Episode 784 | The Wealth Ladder: Six Levels of Financial Freedom

Rob Walling:
Welcome back to another episode of Startups For the Rest Of Us. I’m your host, Rob Walling, and today I welcome Nick Majuli, the author of a new book called The Wealth Ladder that just came out today actually. And if you decide you want to pick up a copy of that book, it’s of course on amazon.com. We will link to that in the show notes. But Nick is the COO at Ritholtz Wealth Management, and he’s been blogging at of Dollars and Data since 2017, so almost nine years. He’s an expert in data-driven personal finance, and he’s given a lot of thought to the levels of wealth that people achieve. And we’re going to dive into the Wealth Ladder during this call and how level one is being paycheck to paycheck. Level two is having Grocery Freedom. It’s a net worth of 10,000 to a hundred thousand and on up. 

It’s a really interesting conversation. Nick has given a ton of thought to this topic and he backs it up with personal experience, but also with data. And he’s followed and read the studies around money, happiness and all these topics. During our conversation, Nick and I talk about ways to invest and move up the wealth ladder. And if you’re an accredited investor and you’re interested in indexing across hundreds of early stage ambitious B2B SaaS companies, you should consider joining me and investing in TinySeed Fund three. Our investment thesis at TinySeed is starting to prove out. We’ve had some great exits recently with Gym Desk who you’ve heard on this podcast as well as Scraping Bee. And if you’re interested in investing in mostly bootstrap founders who are building something different, head to TinySeed dot com slash invest to check out some of our early results. And if you decide to fill in that form, it goes directly to my co-founder, a R’S inbox, and he will reach out to you TinySeed dot com slash invest if you’re interested. And with that, let’s dive into my conversation with Nick Mc. Julie, welcome to the show.  

Nick Maggiulli:
Thank you having me on, Rob.  

Rob Walling:
Yeah, it’s great to have you here. You are the author of two books, one from 2022 called Just Keep Buying, but the reason you’re on the show today is this episode goes live on July 22nd, which is the day that the Wealth Ladder will be available in Amazon, and I’m guessing in all the places that you can buy books. So excited to have you on.  

Nick Maggiulli:
Yeah, I am excited for the book launch.  

Rob Walling:
Alright, so I’m curious, you’ve written so much, so you blog at of dollars and data.com, you’ve been a very prolific blogger for the past eight years, nine years, eight years, it looks like  

Nick Maggiulli:
It’ll be nine at the end of this year, so that’s correct. Eight and a half, let’s say.  

Rob Walling:
Congrats. A lot of people used to be a blogger, I blogged from 2005 until 20 11, 12 ish, and then I’ve moved to podcasting and YouTube and all that. But you are like, this is a lost art. Is it working for you? Blogging continues to be how you express yourself.  

Nick Maggiulli:
Yeah, I love it. I just love writing. I think it’s more my medium where I can sit and really think through, and I’m not a perfectionist, but I’m closer to a perfectionist than not, so I can really get everything perfect versus when I’m trying to go off the cuff, I might say something not exactly as I’d want to. And so I love writing and it still goes, and web ads are great and people, if you look at per thousand views, what gets paid the most, it’s actually bloggers. It’s not even close. It’s like Forex more than YouTube, it’s much more than TikTok and much more than Twitter. So it’s a lost art, but if you get people to read your stuff, it works well.  

Rob Walling:
And you’ve written a lot and given out so much practical advice about money. What motivated you to write the Wealth Ladder specifically as in, was there a gap in the advice you were seeing that brought you to write the book  

Nick Maggiulli:
And some of the gap I was creating in a way? And so I think a lot of the personal finance advice out there is very one size fits all solution. Like, hey, just do this. And I even did that with just keep buying. And the point when I wrote that first book, it was like, Hey, if I know nothing about you, what piece of advice would I give you? And that advice is the continual purchase of a diverse set of income producing assets, et cetera. And so that’s like, I know nothing about you, no priors, just keep buying. But then I said, what if I could control for something? What if I knew something about you? I knew your starting wealth level and more importantly, if I knew where you wanted to go, like Oh, I want to get to that wealth level, then I could tailor the advice better. 

It’s more of a choose your own adventure story instead of a one size fits all thing. And so it’s not that my one size fits all solution was bad, but there are people that are deeply in debt, just keep buying is not their answer, at least not yet. And then people that are like, Hey, I want to get to a major exit, I want to go 10 million plus, et cetera, just keep buying is not going to get them there either. They’re going to have to become an entrepreneur, et cetera. And so I kind of zoomed out a little bit from the just keep buying framework and I just created a larger framework that says, Hey, depends on where you want to go. That’s the thing you have to focus on. So that’s why I came up with a wealth ladder. I wanted a more complete view of wealth building and not just a single answer. And there’s nothing wrong with the single answers, but a lot of people just say, Hey, just do this and that’s it. That’s all you got to do is just, and I’m like, no, it really depends on where you’re starting. It depends on where you want to go, et cetera.  

Rob Walling:
That’s one reason we wanted to have you on the show is I’m kind of a personal finance nerd. I’ve read a lot of personal finance books and the one size fits all or fits most approach isn’t bad when 80% or 90% of people say in the country are in the same kind of situation. And I used to be in that situation, it’s like level one and level two people probably need the same type of advice, but as I progressed in my journey and built a little more wealth, I did find that personal finance books didn’t apply or didn’t apply as much and I had to kind of go out on my own. So that’s what we really liked about the Wealth Ladder framework that you have. Now that we’ve gotten this far in the episode, let’s define what that is. I’d love to hear so folks can understand, I’ve just used terms like a level one and level two, but talk us through what those six levels of wealth are.  

Nick Maggiulli:
So the six levels of wealth are dependent on your net worth. So as your listeners probably know, that’s all of your assets minus all of your liabilities. So that’s assets, it’s your car, your home, if you have a business, whatever the fair value is, your stocks cash in your bank account, et cetera. Subtract out any mortgage debt, business loan, credit card, et cetera. And that gives you a number. Let’s hope that is a positive number. And then depending on your net worth, you’ll fall in one of the six levels. The first level is less than $10,000 in net worth. That’s level one. Level two is 10,000 to $100,000 in net worth. Level three is 100,000 to $1 million in net worth. Level four is one to 10 million in net worth. Level five is 10 million to $100 million in net worth. And level six is over a hundred million dollars in net worth. 

And the nice thing about this is if you just memorize one of the levels, you can back out the rest. You just divide by 10 or multiply by 10. So I just say, Hey, remember level three is a hundred K to a million. That’s also happens to be where the middle class of the United States is in terms of wealth, around 40% of US households are in level three. So that’s according to the survey of consumer finances data from the Federal Reserve. So 40% are in level three, you have 20% in level one, that’s less than 10,000, 20% in level two, that’s 10 to a hundred thousand. So you have 80% of households in levels one, two, and three. 18% are in level four approximately. That’s one to 10 million. That’s like your upper middle class, I mean depending where you live, et cetera. And then the last 2% is level five and up and level six in particular only has like 10,000, 11,000 households in there of over a hundred million, very, very rare long tail of wealth. But that’s the framework. And the whole idea behind the wealth ladder is depending on which wealth level you’re in, the strategy might need to change to get up to the next level, what to avoid changes, all sorts of things are going to change how you spend money, how you can think about spending money, having more spending freedom as you go up the ladder. And so we can talk about income spending investments within that and touch on any one of those things.  

Rob Walling:
What I like to add onto that is level one you call paycheck to paycheck, which makes sense, less than $10,000 in net worth. Yeah, that makes sense. Level two is grocery freedom. You can buy what you want at the grocery store. Level three is restaurant freedom. And I remember hitting that actually distinctly being like, wow, I don’t look at the prices on menus anymore. Level four is travel freedom. You travel when and where you want. Level five is house freedom. You can likely afford your dream house with little impact. And then level six is impact freedom. You can use money to have a profound impact on others. The focus of this podcast is entrepreneurship and there’s a lot of indie hackers, SaaS founders, and it’s folks that are trying to change their station in life. That’s often the number one goal is freedom, purpose and relationships and freedom, of course, you use the word freedom at every level, impact, freedom. How’s freedom, travel, freedom. And so the majority of our listeners are probably in levels one through three. There’s certainly a chunk in four and five as well. What are the most important levers or the mindset shifts from moving up between levels, especially maybe from three to four?  

Nick Maggiulli:
Yeah, I think the biggest shift when going from three to four, and so the big difference there is income really. I mean income is true, it’s across the wealth ladder. But as you go from level three to four, I think, and that’s once again, I’m defining that as the middle class to the upper middle class, a lot of their life is very similar. They’re probably on the same plane, but maybe they’re sitting in different seats, they’re probably living in adjacent neighborhoods. They probably both own a home, but one’s a slightly nicer house and you go down, one owns a Toyota, one owns a Lexus, maybe they have very similar lifestyles, one’s just slightly upgraded. And that’s kind of what the upper middle class is. It’s not like you’re flying private, you don’t have a bunch of people on staff that are working for you necessarily. 

You might have a company you own, but that’s a different type of thing. I don’t mean personal chefs or drivers or things like that. That’s where you start to get into level five wealth. But I think some of the mindset shifts, because at least how I framed it in the book and when you’re talking to business owners is a little bit different because how I frame it, most people that are in level three, I’m like, yeah, you just got to get a decent job, save money, put it, buy income producing assets, buy a diversified basket of equities, stocks, bonds, et cetera, and just give it time and you will eventually get to level four. And that’s generally true. You look at the data, it’s pretty clear there. But if you’re a business owner, it’s a little bit different. I think as a business owner, you need to create a business that you can eventually sell that doesn’t just require your input. 

And this is not even my idea, this is like E-Myth revisited, a very old book, which is like, do you have a business or do you just have a glorified job where, yeah, you’re making good money, you control your time, but without you, the business would fail completely. And so I think the step you need to make as an entrepreneur is how do you go from creating a business that relies on you to creating a business that you can actually sell to someone else? And that is how you’re going to get that jump into level four or even level five obviously if it gets big enough. Now, once again, I’m not the expert on this. I would defer to you on business stuff and SaaS startups, et cetera. But I think just mentally when I’m thinking about it, the businesses that are sold that get people into level four are probably where the owner is not as necessary for the functioning of the business as I guess the businesses for those in level three are. That’s my guess, just off the top of my head. I haven’t seen a ton of data on that, but that’s just how I’m thinking about it. And I don’t know if you would agree or not.  

Rob Walling:
Yeah, I would say very likely. Most of the wealth that I see built in entrepreneurship is not actually from taking profit out of an operating business. Most of it is from exits, is from selling it. And that’s something that a lot of folks I don’t think are familiar with in your research or experience, and it doesn’t need to be with entrepreneurs, but just in general, what does it take to move from level four to level five? So to remind the listeners, level four is one to 10 million of net worth. And so if someone’s worth, I know a lot of folks actually who are worth 2 million bucks, 3 million bucks, they either had some stock options at a big company or they’ve just saved over time, or maybe they got a little bit of an inheritance from relatives, so they’re two and 3 million bucks, but to get up to 10, 15, 20, 30, I don’t think you save your way to that, right? So what are the ways that you’ve seen or have heard of to make that jump?  

Nick Maggiulli:
So excluding celebrities, athletes, entertainers who have these very huge contracts that will get them into that level five or above. For the most part, it’s going to be entrepreneurship and what you already brought it up exits, and I can just do the math for you. That makes it very simple, right? Let’s say today you just got to a million dollars. Let’s just say you have a portfolio. Let’s ignore home equity and all. Let’s just say you have a million dollars in a portfolio. You got there today, remember already that’s already an accomplishment. It’s not easy to get to a million you got there today, it’s earning 5% a year and you’re adding a hundred K to it every year. So you’re saving a hundred thousand dollars after tax, a considerable amount of money. Do you know how long it would take you to get to 10 million? 

The answer is 28 years. It’s a long time. That’s 28 years of grinding, saving a hundred K after tax, probably having to cut back in areas. Think about even if you’re like, you know what, Nick, I can save even more. I have an even higher income, I’m going to save 300 KA year. You do the math there, guess how long it takes start with 1000005% a year, $300,000 a year. It still takes 17 years. It still takes almost two decades saving. You have to be making almost a million dollars after tax and costs and everything to save 300 K. So it’s like it’s an absurd amount of money and it’s an absurd amount of time to get there. So as you can see, your traditional job is just not going to a nine to five or any of that. Or even a business, Hey, I make a hundred KA year in profit, that’s great, but if that’s all your savings, that’s not going to get you there unfortunately, and you can just do the math as well. 

If you’re saving a hundred KA year on a million dollars, that’s 10%. You’re increasing your wealth by 10% a year. By the time you get to 5 million, it’s 2%. So your job or your income source is not moving the needle that much anymore. So really who are the people that get into level five and above? It’s basically always going to be entrepreneurs. I mean, I don’t know. Another way of getting there. Obviously ignoring trust fund, inheritance, marriage, all those types of things. In terms of actual career paths, it’s going to be people that get into exits of some sort. And there’s two types obviously. There’s like, hey, you own the full business and you sell for a decent amount of money, or you start early at a company at a startup, you get equity and then that becomes a really big company like an early Uber or you got into Nvidia before AI went on, all those people are in level five now just because they were early enough and they got enough stock options. 

And then Nvidia just went through the roof and became the most valuable company in the world. So that’s kind of what the data shows. Not saying there’s no other path or you could wait a long time too. You could have $2 million today and just wait another 40 years and you’ll get to 10, but that’s who wants to have 10 million when they’re 90, right? That’s not the purpose. So when I’m thinking about these types of things, it really is entrepreneurship, business ownership, and you see that in the investment data as well. Like people in level five and six, the vast majority of their wealth is in private business ownership. And I don’t just mean stocks, retirement, I mean actually owning some sort of a business.  

Rob Walling:
Yeah, that makes a lot of sense. Something I was really intrigued by is you emphasize spending based on wealth, not income and income can be lumpy for entrepreneurs or unpredictable. So I guess how do you think about spending based on wealth versus income, and I guess that relates pretty well to the feast or famine cycles that some entrepreneurs might experience?  

Nick Maggiulli:
Yeah, I think this is especially true for entrepreneurs who don’t have that every two weeks they’re getting that same paycheck of the same amount. And when I say this, of course you have to spend based on your income, if you have zero income, your wealth’s not going to throw off enough to live on unless you just have a lot of wealth already. And then why are we even having the conversation? But let’s say, okay, you have your rent, you have whatever your mortgage, you have your fixed costs. My question is on that marginal spend, can I buy that extra thing? Can I go and get that nicer meal at the restaurant? Can I stay at that nicer hotel? I came up with the rule for this, which is based on the wealth flatter, and it’s called the 0.01% rule. And so all you do is you take your net worth and you multiply by 0.01%. 

So that’s 0.0001 or more. Simply divide by 10,000. That’s probably easier for people. So take your net worth divide by 10,000 and that is how much your wealth is conservatively generating each day 0.01%. You do that over 365 days, that’s about 3.7% a year. I think it’s a very conservative return if we assume that’s happening every day. That’s kind of like your, it’s trivial. It’s a trivial amount of money. So when you’re at the grocery store and you’re like, Hey, do I want to get the normal eggs or the cage-free eggs for $2 more? If your net worth’s over $20,000, that $2 is meaningless to you. You can spend that $2. And so that’s just a simple example, but it really maps onto the spending freedoms we talked about earlier. So someone in level two, which is 10,000 to a hundred thousand dollars in net worth, by the time they get to a hundred thousand, they can do kind of what they want at the grocery store. 

And then in level three that I call that restaurant freedom because by the time you’re at the end of level three, by the time you have a million, your world’s throwing off a hundred bucks a day, you can kind of buy what you want at a restaurant besides the super expensive wine basically. So that just maps upward from there. So when you’re thinking about spending, I like to use this rule because it allows your lifestyle to creep. I think the personal finance industry has a problem either, oh, you can’t lifestyle creep at all, right? And that’s usually the most of the advice out there. And I’m saying you can, but only after you’ve built wealth, after you’ve shown some financial discipline, then you can start to spend more. And the data actually shows that as well. In general, people with higher incomes, higher wealth do spend more than those with lower incomes and lower wealth, but it rises more slowly than income. 

So the wedge between income and spending is just on average goes up over time. So people with higher income save more savings rate goes up basically. So it’s shown in the data. People are already naturally doing this, but this is a rule that makes it very easy be like, Hey, hey, maybe if you’re deep in level three, let’s say of $800,000 of your net worth, you’re like, okay, I can go and buy what I want a restaurant, but I still got to fly coach. And so that’s how I think about it. Or you just got into level four, okay, maybe you can get to a slightly nicer seat on the airplane. You can see it a slightly nicer hotel depending on where you are in level four, et cetera. So these are just different ways I like thinking about this and it’s not perfect, but I’m just trying to get new frameworks out there to get people to rethink how they’re spending money.  

Rob Walling:
I heard you mention that on another podcast I was listening to and I was really intrigued by it because I had never heard anyone talk about that divided by 10,000. And I appreciate the specificity of each of these levels because I remember hitting each of them because I grew up at level one and I think by the time I was in high school, late high school, I think my parents got to level two and then that was it. And then I came out and then I was at level one, I graduate, you become a construction worker. And then I remember getting level two and it was entrepreneurship. Well, I had a good job as a developer and I saved my way into level two and I think maybe because what level two is to a hundred K of net worth, I probably crept a little higher than that, but then it was entrepreneurship side hustles started putting money in the bank account at a rate that we weren’t consuming it. 

You kind of spend your salary, or at least that’s the way we did mostly. But once I started side hustling and making a couple grand a month and we just socked that away, I felt like that was a bit of a cheat code at the time. And I do remember suddenly being like, whoa, I don’t really look at the grocery prices anymore versus when I was in college, if it was buy one get one free, I was like, I’m eating that. I don’t even know what that is, but it’s cheap, so I’m going to buy that. I want to switch it up and kind of double click on what I just said, which is side hustles. I saw in the book you do talk about entrepreneurship, you talk about focus versus distractions, and we do see a lot of founders and indie hackers that have a lot of side hustles going all at once. And I’m curious, in your research and experience, how do side hustles help at level three and when do they become maybe a barrier to building real wealth?  

Nick Maggiulli:
I guess that’s a very difficult question because you don’t know what something’s going to become. If I had started my blog of dollars in data that was a side hustle for three years, I didn’t make any money, but I also wasn’t trying to make money. I still, my full income, I still to this day have a full-time job. So I’m technically, all this stuff I do is a side hustle, but once I was in level three, I was like, Hey, I’m doing well, but I want to do this other thing. Who knows what it could lead to? I didn’t know anything about monetization of my content. I didn’t know about books. I had no plan to write a book. Now I have two. It’s like all these things kind of happen, and so I just happened into it in terms of your question of, okay, so how do you know when it’s helping or when it’s not? 

It’s like is it bringing an income? Look at how much time you’re spending too. I know initially when you start a lot of these things, when I did my hourly wage of dollars in data back in 2020, for every hour I worked, I’d earned $12 an hour by the time I turned monetization on. So it wasn’t a lot, but now if I redo that calculation, it’s over a hundred dollars an hour and I’m using the same total hours, it’s just like my average hourly earnings is now shooting up. So I think that’s the thing I would look at is, is your average hourly earnings going up over time in that side hustle and you have to put in some time. You can’t be like, oh, I spent 10 hours one weekend coding this and I didn’t make any money. I’ve been at this for eight and a half years. 

You got to spend at least a year on some of these things and really try at them and say, okay, that’s not working or it is. And then start looking, is your average hourly going up? And if so, focus on the things that are working and you’re going to have to abandon projects that aren’t working. And it’s unfortunate, but I’ve tried a bunch of different stuff that hasn’t worked right, and I’ve just said, Hey, you know what? The thing that does work is writing and I just want to get as good as I can at writing. And that’s it. It’s still a side hustle and it’s doing quite well. I mean, I could in theory go all in on it, but I don’t want to because it only requires five to 10 hours a week. I put in that I just write a blog post. 

I have to write one blog post a week, and that maintains everything I do. I don’t do all this other side stuff. I don’t get distracted. I think when you’re talking about distractions, if you do start finding something to work, just keep doing that. I’ve had so many people, oh, you should start a TikTok. You should start a YouTube, you should do this. And maybe those would’ve worked out, I have no idea, but the amount of time they would take is not even close. It’s exponential. The amount of more time I have to put into this for an uncertain payoff, something that there’s already a lot of competition out there. As I said, YouTube and all that pays one fourth of what web ads pay. And so it’s like, why don’t I just get even better at writing and do the thing, I’m already kind of have some proof of work on this thing or I guess product-market fit is what you would say. 

I have some product-market fit on this, and so it’s like I should just keep doubling down on that. And so if I ever do go, I don’t think I would go all in on this just because I don’t want to be a full-time influencer or anything like that. But for the time being, it really works. I have the security of the job. I like working with those people. They also put out content, so it’s like a nice marriage. We’re all doing content marketing, so we all learn from each other. It’s a win-win for everyone in the ecosystem. So I got very lucky in that sense. But that decision, I think where you really start to think about it is my side hustle paying me more than what I’m making from my full-time job. And I don’t think it has to happen right at that moment, but I think a better way of saying, okay, cumulatively since I’ve started this job and started the side hustle, have I earned more cumulatively with the side hustle than I have with the main job? 

So let’s say you started your job in the side hustle at the same time. Let’s just say that and okay, just now your a RR is higher than it is with your job, but cumulatively you haven’t made enough. So I would say keep going in the horse race until the cumulative number is higher. And so that’s a different way of thinking about it because it’s not just saying, Hey, I just had one good year. It’s like, oh, I’ve been having enough good years that now my side hustle has paid me more than my job has from time adjusted basically. So that’s how I would try and do it, not just like what’s paying me more now, but what has paid me more over the same timeframe? And that is the bigger thing to look through.  

Rob Walling:
That makes a lot of sense. Something we haven’t touched on that I know is a big area of your expertise. As you said, you work in wealth management and a lot of your blogging is around personal finance and investing. If I’m at level two versus level three versus level four and up, I guess, what are the differences between assets I should own? We hear 80 20 equities versus bonds is the old rule that I don’t own any bonds, man. I’m not going to own bonds until I retire. It’s just that thing that I don’t, but it’s like if I’m worth 50,000 versus 500,000 versus 5 million, would you think the mix is similar or is there a different approach at those wealth levels?  

Nick Maggiulli:
I think it really depends on your goals. I mean, if your goal is to, oh, hey, I just need a few million bucks and then I want to be able to coast off that if I need to, then you’re going to see the person with five million’s going to have more fixed income. They’re going to have more bonds because safety and how much of that in bonds, that’s going to vary by person, by risk tolerance. I’m guessing in your case you don’t own bonds. I don’t feel like they’re growth oriented. You’re like a tech person. It makes sense why you’d be more kind of all on more of a high growth, high risk. I mean, if you’re an entrepreneur, you’re probably going to be more risk seeking anyways. I think allocations will change based more on the person and less on their wealth. Their wealth does matter, their wealth level matters, but I think the person’s a little bit more important. 

So I think the person level two or three could have basically the same allocation. By the time you get into level four, you kind of want to be more in preservation mode. Also depends on your liability structure. If you have four kids, you’re going to have probably a different asset allocation than if you’re single or you’re a dink two double income, no children. That’s the same. I think that’s going to be very different. So it’s more about your personal life than your wealth level necessarily. I think wealth level does matter as you go higher up, and we can start getting into how we could break that out. But I think there are a lot of other things that impact asset allocation a bit more. And even if you’re an entrepreneur, you have lumpy monies coming in inconsistently, you might want to own a fixed income allocation just because the income’s coming in, whether it is not as high growth as equities, but it’s also hedged a little bit if you have a tech startup and tech is mostly the US economy now if you own US stocks, you’re kind of doubling down on what you’re already doing, which is your income. 

So I actually could make an argument for why you might need to own some fixed income, but it’s really based on you though at the end of the day you have to feel comfortable with it.  

Rob Walling:
As we move towards wrapping up, I want to ask you the age old question. You have an entire chapter with this title. Does money buy happiness? What’s your sentiment on that? I have my own thoughts that I want to weigh in after you do, but I’d love to hear.  

Nick Maggiulli:
So most people know the research, the first paper, which I mean they may not know the name of the paper, but it’s the Angus Deaton Daniel Kahneman paper, which is like, Hey, after $75,000 in income, we don’t see any more happiness. Well, there’s a guy named Matthew Killingsworth came out with another study that said, Hey, actually after 75 KA year, I’m still seeing happiness. And they said, Hey, what’s going on? Someone asked to be wrong. So they dug into the data, Kahneman got with Killingsworth, they went through all the data and they basically found that the original paper was the measure wasn’t as precise. And so they were actually measuring unhappiness. And so above $75,000 a year, you can’t prevent unhappiness, so you can be miserable at any income level is basically what they’re finding. So it’s a weird double negative. You can’t prevent unhappiness, but that’s what they found. 

And so Killingsworth paper was like, Hey, no, if you’re already happy, more money’s probably going to make you happier. But if you’re not happy and you’re not poor, by the way, if you’re poor, more money’s probably going to make you happy too. But if you’re not happy and you’re not poor, more money’s not going to do a thing. So all the people that are looking up will more money make me happier. If you’re not poor already, and I’m assuming you’re asking that because you’re not happy, then the answer is no more money’s not going to make you happier because you have some unhappiness already. If you’re happy already, more money is likely going to make you happier. It’s a very ironic thing that if you’re happy, more money’s going to do it. And that’s what the data shows. That’s true both with income and even more so with wealth. 

Killingsworth came out with a paper that looked at wealth specifically, and the wealthier people were the happier they tended to be, right? But once again, that’s assuming they’re happy already. So there’s all these weird kind of edge cases. But so to summarize all that, I know there’s a lot of research, but if you’re happy, more money will make you happier. If you’re poor, more money’s likely to make you happier. If you’re not poor or you’re not happy, more money’s not going to do a thing. And so that’s the main takeaway there. It’s in the book, and it’s interesting because it makes you think, okay, well if I’m feeling great, if I’m not asking about happiness and I’m feeling great and stuff more money is probably going to make you even happier. But if you’re like, oh, I’m not feeling good, I think, what is the issue? Oh, it’s my money. No, it’s probably not your money unless you’re really in a financial bind.  

Rob Walling:
And that’s been my experience as well, is I remember the first day of my life that I had $100,000 in the bank that I hit six figures or really of net worth, but it was mostly cash. And I was like, wow, this is amazing. And I remember when that balance was half a million, and I remember when it was a million, and I remember each level up and each time for me, it brought a sense of safety inner almost inner peace of like, well, now I could take one year off from working. Now I could take five years off from working. Now I could take a decade. I remember kind of calculating it that way. For me, it wasn’t about, oh, now I can go buy a Maserati even though I can, but it’s just like, that’s not why I did this. I’ve done entrepreneurship for number one, for freedom, but two for the purpose and the ability to control and work on whatever I want to work on. 

But when I heard that study, the 75,000, and of course the headline that whatever it is, the USA today or CNN pulls out is, oh, you don’t need more than 75 KA year. You don’t get more happy. And I was like, that’s bull. That is bull in my experience and has not. And I heard some other folks like Sam Par on my first Million was talking and he said, no, I got happier with more money. And I was like, yeah, me too. And so that’s why I appreciate about your sentiment is you’re framing it. And it’s not the social media clickbait headline. It’s like now in reality, if you are happy, make more money, you have more freedom, you have more happiness,  

Nick Maggiulli:
But it’s not an antidote to, if you’re unhappy, money is not going to solve that. Right? And once again, unless you’re in, let’s just say level one, if you’re in level one and you’re unhappy, it’s probably money. And if you think about the levels when you’re in level one, most of your problems are probably money problems. They could be solved by money. Oh my gosh, I wish I didn’t have to deal with this. Money would solve it. By the time you get to level five and six, money is the least of your worries most likely, and it’s more likely your relationships, your health, your time. There’s so many other things, and that’s what people don’t focus on. So that’s what I try to talk about. It’s like in the book, because I’m like, okay, obviously most people are never going to make it to level six, but how do I still make it relevant to the typical person, even myself? You have to talk about the non-financial things, and those are the things that people in level five and six can lose sight of.  

Rob Walling:
You’re the author of The Wealth Ladder, and as of today, it’s available@amazon.com or wherever greater books are sold. We’re going to have a link to buy that in the description. And if folks want to keep up with you online, of course you’re blogging at of dollars and data.com and your X Twitter handle is dollars and data. Nick, thanks so much for joining me today.  

Nick Maggiulli:
Yeah, thanks for having me on. Appreciate that.  

Rob Walling:
Thanks so much to Nick for joining me on the show. The Wealth Ladder, again is available on Amazon or wherever greater books are sold. Thanks for listening this week and every week. This is Rob Walling signing off from episode 784.