps an investment property is costing more than it earns or you realize you’re spending more on travel than you think. Adjust and feel better that you’re not spending more than you need to.
So, to feel wealthy, to be wealthy and to stop worrying about not being wealthy, take the right financial planning steps – starting with a call to your professional adviser.
This column, written and published by Investors Group Financial Services Inc. and Investors Group Securities Inc., presents general information only and is not a solicitation to buy or sell any investments. Contact your own adviser for specific advice about your circumstances.