Five Financial Planning Secrets of Millionaires

A business man whispers a secret into another businessman's ear.

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Millionaire. It’s a word that is a source of envy for many — for good reasons that go beyond the obvious financial advantages. According to Northwestern Mutual’s 2024 Planning & Progress Study, 87% of American millionaires say they have good clarity on how much they should save for tomorrow and spend today, compared with just 66% of the general population. They also feel much more prepared: 87% of millionaires expect to be financially prepared for retirement when the time comes, more than 30 percentage points higher than the average American.

While being “very rich” remains elusive for most people, the wealthy practice five financial habits to build and preserve their wealth that everyone can use to make inroads toward greater financial security.

1. Focus on the big picture

When it comes to wealth, millionaires look beyond today’s challenges and plan for a brighter tomorrow. Eighty-four percent say their financial plans are designed to mitigate long-term risks, like the ups and downs of the market — whereas only 52% of the general population says the same.

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As life expectancies continue to rise, millions of Americans will live longer lives — so most financial experts agree that financial plans should be designed to last accordingly. Many economic changes will likely occur over a long lifetime, including recessions, periods of high inflation, higher taxes and rising health care costs. By anticipating and planning for key financial risks — and the big picture — people can position themselves for long-term financial security.

2. Act, but don’t overreact

Despite having money, wealthy people aren’t complacent about their finances. They know the value of a sound financial plan, and 78% describe themselves as disciplined or highly disciplined planners — but they have specific financial goals and act on the steps required to achieve them.

A financial plan can help people assess where they are today, identify goals for tomorrow, and take the necessary steps to achieve them. Along with an experienced financial adviser, people can build a comprehensive financial plan that does just that. By following it and using their adviser for advice, they can ensure they stay on plan to achieve their long-term wealth-building objectives.

3. Don’t take chances

Millionaires don’t take chances when it comes to their money — and their financial advisers help ensure their financial plans address situations that could expose them to risk. Eighty-nine percent of the wealthy have an emergency fund, compared with 60% of the general population who say the same. In addition, 79% of wealthy people have a plan to address health care costs — vs only 49% of the general population. And 68% of wealthy people have long-term care built into their financial plans; only 40% of the general population do.

A comprehensive financial plan is vital and should include an emergency fund, health care costs and long-term care. A plan should build in a savings amount of somewhere between three- and 12-months living expenses (depending on a person’s situation) to give the flexibility and financial security needed if facing financial uncertainty. If a health emergency results in permanent disability, disability income insurance can help protect people’s most valuable asset: their ability to earn an income.

4. Stay optimistic about what can't be controlled

Inflation, the economy and Social Security. Wealthy Americans tend to stay optimistic on these issues because of their well-thought-out financial plans, which can withstand key risks. Eighty-four percent of millionaires have a financial plan in place, compared with 52% of the general population. Even if people can’t control the future, a good financial plan can help them anticipate and look to the future with confidence, no matter what is going on economically or politically.

5. Seek professional finance advice

Sixty-nine percent of millionaires work with a financial adviser, compared with just 33% of the general population — and wealthy people consider financial advisers to be their most trusted source of financial advice — more than four times any other source, including a spouse or friend. With an experienced financial adviser by their side, people are more likely to take the strategic actions necessary to achieve their long-term goals.

According to Northwestern Mutual’s 2024 Planning & Progress Study, only 1 in 3 millionaires feel “wealthy.” For most, they say “feeling like a million bucks” is less about believing they’re rich and more about exuding confidence and clarity about the future.

Money alone doesn’t create clarity — financial habits and a solid financial plan do. When people have a comprehensive plan that’s custom-built for their life and an adviser who helps them see their opportunities and blind spots, feelings of anxiety fall and feelings of security rise — as they create wealth and protect what they’ve already built.

Disclaimer

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

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Kevin has been a Wealth Management Advisor for 35 years and was recognized as a Forbes 2024 Best-In-State Wealth Advisor. Kevin holds multiple professional designations, including the CERTIFIED FINANCIAL PLANNER™ Designation (CFP®) and Chartered Life Underwriter® (CLU®). Additionally, he has Series 7, Series 63, Series 66, Series 26 securities licenses, and Life, Accident, Health and Long-Term Care licenses.