Amount required to feel affluent in various regions of Britain, plus advice from experts for accruing over £1 million in savings
In a recent survey, it was revealed that the average British individual believes they need £3.1 million to consider themselves wealthy [1]. This figure varies significantly across different age groups and geographical locations within the UK.
For instance, those aged between 18 and 27, often referred to as Generation Z, believe an average of £3 million is necessary to feel wealthy. This optimism is also shared by Millennials (ages 28-43), with over half (52%) of this group believing they will become wealthy one day [1]. In contrast, the oldest age group, those 79 and older, believe they need the least, around £1.9 million, to feel wealthy.
The geographical location also plays a crucial role in shaping one's perception of wealth. Londoners, known for their high living costs, estimate they need an average of £5.9 million to feel wealthy, while residents in Scotland consider £1.7 million sufficient [1]. This variation can be attributed to differing financial expectations and economic realities across the UK.
When it comes to savings, over 40 years of saving £750 per month could potentially grow into a £1 million pot, given the best savings rates currently pay around 4.5% [2]. However, if one aims to build a £3 million nest egg, investing £1,500 per month over the same period, considering an average return of 4.8% above inflation and investment charges of 0.8%, could be a possibility [3].
It's important to note that these figures are subjective perceptions rather than actual wealth or savings levels. Factors such as local housing markets and personal financial goals can significantly influence these perceptions [1]. Furthermore, the current economic climate, with its high tax burden, could impact one's perception of wealth, as net income and net wealth are crucial factors in enjoying certain luxuries and maintaining a comfortable lifestyle [4].
| Age Group | Amount Needed to Feel Wealthy | Notes | |----------------|------------------------------|--------------------------------------| | 18-27 (Gen Z) | ~£3 million (average belief) | 52% think they will get wealthy | | 28-43 | £4,165,000 | Possibly younger families/first buyers| | 79+ | £1,942,000 | Oldest group needs the least amount | | Londoners | ~£6 million | Highest amount needed geographically | | Scots | £1.7 million | Lower threshold geographically |
[1] AJ Bell Survey, 2022 [2] Based on current best savings rates of 4.5% [3] Assuming an average return of 4.8% above inflation and investment charges of 0.8% [4] Impact of tax burden on perception of wealth not accounted for in these calculations
- To match the average British individual's perception of wealth (£3.1 million), a strategic plan for personal finance might include a combination of savings, investing, and perhaps insurance, such as setting aside monthly savings, considering a pension plan, and possibly buying property.
- For those aged between 18 and 27 (Generation Z), the goal of accumulating savings and investments to feel wealthy could mean setting aside a considerable amount each month, such as £1,500, with a long-term view of achieving an average return of 4.8% above inflation and investing in diverse assets.
- Conversely, for the oldest age group (79 and older), the lower target amount (£1.9 million) may be achievable through lower-risk investments, such as pensions, savings, and perhaps property, with a more conservative approach to capital growth.
- Geographical location significantly influences one's perception of wealth, as Londoners, due to high living costs, might be more inclined to prioritize higher investments, insurance policies, and savings compared to residents in Scotland, who may find a lower threshold more realistic due to less demanding economic realities.
