Inside the Wealthy's Playbook: How the Affluent are Mastering Their Money with Financial Gymnastics

Mastercard study reveals the affluent are optimizing their wallets to live well and leave a legacy

SINGAPORE, Oct. 9, 2024 /PRNewswire/ -- Mastercard today revealed that 73% of affluent consumers like to closely manage their money, with 48% even using "financial gymnastics" to maximize rewards. These consumers, who are in the top 10% of household incomes domestically, juggle various payment methods, plan their spending carefully, and rely on diverse information sources like word of mouth and proactive research. At the same time, they deftly manage multiple payment options, such as credit, debit, and prepaid cards, or alternative payment methods, strategizing their use for different transactions, like credit for travel or debit for daily necessities. By optimizing their wallets, they aim to capitalize on incentives, live comfortably, and save to leave a legacy.

Bending over backwards to maximize returns

Mastercard's study, which surveyed 29,536 consumers in 23 markets globally^[1] (including the affluent in Australia, Hong Kong SAR and India), found that affluent consumers look for many ways to achieve the perfect wallet. Carefully considered payment decisions help them to make the smartest choice for every transaction, earning them points, rewards, and discounts. Their high level of engagement with payment choices extends to how the affluent seek to benefit from their financial institutions, with 69% worldwide trusting that they can take advantage of opportunities offered by their financial services providers. Such perks include rebates on purchases or discounted rates on dining and entertainment.

The study also found that affluent consumers take a more intentional approach to their finances to maintain their comfort level. Their payment choices are led by convenience, but not at the expense of safety. Payment methods that are widely accepted, dependable, portable, and quick, with the assurance of security, become top choices. Notably, they also want to feel respected as they seek an emotional connection with the varied payment options in their bespoke wallets, among which credit cards tend to be the favorite.

Credit cards remain top of affluent consumers' wallets for a few key reasons: 47% say perks (like cashback, air miles, shopping points, etc.) drive usage decisions, while 31% prefer credit for making them feel valued, and 27% favor credit because of the purchase protection it offers. Peeking inside their wallets, those of affluent consumers contain more credit cards (2.1 vs 1.7) and more payment methods overall (average of 6 vs 5) than that of mass consumers', demonstrating their willingness to do more to maximize the incentives from each transaction. Here in APAC, affluent consumers use even more payment methods, with an average of 7.5 per person.

In comparison, debit cards are the preferred payment method for mass consumers, especially when buying daily necessities. Interestingly, the preference for debit is particularly strong in Australia (83% using debit vs 58% using credit) and India (85% using debit vs 64% using credit), while Hong Kong leans more heavily on credit (79% vs 42% using debit).  

"Affluent consumers tend to be very astute in how they select and utilize the payment tools in their wallets, strategizing how and when to use each payment method to capture the greatest returns. This hands-on, intentional approach reflects the growth mindset and commitment to self-improvement that affluent consumers exhibit in all aspects of their lives, including career, health and wellness, hobbies and learning," said Sandeep Malhotra, executive vice president, Products & Innovation, Asia Pacific, Mastercard. "And while ambition has always been a core trait of the affluent audience, the difference is that nowadays they work to live, not just live to work, reflecting a departure from previous norms. The financial institutions that best serve this demographic recognize these characteristics and find valuable ways to support their customers' financial, professional and personal progression."

Illustrating this point, the study identified that while career advancement is key to 30% of the affluent demographic globally, it is not the most important pursuit overall, as 52% said their top personal goal for the next five years is to travel abroad more. Here in the Asia Pacific region, some geographic differences stood out. Australia's affluent are prioritizing travel (58%) over career (19%) while India's affluent are focusing on both pursuits (48% career, 56% travel). Hong Kong's come in at the middle at 30% concentrating on career and 40% prioritizing travel.

Willing to take risks for outsized returns

To improve their financial situation, affluent individuals globally are quick to adopt new payment methods as they discover innovative ways to build wealth. Reflecting their higher risk tolerance (with 45% willing to take risks) vis-à-vis mass consumers (65% of whom prefer to avoid risks), the study found that 38% of affluent consumers are early adopters of new financial technology (fintech) while only 25% of mass consumers are. The affluent embrace and use fintech innovations before they become mainstream, and enthusiastically explore new solutions that fintechs offer, including alternative payment methods like mobile payments and digital wallets.

While the affluent segment is more open to experimentation with fintech, once a new payment method is added to their wallet, time is money. This means affluent consumers expect the onboarding process to be simple and seamless. New cards need to be set up quickly, digitally, in only a few steps, and should link easily to their other accounts. To get this done fast, 45% of affluent consumers globally would rather pay a little more to save time, whereas only 37% of mass consumers would be willing to do so.

Planning ahead to leave a legacy

Finally, Mastercard's study found that 59% of the affluent value experiences over possessions. Having built a solid financial foundation that covers their daily expenses, they want to dine out, be entertained, and travel. With comfort and security assured, the important pillars of family, life fulfilment and intentionality with finances come together with their longer-term view and desire to live a life with meaning and purpose.

This manifests in the affluent's ultimate long-term objective to leave behind a legacy (i.e. resources) for their loved ones. Affluent consumers worldwide are 1.3 times more likely than the global population to prioritize saving for legacy and are 1.4 times more likely to have a financial goal of building an inheritance. Beyond their immediate circle, the affluent also aim to leave the world, or their community, a better place.  

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About Mastercard (NYSE: MA), www.mastercard.com

Mastercard is a global technology company in the payments industry. Our mission is to connect and power an inclusive, digital economy that benefits everyone, everywhere by making transactions safe, simple, smart and accessible. Using secure data and networks, partnerships and passion, our innovations and solutions help individuals, financial institutions, governments and businesses realize their greatest potential. With connections across more than 210 countries and territories, we are building a sustainable world that unlocks priceless possibilities for all.

source: Mastercard