People like to look at levels of income from a narrow perspective…
Understanding where you fall in the American economic class system isn’t as simple as pulling out a calculator or looking at a pay stub.
Seventy-three percent of Americans say they belong to the middle or working class, according to an April 2022 survey from Gallup.
Fourteen percent identify themselves as upper-middle class and 2% categorize themselves as upper class.
Society has come to categorize levels of income into three broad classes:
- Lower class: Less than you make.
- Middle class: However much your current salary is.
- Upper class: Substantially more than you make.
But having started at the bottom and crawling our way toward the top of the financial food chain has allowed us to deeply understand the different stages of income and wealth someone goes through.
We created this based on the input from hundreds of multi-millionaires and billionaires we’ve met and learned from in the past decade, as well as our very own personal experience.
Level 0: $0 – You have no Income
You are either too young or a student, and you fully rely on a third party, usually your parents, for financial support. You’re getting an allowance or some benefits from the state, but it’s not much.
$500 cash in your pocket right now would feel like a nice amount of money.
Your parents paid for the phone or laptop you’re watching this on. You’ve never paid a bill in your life and have no idea how people pay taxes.
You do not generate income consistently. You might flip some things on the internet, try to learn about investments, and are consistently looking for ways to make money.
Your mind is buzzing with ideas, especially since you keep hearing and seeing young people who are already rich flexing on the internet.
This is frustrating because parents usually control you with money.
Truthfully, you realize you’re not evolved enough to live on your own, and your time will eventually come.
You ride the bus, walk to places, and occasionally you use Uber. Your friends are also relying on their parents for money, so they understand.
At this stage, you should read, learn, listen to podcasts, and educate yourself as much as possible.
Level 1: $1,000/month – Your starter income ($10-$15k/year)
This is the first time you start making a little bit of money consistently. It’s your first “hustle”.
Making your first $1000 is one of the greatest feelings in the world.
The moment you get paid and the money hits your bank account or your wallet, you cannot believe it’s real. You feel like you might have a chance at breaking free.
At this stage, you’re usually careless with money because you’ve never had money before and there are things you’ve always wanted. So you buy a pair of sneakers, some clothes, and maybe a PS5.
If the situation requires it, you might use some of the money to help around the house.
This is the first time you buy groceries for your family out of your own pocket, and you are shocked at just how expensive food is.
You know this isn’t enough long term, but if you focus and grind, you are confident that this could evolve into something sustainable.
You feel beyond confident in yourself, and your friends start looking at you funny because they don’t take you seriously. Your parents are happy for you but worry that you’re not doing anything illegal or compromising your studies.
You either still live with your parents or have roommates in a shitty apartment, but you love it because it makes you feel independent.
$50,000 is a lot of money to you.
Level 2: $3,000/month – The “I’m actually doing it” Income (30k-50k/year)
At this point, you think you’re the king of the world. For the first time in your life, you have – what you consider to be – a substantial amount of money on your hands. You realize that you can do this for the rest of your life.
As a result, you buy all the little things you want; take your friends and family out; maybe throw some money at your sibling just to help them out.
You rent a nicer place and spend your time looking at what kind of car you want – or better said – what kind of nice car you can realistically afford to buy.
Eventually, you buy yourself an older, second-hand model, but with a nice interior. The leather seats feel nice and you’re proud of buying the car yourself.
This is the first time you can afford to stay at a nice hotel or eat at a fancy restaurant. You fly low-cost or economy.
You’re looking for deals and ways to maximize the return on every dollar you spend. Because your lifestyle isn’t yet expensive, for the first time you have residual income at the end of the month in your account.
For the first time, you are on a level of income that enables you to save some money.
We can tell you from personal experience that the jump in happiness brought on by money will never be greater than the one you experience at this stage, getting to 3-5,000 dollars per month.
It feels like things clicked for you and that you’ve unlocked the secrets of the universe.
You start making spreadsheets and start giving your friends financial advice. Your friends are either envious or work for their parents’ business.
Almost everyone can reach level 2 of income if they are determined, which is why it makes up the majority of middle-class earners.
Going from level 2 to level 3 is the hardest income jump you will have to make because what got you to $3,000 per month is nowhere near enough to get you beyond $10,000 per month.
$200,000 would be life-changing money to you.
Level 3: $10,000/month – (100k-150k/year)
This is where your side hustle becomes a real business or you’ve been promoted and hold a serious role in the company you work for.
You start feeling a lot of responsibility, and you realize you no longer have the same amount of time you used to.
At this level, money no longer increases happiness the way it used to. Most research points to $100,000 per year as the cap between the happiness and income correlation.
Basically, more money doesn’t make you happier from this point forward.
You are officially in the top 10% of earners in the developed world.
You’re no longer renting; you’re looking to buy, but property prices feel like they’re exploding. You can afford a nice car, clothes, and an exotic holiday outside the country once or twice per year.
You make more than enough money to consider investing. However, based on experience and a rule of thumb: one should not look at passive investments until they generate over $100,000 per year in income.
Why? Because you don’t actually have enough to make a difference.
You’d be better off putting all of it back into yourself or your business until you reach level 3 of income, at which point you can start investing passively.
At this level of income, you have acquired enough valuable skill sets to be confident in your ability to support yourself and your household for the foreseeable future, but your cost of living is also going up.
The nicer car, the nicer place, and the new friends with new hobbies are all putting a little bit of stress on your finances, but nothing that you can’t handle. Your partner mentions children, and you start to realize that $100,000 per year won’t cut it – at least not the way you want it to.
For you, $1,000,000 is a lot of money.
Level 4: $30,000-$50,000/month – The “Life Upgrade” Income (300k-Half a million/year)
This is the first time in your life that you feel like you’re actually rich. You earn substantially more than anyone else in your family. You feel super confident in your ability to generate income.
If only you can keep this going for just a couple more years, not only will you be a millionaire, but you think you will be set for life.
You purchased and paid in full for what you consider an incredible home – probably a really nice apartment that you have fully furnished. It took you longer than a year, but you eventually moved in.
If you really want it, you can even afford a brand-new car, but you’re smart enough to not go for anything crazy.
You wake up in the morning and cannot believe how blessed you are. Your life is overwhelmed by gratitude. This is when you mature from a financial perspective, so your focus shifts toward stability.
Consequently, you invest in real estate for passive income. You have over $100,000 invested in stocks, preferably the S&P 500; maybe you even invest in a friend’s business or a startup that seems promising.
Discipline handles your finances, and as long as you don’t do anything stupid, you know you will do well.
There are more than enough savings to last you for over 6 months on no income, or your passive investments generate the bare minimum to support your household.
At this level of income, you do not worry about bills, groceries, or most menial expenses as they are all taken care of.
When you travel, you have access to a lounge; you’re no longer flying low cost, but you can’t justify paying for first or business class, so it’s economy plus for you, but you do get to choose your seats, and they do offer food and champagne on flights, so you feel great.
At this stage, most people choose to do one of two things:
Either coast and play it safe OR go for a big win, where you risk most of your income into something new with an even higher upside.
The thinking there is that you are smart enough to work for the next 4-5 years, and if it plays out, you will never have to work again.
For the first time in your life, you realize that 1 million dollars is not a lot of money.
If you’re under level 5 of income, you can dramatically accelerate your growth by bringing in a mentor who’s 1 or 2 levels up to show you the way.
The truth is, you can watch as many Elon Musk or Ray Dalio interviews as you want, but it doesn’t apply to your particular situation as their realities are just so different from yours.
And these mentors are almost impossible to find or too expensive for you to be able to afford them.
Our mission at Level Up Now is to help you get there as quickly as possible, and in order to do that, we need to get you rich first.
Six months from now your reality could look completely different.
Level 5: $100k-$250k/month – ($1M-3M/year)
Congratulations! Once you cross the half-a-million to one-million-dollar-per-year mark, you’re now officially in the top 1% of earners.
According to the Economic Policy Institute, the average annual wage of the top 1% was $823,763 as of 2020.
A more recent study by SmartAsset points out that the national average of the top 1% earners is $597,815; Most of the drop is because of Covid, but with inflation going up like crazy, we don’t think these numbers will last for long.
You are either a partner in a business or the owner of an established business. There are multiple employees in your company that earn between $45,000-100,000 per year. You have recently signed a couple of big clients.
The little things in your organization are no longer your preoccupation.
You have an assistant. You’re grooming someone to take over from you in a couple of years or preparing to sell your company.
You bought a house with enough bathrooms to make sure you never have to wait after anyone else and a closet big enough to store everything you purchased.
There is an extensive investment portfolio behind you. And you can afford to go on any kind of holiday you want, if only you had more time, but you’re working on it.
You flew private a couple of times and spent a summer on a yacht in Europe.
Even so, you think buying a jet or a yacht is one of the dumbest things you can do. However, you secretly wonder how much money you would need to have to not care about your spending.
You stay at the nicest hotels, the entire family flies business class and you eat at the nicest restaurants.
Your partner received a really expensive car for her birthday and your parents have retired thanks to you.
The kids go to a really nice school, and you live in a nice neighborhood. You worry about your children growing up spoiled, but you’re proud of the comfort you’re able to offer them.
Your friends are also rich and spend most of your time talking about how blessed you are and how to improve your health. You play golf.
You’ve been featured in magazines and podcasts, and people see you as a success story.
You really care about quality and convenience and have no problem overpaying if you no longer have to deal with it.
At this level, time becomes really important as you feel like you work too much.
You rationalize that you have enough and consider giving it all up and retiring somewhere on the beach, but you know you still have a few years to go to complete your story.
From a personal perspective, this level of income is probably the most stressful of all of them because it’s in a very peculiar financial position.
A net worth of $5,000,000 literally makes you the poorest of the rich.
You have substantially more money than anybody you grew up with, so your old friend can’t relate to you at all and can’t afford to live life at your current rhythm. But at the same time, you’re not really rich enough to keep up with the super-wealthy, who have net worth’s of over $25M.
Although you know you have enough money, somehow you feel like you do not have enough.
Level 6: $1Million/month – ($10M-15M/year)
Most wealthy individuals will agree that this is the inflection point: $1,000,000 per month or a net worth of around $25,000,000.
From $25,000,000 and up, more money does not contribute at all to your lifestyle or general happiness! This is the money can buy happiness ceiling.
Once you reach level 6, money no longer matters. You feel like you and your family will never be poor again.
The freedom to live anywhere in the world and enjoy the same level of lifestyle is there. However, you’ve settled down next to where your business is centered and fly around the world based on where you need to do business.
You made yourself really comfortable and even bought a couple of toys you’ve always wanted. Every couple of years, you visit the place where you were born and realize just how far you’ve come.
Business is booming, and you’re perfectly aligned with the marketplace. Your job consists of being in meetings and managing managers. You have created a business and have a solid product that the market loves.
You’ve successfully scaled and are now focused on fine-tuning every process. Your business has clearly defined systems, offices, departments, and processes and you’ve successfully built an entire infrastructure around you.
You’ve been sued a couple of times and won. You have great accountants, lawyers, and wealth managers as friends.
Investments independent of you generate over 1 million dollars per year in disposable income.
At this point, you earn more money than you can spend. You’re confident that you will be ok and can survive 1 divorce.
You’re getting a fully new level of attention that wasn’t there before – especially in higher-up, more refined circles – but you will never do anything to compromise the home you’ve built. Think of the kids.
You become more aware of people’s intentions because now you have something to lose.
In Silicon Valley, there’s this joke running around about people achieving what’s called GOLDEN MILLIONAIRE Status.
This is when your net worth is at least equal to your age. So if you’re 35, having at least a $35 million fortune would technically make you a golden millionaire.
Which is kind of a nice goal to have don’t you think?!
Since between 20 million and 80 million, the difference in lifestyle isn’t that much, you are impressed by those worth over 100,000,000 dollars.
Because they’re the people who can afford to buy the jets and the yachts that you’re renting.
Level 7: $50month-100M/year
To take a company from $50 million per year to $1 billion per year in revenue is something extraordinary. The person able to do something like that is world-class in terms of performance.
To get to $50-$100 million per year in income as an individual:
You either own a very successful company OR are the CEO of a multinational company doing incredible numbers. The person who can build systems strong enough to take a company from, say, $100 million in revenue to $1 billion is worth this salary.
Just to put things into perspective: In the United States alone, there are over 40 CEOs earning over $100 million per year as a salary.
Your rewards in life will always be in exact proportion to your contribution!
Want 100 million dollars? Generate 1 billion dollars worth of value and retain 10% of that.
Although this might be a simplified model to keep this particular article short and consumable, owning a company doing over $100 million per year where you can pay yourself dividends or an 8-figure salary isn’t impossible.
Let us run the numbers for you!
As of 2023, Statista estimates there are roughly 215 million companies operating worldwide. Out of these 215 million companies, a close estimate would be that 55,000 companies generate revenues of over 100 million dollars every year. [Data source: Apollo.io]. That’s 0.02% of all companies.
Keep in mind that if you were to start a company today, you’d have a 1 in 20,000 chance of reaching 100 million dollars in revenue. To put things into perspective, the chance of winning the lottery is 1 in 292,201,338.
Even famous actors or athletes struggle to get to this level without building a company first.
At this level of income, you can not only buy a private jet or yacht, but you are also actively changing the world around you.
You’re one of the largest contributors to your local church or charities. You are actively acquiring new businesses, some of which are your competitors. Investment funds are approaching you at the same time because they want to keep an eye on what you’re doing for acquisition purposes.
You pique the interest of industry leaders, who will either compete with you or acquire you.
At this level of income, there is no doubt that:
- You have achieved financial success.
- You bought the houses, the cars, and all the toys you wanted.
- You live a very comfortable life from a material perspective.
- You’re friends with some really high-profile individuals.
You are proud of everything you’ve built so far, but you start to question if anything you’ve done will have a lasting effect on humanity.
Money no longer impresses you, unless the number starts with a B.
A billion dollars is still a lot of money to you.
Level 8: “Almost there” Income – A couple hundred million but not yet a billion
Believe it or not, there are people who earn hundreds of millions of dollars per year. The most common are ultra-high-level hedge fund managers and business tycoons. And this includes heirs to industrial empires as well.
The rest are mostly outliers that might have a couple of good years but never be able to sustain it for decades.
Hedge funds are institutions that manage other rich people’s money with the purpose of generating high returns.
These institutions invest billions of dollars every year. Moreover, they get to keep some of the profit they generate, mostly through the 2 and 20 compensation structure:
- 2% per year from your initial deposit
- 20% of all the profit the fund is able to generate for you
Most of these funds require you to have a net worth in the 10s of millions of dollars to be allowed in.
The second category is that of business tycoons. These are the ones who are actively reshaping the reality around you.
They build hotel chains, shopping malls, or the apartment complexes in which you really wanted to live when you were back at levels 1 and 2. You’re in the business of buying businesses.
At this level of income, you are forced to work with the government;
Otherwise, your projects might not get the green light. So you get involved in politics. You donate to your favorite candidate.
And by helping them raise funds by throwing charity dinners, when they do reach office, they make sure you’re taken care of.
Furthermore, at this level, you have access to almost anyone in the world. They will pick up the phone for you and a meeting can be arranged with anyone from celebrities to even the president.
Security becomes incredibly serious. You have a driver with a military background and they’ve been with you for a couple of years.
Your kids study abroad alongside the kids of other ultra-high-net-worth individuals.
At this level, you are tired most of the time. This happens because other people don’t seem to grasp just how important what you are trying to do is.
You’ve been in this game for so long that you have personal vendettas with other rich individuals. And the only reason you don’t stop is that you don’t want them to have the satisfaction that they outlasted you.
Deep down, you’re scared that without your involvement, everything you’ve built might go down in flames as it becomes uncompetitive.
Level 9: 3 Comma Club Income – 1 billion dollars or more per year.
These are your high-level billionaires.
At this level, we’re no longer talking about income as much as we are focusing on the growth of someone’s net worth.
The world’s 10 richest people, the likes of Elon Musk, Jeff Bezos, and Bernard Arnault, have added over 400 billion dollars to their net worth in a single year.
Based on the Bloomberg Index that tracks their net worth in real-time, you can see that since the beginning of the year, these 10 have either made or lost billions.
People like Elon Musk usually don’t take a salary; instead, they get rewarded in shares based on how well the company does.
If Tesla does well, Elon gets more shares, and thus his net worth skyrockets. As hard as it is to believe, as of 2023, there are people who earn over 1 billion dollars per year, EVEN AS A SALARY.
Remember those hedge fund managers we talked about earlier? The eight best-performing earned over $1 billion in salaries last year.
Jim Simons from Renaissance Technologies gets paid almost $2 billion per year to keep doing his job.
In comparison, the CEO of APPLE, Tim Cook got his salary cut from 100 million to 50.
We’ve met billionaires before – meaning people who are worth over 1 billion dollars. But never anyone who is actively earning over 1 billion per year. These people are usually super private.
Their time is beyond valuable and you can not request a meeting under any circumstances. They’re the ones who ask for the meeting.
At this level, we imagine the only thing left is the impact you have on the human race and how you will be remembered.
This is why Jeff is trying to compete with Elon in terms of Space exploration; why Peter Thiel tries to solve death and why Gates & Buffett are donating most of their wealth to curing diseases.
If these people have gotten to this kind of level of income, it means that it is possible, but you have to ask yourself if you are willing to make the sacrifices required to get you there.
Bonus: The NEGATIVE INCOME & “Desire for More” Trap
There are people out there with negative income. Meaning these people spend more than they earn. They are in a hole and can’t seem to stop digging.
These are the people who get new credit cards or payday loans to pay off older credit cards. You might not realize it, but there are people out there that are actually poorer than the homeless.
At least the homeless individual is at level 0. All their possessions fit in a tent, but others are so much in debt that they’re in the negative.
The moment they generate any form of income, the debtors come to collect it. At that stage, you no longer own yourself. So be careful when playing with debt, make sure you know what you’re doing.
This completes our list of levels. Now we want to take the opportunity to share with you one of the golden nuggets we’ve learned in the past couple of months, and it has to do with:
How much more money do you think you need?
Because it’s one of those questions that we’ve been really thinking about, we started looking for proper research. It turns out there was an impressive study done on millionaires and high-net-worth individuals.
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You already know that once you cross the $100,000 per year mark, money no longer affects your happiness. But what about your overall perceived need for money?
This study focused on people with fortunes ranging from 1 million dollars all the way up to $250 million. And the question was how much money they still wanted before they thought they had enough.
The result blew our minds.
On average, people answered 3.2 times what their current net worth was. The guy with 1.4 said 5 million. The one with 40M said 100M. The one with 73 said 200 million.
Compiling the hundreds of responses resulted in an average desire of 3.2
As humans, we perceive the next level of safety, abundance, and prosperity at 3.2 times what we currently have. At least once money is no longer an emotional factor.
What shocked us is that when we asked ourselves what number would be “sufficient” for us, our instinct was 3X our current net worth as well. We realized that this is a never-ending game.
The person with 1 million wants 3. We want to be over 100. The person with 70 million wants 200. The person with 300 wants 1 billion. It never ends.
So here is the most valuable lesson from this article:
Money is a self-perpetuating game where you can only win by deciding you have already won!
Until then, you will only trade one rat race for another. You’re simply competing with a different kind of rat.
