How Wealthy Are You? Learn the 4 Levels Of Wealth

Ideas and Concepts: (See the 4 levels of Wealth in the last part of this article)

For most people, income, and wealth are fairly simple concepts. When you think about tiered wealth, what’s interesting is that you realize that certain amounts of money won’t necessarily make your life much better. Due to the variety of life circumstances, it can be difficult to establish an exact dollar amount for each of the above wealth levels. 

Income is not the same as wealth, so it makes sense to look at net worth as well. To qualify for this level of wealth, you must have twice as much net worth as the number given by the formula.  

This number may seem random, but 0.01% is a good indication that it’s an insignificant amount for any level of wealth. If you’re worth $10,000 (or more), the decision to spend that extra $1 may be trivial financially because it represents less than 0.01% of your wealth. The 10,000 yuan given by ordinary people on the first floor can be transferred to the second floor. 

Many people believe that the most critical stage in life is when you are financially secure and you can live comfortably without worrying about money. Achieving financial freedom isn’t just about building wealth – it means having confidence in your life and your finances. When it comes to wealth, financial freedom is what it’s called: the financial freedom to do what you want. Financial stability is the stage of wealth and you can afford to relax more.

You have a very nice home, you can afford all the medical care you need, and no financial emergency can ruin your life. The first level of wealth acquisition, financial stability, requires you to start learning how to get out of debt. The first layer of wealth is learning how to maintain financial stability.

To achieve financial independence, you must increase your wealth. Financial independence is a stage of happiness that means a person has enough savings and other assets to live without any income for more than two years. At this stage, people have a high income level and can invest in prestigious properties and businesses.

Being rich doesn’t mean smoking Cuban cigars off a $100 bill – it means being financially independent and staying that way. This is a wonderful book that explains that most people try to get rich in deceitful ways. It takes a lot of work and effort to accumulate wealth, and you need to go through several stages before you get enough money to be considered rich.

There are also wealth calculators to help you calculate how rich you are in relation to your aspirations. As a result of many years of research on various people with high income and high net worth, we have developed several wealth equations based on many variables.

Another way to determine whether a person, family or family is wealthy or not is based on the expected level of net worth. The middle class is a reflection of the economic resources of households as measured by income or wealth. For US wealth, the median or mean overestimates the figure due to the concentration of wealth at the top of the range. This is a fairly large difference and shows how the concentration of wealth among the wealthiest households can skew the average. 

This perfectly illustrates that wealth is and will always be a relative measure. For most Americans with an annual real income of $50,000 or more, and for most people between the ages of 25 and 65, their expected level of wealth is appropriate. There appears to be a strong (at least perceived) correlation between wealth or income and happiness. Stewart Butterfield says he believes there are three levels of wealth in the world and knowing where you are depends on your mind.  

Butterfield’s three levels of wealth are not all-encompassing, but I like the fact that Stuart Butterfield formulates them in terms of personal finance that people can understand. Aside from “the last level,” Stuart Butterfield said the extra wealth doesn’t really matter and doesn’t have any other impact on his life. With a net worth of around $1.27 million or more, Mr. Anthony O. Duncan is an amazing accumulator of wealth.

I have personally found the Wealth Spectrum to be a very insightful and very useful planning tool for my circumstances. The Wealth Spectrum, designed by Roger Hamilton by Roger Hamilton, gives a very clear idea of not only the 9 levels of wealth, but the characteristics, behaviors, and activities associated with each level. The standard of living you choose to live in can have a huge impact on how far you can go with any of these income or wealth figures. The Great Recession and subsequent recovery had a huge impact on household wealth, depending on where you are.

4 Different Levels of Wealth According to Global Wealth Hub

Level 1: Financial Stability
The first level of wealth is known as financial stability. This is the most basic level of wealth that you must first attain.
You have achieved Financial Stability when:

  1. You have accumulated enough liquid assets to cover your current
    expenses for a minimum of six months.
  2. In addition, you have life and hospitalization insurance to protect
    you and/or your family’s lifestyle should you be permanently
    disabled, unable to work or if you pass away suddenly

Level 2: You have achieved Financial Security when you have through time, money, and ideas accumulated a critical amount of Positive Cash Flow Assets that generate enough passive income to cover your MOST BASIC expenses. In other words, when you reach this level, you can stop working and maintain a very basic lifestyle. It also means that if you continue working, all your active income can be channeled towards your investments and this will further compound your assets and increase your income streams.
So, what are your most basic expenses? What necessities must you spend to live a very simple lifestyle? Well, this is subjective but generally, your basic expenses should include no more than the following:

  1. House mortgage and related expenses such as utilities and
    conservancy fees.
  2. Public Transportation expense.
  3. Food for you and your family (household groceries).
  4. All Interest payments for debts owed.
  5. All Insurance premiums including life, disability and home.

Level 3: Financial Freedom
Many of us have heard of the dream of achieving financial freedom but what does it really mean? Well, Financial Freedom is when you have through the investment of time, money and ideas, accumulated a critical amount of Positive Cash Flow Assets that generate enough passive income to sustain your CURRENT LIFESTYLE.

Level 4: Financial Abundance
So what is the ultimate level of wealth you can achieve? Financial Abundance is when you have through the investment of time, money and ideas, accumulated a critical amount of Positive Cash Flow Assets that generate enough passive income to sustain your DESIRED LIFESTYLE.

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Alex Silva

Alex Silva

Alex Silva is an American Entrepreneur, Author and Finance Educator. He is the Founder of Global Wealth Hub, Master Excellence Academy & Other Companies in the Field of Finance & Personal Development. Alex also runs one of Europe's largest private Consulting institution.

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