5 Reasons You Don’t Feel Rich (Even If You Are)

Charles Schwab’s 2025 Modern Wealth Survey is here, and they found that Americans need, on average, a net worth of $2.3 million to feel wealthy. Eighty-nine percent of Americans do not consider themselves wealthy, according to Fidelity’s State of Wealth Mobility. And a CBS report from late 2024 stated that two-thirds of American millionaires—including some respondents with a net worth of over $10 million—don’t consider themselves wealthy.

Today, we’re going to cover five reasons why Americans feel so poor and some strategies to overcome each one.

1. Money Dysmorphia

Money dysmorphia is simply a disconnect between your financial reality and how you feel about it. Some who are financially stable constantly feel broke, while others who are drowning in debt somehow convince themselves everything is completely fine.

This mindset typically develops during tough financial times or when you don’t have a lot of margin early on. When you’ve spent months or even years worrying about making rent or losing your job, that survival mindset becomes your default setting. Even after you’re out of that season of life, your brain doesn’t automatically update or let go when your finances improve.

But there are some strategies you can use to start working your way out of it. Start by consistently tracking your net worth — The Money Guy Net Worth Tool makes this extremely easy. The key mental shift isn’t just collecting the data; it’s how you actually interpret it. Train yourself to focus on how far you’ve come rather than how far you think you need to go. This simple shift in perspective can transform your relationship with money. You’ll likely be surprised by your progress after a few years of disciplined saving and investing.

2. Your Net Worth Is Tied Up in Illiquid Assets

This disconnect can manifest in two common ways. You might be house rich, life poor, where you’ve purchased a home that looks impressive on paper but consumes too much of your income. Sure, you have a beautiful house, but the mortgage payments, property taxes, insurance premiums, and maintenance costs severely limit your day-to-day financial flexibility.

Alternatively, you might be retirement rich but life poor—diligently maximizing your 401(k) and IRA contributions while neglecting more accessible savings. Your retirement accounts show impressive balances that boost your net worth, but you lack liquidity for immediate needs or short-term financial surprises.

Think of cash as the essential buffer between you and life’s inevitable surprises—car repairs, job loss, or unexpected medical bills. Maintaining three to six months of living expenses in an easily accessible account doesn’t just protect you financially; it reinforces the psychological sense that you’re truly secure. This balance between liquid and illiquid assets is crucial for both financial security and feeling wealthy in your daily life.

3. Lifestyle Creep

This phenomenon explains why, according to a 2025 Lending Club study, a surprising 44% of Americans earning over $100,000 annually still live paycheck to paycheck. While rising living costs certainly contribute to this financial pressure, lifestyle creep plays a far more significant role than most realize.

Lifestyle creep occurs when your spending rises to match—or even exceed—your income increases. It’s the natural but dangerous tendency to upgrade your lifestyle with each pay raise or bonus. What starts as small indulgences—premium streaming subscriptions, a slightly nicer car, or more frequent restaurant meals—gradually transforms into your new normal.

Before you know it, your discretionary expenses have expanded to consume all available income, leaving little for wealth building despite your higher earnings. When lifestyle inflation becomes ingrained, even with significant income, you’re perpetually in a state of financial stretch—always chasing the next purchase or upgrade rather than enjoying the security your wealth should provide.

Overcoming lifestyle creep requires intentionality with your financial decisions. At The Money Guy Show, we recommend following what we call the 60/40 Rule: when you receive an income boost or pay raise, allocate 60% toward savings and investments while allowing 40% for lifestyle upgrades. This balanced approach enables you to enjoy the rewards of your hard work while still making substantial progress toward your financial goals.

4. The Social Media Trap

Today’s digital landscape constantly exposes us to carefully curated highlights of how others live their financial lives. These filtered glimpses create a distorted view of normal wealth. Despite solid income and investments, scrolling through posts of exotic vacations and luxury purchases can make you feel financially inadequate.

That impressive BMW you see on social media might come with crushing monthly payments, and those exotic vacations might be maxed-out credit cards struggling to get paid off. This isn’t a hypothetical problem—a 2025 report from Hartford Funds notes that increased social media consumption correlates with decreased financial satisfaction and increased unrealistic financial comparisons, regardless of actual wealth.

To escape this trap, audit your digital consumption and limit exposure to content that triggers financial inadequacy. Replace these sources with financial education that emphasizes personal progress—and subscribe to The Money Guy Show if you haven’t already.

Welcome to The Money Guy Show. I’m your host, Brian Preston. Have honest money conversations with trusted friends who share financial goals and values that align with your own.

5. Lack of a Clear Definition of “Rich”

Without a clear definition, wealth becomes an ever-moving target that continuously recedes as you approach it. Many folks fall into this trap, constantly pushing their “enough” number higher. Once you have $1 million, you want $2 million; at $2 million, you aim for $5 million.

This wealth identity crisis stems from confusing having money with feeling financially secure. Someone with $10 million but expensive tastes may experience more financial anxiety than someone with $2 million and modest needs. Without a personalized definition, you’re chasing a cultural standard of wealth that may not align with what truly brings happiness and fulfillment.

The solution is enough planning. Envision your ideal life holistically and attach tangible numbers to these visions. Calculate what your desired lifestyle actually costs, plus a security buffer. This number becomes your personalized “enough” figure. By defining wealth based on what truly matters to you rather than arbitrary figures or comparisons, you create a meaningful target that delivers genuine satisfaction when reached.