The concept of wealth is constantly evolving — and in the Instagram age, social media makes it all too easy to keep score in the bid to keep up with the Joneses.
A study conducted by Charles Schwab found that Americans believe having a net worth of $2.2 million is the benchmark for being considered wealthy.
However, the study also found that few consumers have a financial plan in place to reach that $2.2 million threshold.
In an interview with Karen Webster, Sezzle CEO Charlie Youakim went beyond the dollars and observed that “wealth is like you have time on your side. You’re deciding what to do with your life, what to do with your funds.”
Credit, including buy now, pay later (BNPL), can be a tool leveraged to help consumers manage their spending and get on the path to that $2.2 million goal, he told Webster.
BNPL has proven especially useful to younger generations, who tend to make less money than their elders and thus are more disadvantaged on the credit spectrum.
Youakim said, “the Gen Z population actually saw that keeping up with the Joneses is about, ‘as long as I’m doing as well as my friends, I feel wealthy.’”
This mindset is shared by two-thirds of Generation Z denizens because so many younger consumers live with their parents, so their expenses are lower, said Youakim. Along with the recognition that experiences and well-being matter at least (and likely more) than assets, only a third of Americans have a dedicated financial plan in place.
He also added, “that’s where credit really helps quite a bit — where a younger coworker for that one moment may want to splurge a little bit or stretch a little bit, and that’s where credit can help them with that positive feeling.”
BNPL, he said, can help users responsibly boost their purchasing power. The comments dovetail with PYMNTS and Sezzle research, which found earlier this year that a significant percentage of consumers use BNPL as a means to buy goods and services without overspending.
He cautioned that financial education should be a priority in families, within schools and across society at large, giving individuals the knowledge they need to avoid taking on too much debt and to manage their money with long-term goals in mind.
Financial education can go a long way toward keeping consumers and households from boosting their expenses in lockstep with their rising salaries as careers take shape and progress, he said.
Over the long term, he said, “you’ve got to put aside something for your nest egg — and put funds aside in your 401(k).”
Looking ahead, said Youakim, COVID and the pivot toward working from home have irrevocably changed consumers’ perception of wealth.
“Spending time with your loved ones has become much, much more important,” he said. “People feel better about things … and they don’t want to come back to the office.”
“That’s what living the good life feels like,” he told Webster. “When your life feels in control … and with $2.2 million, if you’re good with your budgeting, it can take you all the way through to retirement.”
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