How Do You Measure Financial Success?

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Financial success means a lot of things to many, but it must be personal in order to be effective.

We all have different ideas of financial success. For some that might mean living in uber frugal fashion and investing like crazy so they can retire in their 30s. For others it might mean going the traditional route of working for most of their adult lives and retiring once they hit their mid 60s with a handsome 401(k) to rely on. There are countless variations of that of course, and really depends on your preference and situation.

Generally speaking, achieving financial success largely depends on the principals you espouse, how much you earn and a variety of other things.

That said, we’ve heard a lot of talk about the shrinking middle class since Mr. Obama delivered his State of the Union address a little over a month ago. I didn’t watch the whole thing, but much of what I heard and much of what the pundits honed in on was the supposed shrinking middle class. Laurie spoke about it a few weeks back so I won’t belabor the point.

However, I did read part of a study commissioned by Mr. Obama soon after he took office. The report identified six core beliefs or principals the middle class considers key to financial success. Yahoo Finance covered the report to a certain extent, but I’d like to give a more personal flavor to it.

Financial Success and the Middle Class


According to the report those that are likely to be considered ‘middle class’ earn between $50,800 and $122,800. The report was commissioned in 2010, so you’d want to account for inflation in and rise in wages but this would be fairly close. While it’s a pretty broad range, I can see how they’d argue that much of the middle class would fall within that range.

However, one quote stood out to me in the report – “Middle-class families are defined by their aspirations more than their income.” There is something behind that statement – I think part of it is that middle class families want something more. They want financial success, or at least their impression of it. What are those ideals or principals? They often include the following:

  • Owning a home
  • Owning a car
  • College education for their children
  • Good health
  • Secure retirement
  • Occasional family vacations

I look at that list and am not surprised much. Some of the things are on my and Mrs. Frugal Rules’ list for our family. But, there are also some things I wouldn’t include.

Take home ownership for example. We live in a society that has prized owning a home for years. Owning a home is a relatively good thing, but is it something we should all aspire to? I would argue in some cases it’s not and that’s okay. Going to college is also a relatively good thing, but is it something everyone must do? As a parent of three little ones I can only imagine what the cost of financing a college education on student loans will be in 10 or 15 years.

I don’t want to hone in on what a middle class family needs, or what they must make in order to have a good life as the Yahoo Finance piece covered that at length. However, when I compare where we want to go as a family I see some starkly different ways we measure financial success.

The Frugal Rules Path to Financial Success


While I like the above list, on one level, one thing screams to me – cookie cutter. There’s nothing necessarily wrong with that, but we want something different. We want to be able to look back on decisions made and know we took control of things so we could enjoy the lives we wanted.

We don’t want to be all consuming and producing/growing little. We want the exact opposite in fact, which brings us to our list of things needed for financial success.

#1 – Regularly increasing our net worth. I know this isn’t too terribly quantifiable, but you get the point – everything is done to give higher trajectory to our net worth. This involves maxing out all of our available retirement accounts, putting money into non-retirement brokerage accounts, growing our business, etc. This is all done with a long-term view of investing and not allowing emotions to get in the way. I know that last part is tricky for many, but know this…giving into fear when it comes to investing only results in you being your own worst enemy.

#2 – Avoiding debt at all costs. I debated on sharing this one as we still have mortgage debt. Yes, it’s debt and a big part of that is the fact that we I gave into the myth that you HAVE to own a home to be an adult. Yes, home ownership can be a good thing, but it’s not in every case. Anyway, my point here is to avoid consumer debt at all costs. Consumer debt will only hold you back in the near term and long-term and we don’t want to be enslaved by having to pay off debt to others. It’s just a losing equation.

#3 – Preparing our kids for the future. Notice I said nothing about college there. Going to college is a good thing. I did it myself and collected several degrees I rarely use along with a pile of debt. I wrote a post several years ago on whether or not a college degree is worth it and got some flack over it. I get it, we’re in a society that prizes a college education but that doesn’t mean it’s for everyone. We want to help our children wade through that decision and help them decide if they’d rather take up a trade, go to technical school or whatever. The point is we want them to be happy in life and find a calling that fits with their skillset, college or not. On top of that, and more importantly, we are committed to teaching them about money so they can deal with their finances confidently as they grow up into adults and move into the world.

#4 – Be relatively healthy. This is likely the closest one to the other list for us. We want to live healthy lives, because it impacts us financially as well. That includes avoiding cheap food and eating things that are real and whole – and teaching the little Frugal Rules’ to enjoy it as well. Beyond that, it includes being active so we can mitigate any risk of future health problems.

#5 – Truly vacating. You’ve likely heard or read reports about how we don’t vacation much here in the States. Apparently we prize working ourselves into the ground, but that’s just not for us and much of the reason why I love working for myself. This might seem like an odd thing to have on a list for financial success. I believe it fits though. Mrs. Frugal Rules and I work hard so we like to play hard. More importantly, we highly prize time together as a family and want our kids to see different parts of the country/world. There is so much out there in this great big world to learn from and we want them to be able to have those experiences. Of course, it takes money to do this, which is why we make it a priority in our budget. We actively save for vacations and churn credit cards extensively to make these kind of things possible.

Making Financial Success Personal


Going back to the aspirations quote, Yahoo Finance touched on how things are bleak for the middle class as many of the things on the identified list have not been up to snuff over the past few years. There is no denying that things have been tough financially for the better part of a decade.

This is why financial success must be personal. If you’re chasing down owning a house or pigeonholing a child into going to college you’re likely going to be as effective as a dog chasing its tail. That’s not the life I want for my family and I and spent years coming to the realization that it has to be made personal. While that won’t guarantee reaching financial success, there will be much more fight in you to reach a goal you’ve set for yourself as opposed to one that you believe is expected of you. Point being…live the life you want, not a cookie cutter version of it.


What would be on your list on things required for financial success? What’s one thing you’d take off the “average” list without question? How do you personalize financial success?

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John is the founder of Frugal Rules, a dad, husband and veteran of the financial services industry whose writing has been featured in Forbes, CNBC, Yahoo Finance and more.

Passionate about helping people learn from his mistakes, John shares financial tools and tips to help you enjoy the freedom that comes from living frugally. One of his favorite tools is Personal Capital , which he used to plan for retirement and keep track of his finances in less than 15 minutes each month.

Another one of John's passions is helping people save $80 per month by axing their expensive cable subscriptions and replacing them with more affordable ones, like Hulu with Live TV.


  • MyMoneyDesign says:

    I do like your version of financial success a lot better than Obama’s. Focusing on health, your children’s future, and increasing your own personal net worth has got to be priority.

  • Holly@ClubThrifty says:

    We measure success similarly. I would also add that our idea of success includes being able to live our lives the way we truly want. And of course, happiness is truly the ultimate goal.

    • John Schmoll says:

      Totally agreed Holly. If you’re not pursuing either of those then I’d argue that it’s much less likely to stick.

  • Jon @ Money Smart Guides says:

    I agree completely on the education part. College is a good thing, but it’s not for everyone. Society puts down people that don’t go to college, but there are many good paying jobs out there that don’t require a college education. Plus, how many people really know what they want to do for the rest of their lives at 18?

    I think it is best to take the time and reflect on what you value the most and live on those principles as opposed to a set of blanket ones.

    • John Schmoll says:

      That’s my thought exactly Jon. Very few know exactly what they want and it pays to look at the different options available.

  • Stefanie @ The Broke and Beautiful Life says:

    I’d never considered myself much of a financial success until recently, and now that I’m starting to feel it, this is how I’ll define it- having flexibility of income (and time thanks to how I earn my income) to afford freedom of choice.

  • Shannon @ Financially Blonde says:

    In my previous life, I would definitely equate financial success to “stuff” now I equate it more to a state of being. As long as you can financially afford to live the life you want to live without stress or worry, then I feel as though you have achieved financial success. For me and my hubby, we want to send our son to college and declare financial independence within the next 10 years.

    • John Schmoll says:

      I was right there with you Shannon, stuff definitely played a major role in how I viewed success. Now, that’s about the last thing I’m concerned about.

  • Tonya@Budget and the Beach says:

    Good health would be an important one for me. I don’t think home ownership needs to be on my list. I live in a high cost area obviously and even people I know making six figures still rent. And being a freelancer I would not want to be saddled with that pressure to have a mortgage. Financial success ultimately means being able to enjoy some things in the present, have enough for my future, and not be “thinking” too hard about what I can spend money on or feeling worried, as I do now. 🙂

    • John Schmoll says:

      That makes complete sense Tonya – those in high COL areas need to think twice about the mortgage vs. renting issue. If we were still in SoCal we’d likely very much still be renting.

  • Kim@Eyesonthedollar says:

    I would make it owning a home that is actually paid for. So many people keep trading up and still have a mortgage going into retirement. That’s not my idea of financial success. I would also want my child to become a productive member of society. Whether that requires a college degree remains to be seen. I also think of financial success like you and so many others in the PF community with being able to live on your own terms without the burden of debt and monthly payments.

    • John Schmoll says:

      That’s an excellent point Kim! We’ve seen that as well and the last thing we would want is to carry a mortgage into retirement.

  • Mark@BareBudgetGuy says:

    This has been on my mind a lot lately. It has really helped me to realize that success is personal and should only be defined by the individual. I need to step it up on the family vacations!

  • Mike Collins says:

    To me financial success means freedom and piece of mind. It’s the ability to do things you enjoy and spend time with the ones you love without always worrying about whether or not you can afford it.

  • Kayla @ Everything Finance says:

    I’m glad everyone has different views on financial success and independence, after all it would be boring if everyone strived for the same things all the time. 🙂 Personally, I want to get out of debt (everything but my mortgage) in the next year or two and then I want to save, save, save and invest. I don’t want to retire fully, but I would like to work for myself so I can make my own schedule, etc. That’s my dream for my finances.

  • DC @ Young Adult Money says:

    I would say financial success to me would be to have income that allows for significant saving/investing on top of our regular monthly expenditures. We are working towards that goal in both of our careers and side income pursuits.

    • John Schmoll says:

      We’re of the same mindset DC, especially when it comes to adding different streams to cover different things.

  • Heather Stephens says:

    Financial success, for me and my family, is very similar to what you’ve shared here. I would add to your list, the ability to give more, both financially supporting a charity we believe in and having the time freedom to volunteer.

    • John Schmoll says:

      Hey Heather! That’s an excellent addition, we’d love to have the ability to do that more as well. We want to involve the kids in that so they have a similar attitude to give as they grow.

  • Shannon @ The Heavy Purse says:

    I couldn’t agree more that financial success is very personal and many people have fallen into the trap of making it cookie cookie and playing follow the leader versus truly figuring out what financial success looks like personally. For us, it’s a strong focus on financial security and enjoying life now and in the future.

  • Abigail @ipickuppennies says:

    This is a hard one, since I’m not sure I’ll ever feel financially safe. But I guess I would feel successful if we:

    *Were contributing the maximum amount to the IRAs (including the SEP)
    *Had some outside investments and/or a rental property
    *Were done with our mortgage or at least on track to pay it off in 7 or 8 years.
    *Had $15,000+ in savings
    *Could afford to take at least one really nice vacation a year.

    I’m sure we’ll get there eventually, but it’s going to take some time.

    • John Schmoll says:

      That’s a solid list Abigail! I love the adding in of real estate investments as it provides another stream of income. That’s something we want to do as well, but with our business and the kids it’ll take some time.

  • Kalie says:

    I’d add generosity. Giving money (and time) to help others is an important value to us and I think anyone with something to spare would enrich their own and others lives by sharing.

    • John Schmoll says:

      Heather sort of said the same thing Kalie and think it’s a great point to add. Being able to help others out of what you have is definitely not something to be overlooked.

  • MiningFrugal says:

    It’s already been mentioned above, but to me, financial success is all about being able to live your life the way you want to.

    If you’re the type of person that always wants more, you’ll probably never reach it and will likely be a little dissatisfied with life.

    If you’re typically a content person and can afford to live the life you want to, then congratulations. You’ve made it.

    • John Schmoll says:

      Excellent point MiningFrugal, I could not agree more! Contentment is a hugely overlooked in my opinion, thus another reason why personalization of what you’re striving for being so important.

  • Adam @ says:

    I’ve had years where I didn’t manage to take even 2 weeks of vacation. It’s definitely a priority to at least take the minimal amount we get doled out.

    • John Schmoll says:

      I’ve had that as well Adam – much of why I work for myself now. I may work much more today, but I also take more vacations.

  • Brian @ Luke1428 says:

    My definition of financial success is having the resources to a) meet your immediate needs, b) provide for your future and c) enjoy life to its fullest in however you see fit. If you can generate the income to fund those categories then I think you’ve been successful enough.

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