The 5 Levels of Wealth and How To Get There
The 5 Levels of Wealth and How To Get There
January 27, 2024 By Sheiresa McRae Ngo, AI Editor
If building wealth is one of your goals this year, you’re not alone. Roughly 48% of Americans are making financial resolutions for 2024 according to a study by Allianz Life Insurance Company. This is up from 43% last year.
Certified financial planners Brian Preston and Bo Hanson, hosts of The Money Guy Show, discussed how to reach the five levels of wealth. Here’s what they revealed about each wealth level and how to get there.
Level 1: Stability
of their show, Hanson and Preston explain that financial stability signifies the ability to pay your bills without living paycheck to paycheck. This level is not solely about income, as even high earners can struggle to achieve stability. It’s about adopting a mindset of deferred gratification and discipline in spending.
Key aspects of stability include eliminating bad debts, following a budget, and understanding the importance of saving. To assess if you’re at this stage, check if you are not relying on services like “buy now, pay later,” have an emergency fund, and are not carrying a credit card balance.
Level 2: Strategy
Moving up the wealth pyramid, the next stage is strategy. Here, you’re no longer just surviving; you’re beginning to make your money work for you. This level involves controlling your paycheck rather than letting it control you. It’s about having a financial plan and executing it, not just dreaming.
Investing for Everyone
Strategy is also about educating yourself financially and avoiding the trap of chasing the latest investment fads. To transition to this stage, focus on increasing your income, managing major expenses wisely, and ensuring your spending aligns with your financial goals.
Level 3: Security
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