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This applies to 34% of wealthy millennials compared to only 20% of Generation X, or 4% of baby boomers.
More than half of wealthy Americans have cut back on their luxury purchases after the pandemic. Furthermore, most say they wait until items are tagged before purchasing them.
However, wealthy millennials — who have investable assets ranging from $250,000 to more than $1 million — go to great lengths to appear wealthy.
Wells Fargo found that 29% of affluent millennials admit that they sometimes buy items they can’t afford to impress others.
Meanwhile, 41% of affluent Millennials admit to financing their lifestyles with credit cards or loans, compared to just 28% of Generation X and 6% of Baby Boomers.
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More than half – 51% – of wealthy millennials say their efforts are successful, as people assume they are wealthier than they are.
But they are paying a price, with 40% reporting they took on more debt than they would have preferred.
Wealthy millennials have been impacted by inflation, rising costs of living and the resumption of federal student loan payments, if they still carry those debts, said Emily Irwin, managing director of counseling and planning at Wells Fargo.
“However, they want to have the mindset: ‘We work hard, therefore we are successful, and we can still do whatever we want to do,’” Irwin said.
Despite the wealthy lifestyles shown on social media, two-thirds of individuals surveyed are reluctant to talk about money, according to Irwin.
“It seems to be a real silent journey that people take,” Irwin said.
Women in particular are more reluctant to discuss financial topics, except for matters related to income.
Meanwhile, men are more reluctant to talk about their earnings, although they are willing to address most other financial topics, including investments, balance sheets and debt.
Silence about money can encourage delusions about how much money other people really have, according to Irwin.
No matter someone’s financial picture, it’s easy to draw conclusions from what they portray on social media, Irwin said.
“There’s this tension between appearance and appearance and being leveraged,” Irwin said.
She said that while people may be willing to portray a certain lifestyle – and the balance sheet needed to support it – it is important to keep in mind that this may or may not be true behind the scenes.
A lot of people’s behavior goes back to their financial stories – how have they evolved? How were they raised with money? How does this affect their spending and saving behaviors now?
Brad Klontz, a certified financial planner and expert in financial psychology and behavioral finance, points out that people who try to appear wealthy tend to come from poor families, and they also tend not to have a lot of money or net worth. Clontz is also a member of the CNBC FA Council.
“This is not representative of how most people get rich and how most wealthy people spend their money,” Klontz said.
Wealthy individuals won’t show you their wealth on Instagram or show you their brands and Gucci belts, he said. Instead, they are often enthusiastically frugal.
“The only way to increase your net worth is to not spend your money,” Klontz said.
Before making discretionary purchases, ask yourself some questions first, Irwin suggested.
First, do you have enough cash flow to support those expenses?
Second, do you have enough money saved for emergencies?
Additionally, do you pay yourself into a retirement plan, either through your employer or a self-directed IRA?
“These are the types of things you want to be able to recognize when you first put your oxygen mask on,” Irwin said.
“Only then can we really think: Is overspending appropriate, given the overall financial picture?” she said.