The Levels of Wealth – Episode 499

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[00:01] Welcome to the Prosperity Podcast. Prosperity thinkers, welcome to the podcast. Today we’re going to be talking about the levels of wealth. And these levels of wealth start out with the bottom, we’re going to call it the middle and the upper middle, all the way to the upper class. And Kim, you haven’t seen this, so I’m going to be fielding a couple of questions to you. Are you ready for it? I am. Okay, excellent. In your language, what would you describe as the very base, the very bottom of wealth? What does that look like? And we’re talking not wealth, probably just like the very bottom rung, the bottom rung. Yeah, it’s emergency money. Like you absolutely, positively have to go there. You remember our prosperity ladder that we have from our very, very first book,

[00:51] The Busting the Financial Planning Lies? This is, you’ve moved out of your house, right? You’re not in school, you’re earning an income, or you might be in school, but you’re earning an income, you’re paying your bills, and you’ve got to have an emergency fund. Like that’s it, period. Yep, absolutely. And so in this article, it’s stating, and we can put a link to this article, that’s the bare minimum. Now, he made a couple of distinctions in here that I thought were really interesting. And he says right here, he says that we’re talking about the very, very lowest, the very bottom. And in this article, he’s talking specific to people in the USA. And he says, there are no room for excuses if you were born in the USA.

[01:39] I thought that was bold. That’s not shared often anymore. Yeah. And it’s so true because, you know, any of us listeners, and you know, we have listeners throughout the world, but any of us listeners that are born here or here in the US, we’re very lucky and grateful, extremely grateful for what we have. And they’re talking about this layer of wealth. And it says that anything can move the needle to get you moving along. And that can be, you know, job searches, side hustles, you know, recycling cans on the side of the road. Exactly. Okay. So the next level is the middle. And the middle of wealth is where often people are stuck. And from your experience, why do you see that people get stuck? I think two reasons.

[02:36] One, we just don’t do a good enough job of declaring what that next step should be. Like everybody knows that emergency fund is kind of the first step. But to me, it is an opportunity fund. And because we instead try to figure out what we’re going to invest in, we are unclear on that. And so we’re all over the place and so nothing happens. And the other major disconnect is that our lives operate monthly. Good investments require lump sums. And so everybody needs a way to get from the capability of saving money monthly to the opportunity of having a lump sum to do a good investment deal with. And even if it’s 10 grand for your first down payment on a 100k rental home, it’s still 10 grand. And if you’re saving a couple of hundred bucks a month, you know,

[03:33] where’s that opportunity fund space? You know, take what you just said and let’s plug that into the prior episode, which is the Currents app. What you’re doing is you’ve helped create a mechanism so that all the hard work and the decision making and the strategy and the structure and all of that is like, poof, gone. Let’s just work towards the goal. So that’s really cool. He says something in here about the middle class that I think you are going to love because this is exactly what you talk about. He says, and he calls it a mind virus because there’s a general mind virus here. People believe experience trumps results. They believe that rich people are mean. And on top of this, they have a time for money exchange belief systems,

[04:27] a mind virus. So the wealth to go from middle to upper middle, it’s right here. Right. Wow. You’ve seen that happen all the time. Totally. How does the language change with people when you meet them? When you see them go from middle to upper middle? Yeah. Well, it’s simple things like instead of I can’t afford that, it’s how can I afford that? Instead of, oh my gosh, I don’t know how to get this done. It’s who can help me get this done. And that all starts with mindset. Exactly. Exactly. That’s, I think the, the who, as you’ve learned from Dan Sullivan over the years, moving from how do I do this to who is doing this to going through and how can I afford this versus when people are like, well, I can’t afford

[05:29] this or whatever that language works. The next level is the upper middle class. How are you in your practice and your work, how are you defining the upper middle class just so we can put some bumpers on it? Yeah. I think it’s when you cross over into a credited investor space. So this is million dollar net worth or two to 300,000 of income, depending on whether you’re married or not. Now the SEC is out there possibly talking about changing that and okay, if it changes, fine. You know, they’re talking about not only have to have that income or net worth space, you have to have a personal connection to the person. Well, okay, fine. Whatever that is, I believe defines your basic investor separates, I

[06:19] should say your basic investor from somebody with more capability. What’s also really interesting. Most of the accredited investors, nobody ever talks about this. If you read the fine print in accredited investor, investments require that you have $150,000 of liquidity elsewhere because according to all the powers that be, whether it’s true or not, and it is probably true, accredited investments can be riskier, meaning more higher loss of principle is a potential and so they want to make sure that you have that liquidity, that that investment is not dictating whether you eat tomorrow night or not. So I think that’s a really good dividing line. Yeah, absolutely. And there’s a really good distinction about that, that it’s not

[07:11] including your personal residence because so many cases you’ll see that, and I’m just going to use a general statement, you know, it could just be by luck that you bought a house in the 1980s in California. You lived there and your house appreciated so much that you then sold it, but you didn’t actually do the work to become a person that’s a master of your finances. And so, you know, for a person to have a ton of equity in a property, but having not learned, it’s actually a sword that you could fall on versus like something that could help you. Really well said. So glad you added that. Yeah. So there’s a phrase in here that I thought was really interesting, which is how does the upper middle class get trapped?

[08:01] This is pretty easy, actually. If you’re in the high income space and never start a business, it looks something like this in terms. So like your wealth just incrementally grows. Whereas if you start to make investments, you start a business, you do things, you get out of that trap. And so I think what’s what I don’t think I know what’s taught in schools is go to school, get a good degree, get a good job, be at that job for a long time and hope that job pays off. While that may have worked decades ago, you’re teaching the opposite because the opposite is actually what works. Yep. And it is what Robert Kiyosaki has shared for years and years which is that upper income is fine and it can absolutely get you wealthy.

[08:52] But does it get you the knowledge to be a true investor? And I think only business ownership gets you the knowledge to be a true investor. Absolutely. So the final stage is the upper class. And so we established that the upper middle class are accredited investors. How would you quantify or describe like the upper class? Well, it’s passive income exceeds expenses. So whether it’s from investment income or business income that doesn’t require your day to day to day, it’s financial freedom. You know, the word that comes to my mind is intentionality. So, you know, you can get lucky to go from a lower class to middle class. And you might get lucky to go from middle class to upper middle class. You know, you could be born into it.

[09:46] You could stumble upon something or whatever it is. But to become upper class, you have to be really intentional about it. I would agree. And the few that make it there without that intentionality blow it. Oh, yeah, absolutely. There’s business owners that are in the public space right now today as we’re recording this that are blowing it because it wasn’t intentional or the intentional was for the wrong reason. Peter D. Amanda says all the time, do not start a business just to make money. You will not succeed. And the few that do succeed and then fail. And so is that success. And not that failure is a problem because we all learn from our failures and it’s very necessary. However, if that intention is not true,

[10:38] if it’s not service oriented, if it’s not very connected to who you are at the core of your being, you won’t have the sustainable success that I would use to call upper class. Absolutely. You know, I’ll throw in one piece that wasn’t mentioned in this article and we’ll reference the article here in the podcast. But the accelerator, like I’m always looking for not shortcuts because that can have a negative connotation, but we’ll call it an accelerator, is going to be by the people that you associate with. So if you have relationships with people that if you happen to be in the middle class and you’re like, man, I really want to be upper class. Well, you have to have the attributes, behaviors

[11:26] and the relationships with those people to get you there. And so what I’m doing is I’m applauding all of our listeners that are investing their time for being on this podcast, from learning from you and from doing the things that are very intentional. And, you know, often we’re like bamboo trees, you know, as we grow, like we just don’t see it. And then all of a sudden, boom, like an explosion. And, you know, it can happen to any of us as we are intentional on this path. Really well said. So we’ve talked about the people and we’ve talked about the mindset. So it’s also the mindset of the people, right? So just, you know, the age old, like who you’re hanging out with. And I believe very, very firmly that we have an obligation

[12:13] to raise others along with us. So I don’t agree with a lot of commentary out there. You’ve got to ditch the people that are negative or what have you. I just believe you want to raise them up and bring them along with and make sure that you are also connecting with the people that already have the mindsets that you are striving to install in your own brain and thinking. Oh, that’s so well said. That’s the clip of the episode. That’s good. And for listeners, you know, you’re already listening to the podcast. If you’re not subscribed or following the podcast, make sure you smash the follow button. Second, if you’re not having your inbox flooded with good information that’s intentional, jump on the email list.

[13:00] Go to ProsperityThinkers.com. Get the email. It’s not going to be flooded, but it’s going to be good information that you’ll be able to read. And then when or if you have more time, which we all can make it, go on Amazon, read some of the books that you’ve read, Kent, that you’ve written, you know, or listen to them. You know, if it’s for your commute, choose a podcast, choose a book instead of choosing music. You know, we’re not going to start our day out with candy. We definitely don’t want to start our day out with just chatter. Well said. Thank you, Spencer. Thank you, Kim. Thank you for listening to the Prosperity Podcast. To take control of your money and have it work for you, visit ProsperityThinkers.com.