The Wealth Ladder by Nick Maggiulli

Core Frameworks Deconstructed

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Citation: All text highlighted in yellow in this section is cited from – Maggiulli, Nick. The Wealth Ladder: Proven Strategies for Every Step of Your Financial Life. Kindle Edition.

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A framework for your Wealth

The wealth ladder has five rungs on it, and each rung brackets a wealth level. Wealth levels are ranges of your wealth and each level is important because it defines what you can do, and the amount of freedom you have in your life in a general, practical sense. “Wealth” as measured as your net worth: the difference between your assets and liabilities.

Because each level is separated from the next by a factor of 10, when you ascend the ladder and move up a level, it has a real impact on your life. And because of the same reason, climbing up each rung is exponentially more difficult than the one before. This explains why you’ll find lesser and lesser people every level you ascend. Also worth remembering is that “… people in the same wealth level have similar consumption patterns. Even people in adjacent wealth levels consume in roughly similar ways.”.

Though the exact numbers will vary depending on where you live, as a rule of thumb you can assume the most number of people (or households) to be in:

• Levels 1 and 2: I’ll say about 70%;
• while the remaining 30% will be generally as follows: 21% in level 3, 6% in level 4, 2% in level 5, and 1% in level 6.

What are we doing here?

The goal of the book is two fold: (a) to help you ascend wealth levels, and (b) to help you behave appropriately for the wealth level you are currently at. I have written this Note in line with these two objectives.

Now, when it comes to spending, it is better to spend according to your wealth level than your income. Reason being that income is a fickle mistress: you can be making lots of money one day only to see the river dry up the next.

Besides, moving up the wealth ladder requires financial discipline (discounting the role of luck, such as getting an inheritance), and if you have been able to move up the wealth ladder through your own effort, it is proof that you can both make and handle money, whereas having high income is proof of only the fact that you can make money.

If you’re being even more financially disciplined, it is even better to spend according to your “working” net worth instead of total net worth.

Working net worth excludes two things:

• Liquid net worth: The amount of money that can be made available for spending quickly (such as cash in bank, or company shares).
• Earmarked funds: For instance, the amount you are keeping as your retirement savings. Even though such funds might be liquid, it is not your intention to liquidate them.

For example, if your total net worth is $15M of which $1.5M is the value of your house and $12M is the value of your retirement savings account, then you should treat your “working” net worth as only $1.5M ($15M – ($1.5M + $12M)) and spend accordingly because not all sources of wealth are not immediately accessible to you either by virtue of them being illiquid and/or your own decision not to touch them until a later point in the future.

Given that many of us, especially at levels 1-3, keep our wealth in immovable property, deposits, and accounts that we’re keeping for a rainy day – spending according our working net worth is a very difficult thing to do indeed, particularly if others depend upon us.

A trivial sum

Also, the Point Zero One Percent Rule works in the opposite way too: just like spending 0.01% of your net worth is not going to hurt you in any practical way, saving (or earning) that amount will also not register on your long term financial health either. After all, 0.01% is what we call “a rounding error”. Maggiulli writes, “Assuming that your wealth will grow by 3.7 percent annually, you could spend about 0.01 percent of your wealth each day and maintain the same net worth.”.

Consider the following quotes from the book: “It’s rare to have high income with low wealth or high wealth with low income … as income increases, so does wealth. This is one of the strongest relationships in all of personal finance. It’s so strong that the least wealthy high earners have about four times more wealth than the wealthiest lowest earners … Your income today is the foundation of your wealth tomorrow. It is the bedrock on top of which everything you desire financially will be built.” – This highlights the criticality of having regular (and if possible, high) income – if you find yourself relying on your net worth (esp. illiquid total net worth) to make financial decisions without having a fixed source of income, you really should consider first putting together a source of income.

Putting it all together, here is what the wealth ladder looks like:

Wealth level (Net worth)	Socio-economic strata	Freedom to …	Equivalent net worth if you live in India	What is a trivial amount?
Level 1 (≤ $10k)	Lower class	… what is freedom?	≤ ₹2.3 Lakh	≤$1 (≤₹23) per decision
Level 2 ($10k-$100k)	Working class	… buy anything at most supermarkets (grocery freedom)	₹2.3 Lakh-₹23 Lakh	$1-$10 (₹23-₹230) per decision
Level 3 ($100k-$1M)	Middle class	… eat anything at most restaurants (restaurant freedom)	₹23 Lakh-₹2.3 Crores	$10-$100 (₹230-₹2300) per decision
Level 4 ($1M-$10M)	Upper middle class	… go almost anywhere (travel freedom)	₹2.3 Crores-₹23 Crores	$100-$1000 (₹2300-₹23000) per decision
Level 5 ($10M-$100M)	Upper class	… live almost anywhere (house freedom)	₹23 Crores-₹230 Crores	$1000-$10000 (₹23000-₹230000) per decision
Level 6 (≥$100M)	Super rich	… influence the course of humanity (impact freedom)	≥ ₹230 Crores	≥$100000 (≥₹230000) per decision

Opportunities to consider

One of the key factors playing into questions that get “it depends” as the answer is opportunity cost. As you’ll know, opportunity cost is the cost of an opportunity in terms of other opportunities forgone to pursue it. For instance, for me the opportunity cost for writing this Note is all the other things I could have done in that time, such as look for a new job.

In other words, considering opportunity cost helps you answer the question: “Is this the best use of my time?” Ideally, one should consider the opportunity cost before deciding to do something.

As you ascend wealth levels, your opportunity costs will change and as a result the same task that had low opportunity costs in the past will have higher costs in the future. For instance, getting a job as a clerk might have a low opportunity cost when you are at level 1 or 2 of the ladder (because there isn’t much else in your life that can get you a better return than a job) but a high opportunity when you are at level 4 or 5 (because there is a lot more money you can make by simply managing your investments than working as a clerk).

So, how much is enough opportunity cost? In other words, how much better should a financial opportunity be compared to what you have right now before you decide to make a change. According to the author, it is 1% – according to me, this is a very low bar.

As you work to climb the wealth ladder, somewhere between level 2 and level 3 you will find yourself “maxing out” opportunities where you are the source of wealth. What I mean is, you will start to hit the upper limit of what you can make from opportunities where the increase in your wealth level is primarily and directly linked to your personal effort – such as a working as an employee.

For example, you may hit the upper limit of the salary band applicable for your current level at your company, which means waiting for a promotion is the only option. At this stage, you will want to think about leverage.

The four of forms of leverage are more applicable to certain wealth levels than others, for example, hiring people (labour leverage) is only feasible when you have the means to do so, hence it is a level 3 to level 6 strategy:

Form of leverage	Suited to wealth level	Use when
Labour	Level 3 to level 6	You know how to manage people to get work done, one way or another
Capital	Level 3 to level 6	You intuitively understand how money and financial markets work, and have the emotional control and patience to tide out the highs and lows of investing
Content	Level 2 to level 4	You don’t mind getting lost in the crowd and waiting patiently as people discover you; You love to create anyway and would do (/have been doing) it even if no one was paying your for it
Code	Level 3 to level 5	You have the technical skills needed to make high quality software, and some marketing skills to properly position your product out there

Earning member

Whichever form of leverage you use, the big idea for moving up the wealth ladder is to get something, as soon as you can, that makes you money without direct dependence on you. While you can help the thing make more money than it was initially, but it should, first and foremost be an income generating asset in and of itself. An income generating asset is an asset that you expect to keep making money for you over the foreseeable future without overly being dependent on your direct intervention to do so. Having income generating assets is what separates those at wealth levels 1-3 from those at wealth levels 4-6.

Cash, car, and house – this is where the bulk of the wealth of those falling in levels 1-3 is generally stored. Of these, only house (i.e. a person’s primary residence) is an income generating asset, but it isn’t much use because renting out their house and living on rent themselves is not something most people want to do.

Wealth level 4 onwards we see an increased contribution of income generating assets in a person’s net worth. Things like stocks, bonds, mutual funds, real estate (besides primary residence) and business interests (businesses where you own a significant/majority stake and have executive powers) – of these, the first four use capital as a form of leverage, while a business usually uses two or more forms of leverage.

Following is a list of the main contributors to net worth for people at different wealth levels:

• Level 1: Cash and vehicles
• Level 2: Vehicles and primary residence
• Level 3: Primary residence and retirement accounts
• Level 4: Primary residence, retirement accounts, stocks
• Level 5: Business interests, stocks, retirement accounts
• Level 6: Business interests and stocks

However, this doesn’t mean that you need to wait till level 4 to start investing, in fact, investing wisely when you are at level 2 or 3 may be your ticket to level 4 wealth. This bottom line is worth repeating: focus on acquiring income generating assets as early as you can in your financial journey.

What to do at each wealth level

Level 1

Welcome to the hard life, this is the level where what would be a little bad for people in the other levels becomes really bad. Everything hurts more when you are living in level 1 – sprain an ankle when returning home from work and there goes your dinner for the next three days because that’s how much the doctor’s visit costs, wake up late and miss the bus to work and you can kiss good-bye that day’s wages because the supervisor just put someone else on the job who happened to reach on time – you get the idea.

Therefore, improving your health and avoiding/reducing your debt (as much as within your power) are the first two things to do when it comes to getting out of level 1. Beyond those two, get ready to work hard, really hard – I’m talking multiple jobs, going above and beyond in each job, long shifts, no off-days, cutting down spending to the bare essentials, and putting away each penny in the rainy-day fund.

These are common sense things that almost everyone in level 1 knows, there’s nothing new here. The challenge in level 1 is not that people don’t know what to do, but that their life circumstances make it very hard to do the right thing. As the lyrics of the song I Tried go, “I’m stuck in the game. As soon as I get out, it keeps pullin’ me back”, even those in level 1 who genuinely want to rise might find themselves compelled by circumstances to remain in it.

So, we see two other things that are essential at level 1: keeping the right company and keeping the right mindset. As Maggiulli writes, “… sulking and self-hatred won’t help you pay down your debt …”.

Finally, Magiulli advises those in level 1 to focus on building marketable skills. Marketable skills are abilities, knowledge, or expertise that employers value and are willing to pay for. These are skills that make you more employable and can help you earn a higher income, and hence are useful at any wealth level but are absolutely critical at level 1. Examples of marketable skills include:

• Technical skills (e.g., computer programming, data analysis, machinery operation)
• Trade skills (e.g., plumbing, electrical work, carpentry)
• Professional certifications (e.g., healthcare assistant, bookkeeping, project management)
• Soft skills (e.g., communication, problem-solving, customer service)
• Language skills that are in demand in your job market

Unlike the other five levels where you can build marketable skills by getting an education, building marketable skills in level 1 requires more creativity because getting an education isn’t feasible. A few things one can do to acquire marketable skills without spending much money:

• Working harder and taking on challenging assignments that make your skills grow faster than peers
• Offering to help someone for free, and volunteering at community organisations or charities to gain experience in administration, event planning, or coordination roles
• Watching free online tutorials and educational videos (YouTube, Khan Academy, etc.) to learn new skills like basic coding, graphic design, or digital marketing
• Shadowing or apprenticing with skilled workers in trades to learn hands-on skills without formal education costs
• Learning from library books and free resources to develop expertise in a particular area
• Joining free community workshops or programmes run by local councils, libraries, or non-profits that teach job-ready skills

Level 2

Being on wealth level 2 is much better than level 1 than most people realise – small spells of bad luck cannot undo you, but your life is still tough enough to remind you to work hard. Maggiulli has two pieces of advice here: get an education and focus on your career.

Education

Generally, more education = more income, but among all wealth levels, it is level 2 is where education really becomes important because the its opportunity cost is likely the lowest. When you are at level 1, getting an education is not only unfeasible but there are things that are a better use of your time, like working a job to put food on the table. When you are at level 3 or higher, getting an education is good but there may be things that are a better use of your time, like managing your investment portfolio and beating the market.

Career

Speaking of what you can do “… failing to focus on your career (and thus, your income) is the financial sin of Level 2.”. If you find yourself with a job in level 2 – do not let it go. From a purely risk-reward perspective, having a job in hand in level 2 is the most powerful tool has one to ascend to level 3. Keep finding ways to excel at your job, get promoted, switch to jobs that have a higher pay rate and you will move from level 2 to level 3.

We live in times when it is common to talk about whether one loves their job. Platforms like LinkedIn, Instagram, and TikTok are filled with content about “finding your passion,” “doing what you love,” and “never working a day in your life if you love what you do.” The focus has shifted from merely having a job to having a job that aligns with one’s values, provides purpose, and contributes to overall life satisfaction. While these are legitimate and wise perspectives, this kind of thinking for those in level 2 is risky.

Waiting for that perfect job opportunity to roll around might turn into a slide back into level 1 if one is not careful. Nonetheless, Maggiulli recommends that you must have at least two of the following three things to rise in your career at level 2:

• Aptitude: You are good at what you do.
• Passion: You like what you are doing.
• Marketable: You can make money from what you do.

The approach for each combination is as follows:

Combination	Approach
Aptitide + Passion	Keep this as a side project (nights, evenings, weekends) until you figure out a way to make money from this. Leaving (or deprioritising) your job to focus on what you like doing (even if you are good at it) is generally not a feasible strategy for those in level 2.
Passion + Marketable	Work hard to get good at the thing you are doing; this is where getting en education to develop your skills and capabilities is especially useful.
Aptitude + Marketable	Find a way to develop passion for your work; parts of it if not the whole.

Finally, Maggiulli tells us about the “hunger” that must be in those at level 2. If you do not find yourself learning in your job, if you find that your skills and responsibilities are not growing, if you find yourself in a dead-end job – it’s time to change and look for new opportunities.

Level 3

When it comes to level 3, investments is the name of the game. By this point your income reaches a level that it allows you to set aside some amount for a rainy day fund each month (unless you’re living extravagantly, which I personally would advise against).

Maggiulli does not have any specific advice for your investments except one: start as early as you can. The reason? Compounding.

Here’s an example to illustrate the power of starting early with compound investing: Sarah vs. Tom

• Sarah starts investing at age 25. She invests £200 per month (£2,400 per year) for 10 years, then stops completely. Total invested: £24,000.
• Tom waits until age 35 to start investing. He invests £200 per month for 30 years straight until retirement at 65. Total invested: £72,000.
• Assuming both earn an average 7% annual return:
  • By age 65, Sarah’s investment (despite stopping at 35) grows to approximately £338,000
  • By age 65, Tom’s investment (despite investing 3x more money) grows to only approximately £244,000
• Sarah ends up with nearly £100,000 more, despite investing £48,000 less, simply because she started 10 years earlier. Those extra 10 years of compounding made all the difference—the returns on her early investments had decades to multiply. This is why starting early, even with small amounts, is so crucial at Level 3.

In the example above, even though Sarah stopped at age 35, she earned more – this is what Maggiulli calls “Go Big, Then Stop” which basically means that if you start investing at a earlier age, you can stop at a later age and still do fine.

Besides investing, you can also start a side hustle at level 3, and many will actually see the side hustle grow bigger than their regular day job allowing them to switch over completely to it. Though you can start a side hustle in levels 1 and 2 as well, at that time focusing on stable income than a promising but risky bet is more reasonable.

Here are some contemporary examples of side hustles at Level 3 that grew into full-time businesses:

• Content creators and influencers: Many people started YouTube channels, podcasts, or Instagram accounts whilst working full-time jobs, eventually building audiences large enough to earn more from sponsorships and advertising than their day jobs.
• E-commerce and dropshipping: Individuals who started selling products on Shopify, Etsy, or Amazon as a side project, which eventually scaled into full-time online businesses.
• Freelance services: Graphic designers, web developers, copywriters, and consultants who began taking on clients in the evenings and weekends, eventually transitioning to full-time freelancing or starting agencies.
• Coaching and courses: Professionals who created online courses or coaching programmes in their area of expertise (fitness, business, personal development) that grew into their primary income source.
• Software and app development: Engineers who built apps or software tools as side projects that gained traction and eventually became standalone businesses.
• Subscription services: People who started subscription boxes, membership communities, or newsletter businesses (like Substack writers) that eventually generated enough recurring revenue to replace their salaries.
• Real estate investing: Individuals who started with a single rental property whilst working full-time, gradually building a portfolio that provided enough passive income to leave their jobs.

These examples illustrate how starting small at Level 3—when you have some financial stability—can eventually lead to a complete career transition.

Overall, in level 3 “… the key is to generate more income streams. Most people have just one income stream – their job.”.

Another thing Maggiulli cautions against is overspending. While in levels 1 and 2 even if you wanted to overspend you couldn’t, in level 3 this is completely possible. Besides if someone has finally arrived at level 3 net worth after years of struggle in lower levels, they may feel that they deserve a bit of pampering. But Maggiulli wants you to exercise your willpower here, he writes: “If increasing your income in the way up the Wealth Ladder in Level 3, then not controlling your spending is the way down.”.

Level 4

The importance of investments continues in level 4 as well and at this stage your investment income is likely to exceed the income you could earn as an employee.

Therefore, you may be tempted to focus on your investments full time and making sure you beat the market. Doing this will keep you in level 4 territory and there’s no problem with that; level 4 wealth allows for a very comfortable life and with a well diversified investment portfolio you can ensure some money each month for your expenses while also taking a few bets for supernormal returns, as Maggiulli writes: “… if you want to remain in Level 4, you must diversify your investments.”.

Level 4 is a great place to be, but it’s also the “… hardest level to break out of for good reason—the strategy needed to get out is drastically different from the strategy needed to get in.”. Because going to level 5 means getting an additional $9M beyond the money that got you to level 4. You are unlikely to make that amount of money from any job or your investments anytime soon. Even if you start investing at a young age and generally beat the market, this is a herculean task. In fact, even if you double your net worth, it is going to take you 3 more doublings after the first one to reach level 5.

This sort of approach to level 4 requires one thing though: patience. Patience with your money, patience to not rush into get rich quick schemes. Patience to let good things come to you. And this is another way level 4 can be different than the previous levels – for the first time, it makes sense to slow down and take careful steps instead of rushing into new opportunities if they satisfy the 1% Rule.

At this patient rate, you will go from level 4 to level 5 in about thirty years. Assuming you reach level 4 when you are in your forties, you will be close to your eighties when you are in touching distance of level 5 wealth.

If you think thirty years is a long time, then the only way out of level 4 and into level 5 is through business. Own or join a business (where you get equity) that sells for tens if not hundreds of millions – that is your ticket to level 5. This is easier said than done and Maggiulli spends time explaining how starting a business (or joining a very early stage one) is not for the faint of heart.

Finally, Maggiulli reminds us: “If your business depends on you, you don’t own a business—you have a job.” Here are some examples that illustrate the distinction between owning a business versus having a job:

• Restaurant Owner vs. Head Chef
  • Has a job: A chef who owns a restaurant but must be there every day to cook, manage the kitchen, and train staff. If they take a holiday, quality suffers and revenue drops. The business cannot function without them.
  • Owns a business: A restaurant owner who has hired excellent chefs and managers, created systems and processes, and can take a month off whilst the restaurant continues to operate profitably.
• Consultancy Firm
  • Has a job: A consultant who bills clients under their own company name, but all clients specifically want to work with them personally. If they stop working, income stops immediately.
  • Owns a business: A consultancy with multiple consultants, standardised methodologies, and clients who hire the firm (not a specific individual). The founder can step back from client work entirely.
• Software Development
  • Has a job: A developer who runs a “software company” but writes all the code themselves, handles all client communications, and does all the troubleshooting. They’re essentially a highly-paid freelancer with a company registration.
  • Owns a business: A software company with a team of developers, a sales process, documented code standards, and automated systems. The founder focuses on strategy whilst the team delivers the work.

The key difference: if you cannot take an extended absence without the business collapsing or revenue ceasing, you don’t truly own a business—you’ve created a job for yourself even if its one that pays well.

Level 5

Making it into level 5 involves at least some luck, and making it into level 6 even more of it. But luck aside, going from level 5 to level 6 has the common thread of having equity stake in a business or multiple businesses. That is, you’re looking for asymmetric upside – if you want to keep your current businesses you need to make them bigger, and if you sell your current businesses then you need to start new ones from that money that will take you can sell for even more money. Let’s look at the scale to ground ourselves: to go from level 4 to level 5 you needed an additional $9M, but to go from level 5 to level 6 you need an additional $90M:

• Going from level 3 to level 4 is possible with a well-paying job or a side hustle that you build into a small business, a few well timed investments, and generally being patient.
• Going from level 4 to level 5 generally requires you to have ownership in a medium to large business, invest wisely and be patient.
• But going from level 5 to level 6 requires you to have ownership stakes in multiple large businesses that should ideally be diversified to avoid catastrophic risk from market fluctuations, and your goal with each business you own should be to make it larger because larger businesses tend to attract a greater valuation multiple than smaller businesses even though they may be as profitable.

Beyond this however, Maggiulli does not have much advice for you on how to go to level 6. In fact, if you find yourself short of level 6 by a few million dollars and someone offers to give you a good sum for your business, Maggiulli’s advice is that you should sell: “I’ve heard far more stories of people who regret not selling their businesses when they had the chance than of those who sold too early.”.

Although my personal opinion is that level 4 is the wealth sweet spot, it is at level 5 that Maggiulli asks you to “… seriously consider whether continuing to climb is truly worth it.”. At Level 5, you can afford nearly everything worth experiencing in life. The gap between Level 5 and Level 6 is enormous in monetary terms, but trivial in terms of actual quality of life improvements. Beyond this point, the pursuit of wealth offers diminishing returns whilst demanding increasing sacrifice. Before climbing higher, ask yourself: what will the extra wealth actually enable that you cannot already do? And is that marginal gain worth the stress, time, and relationships you might sacrifice to achieve it?

If you do decide to go it though and really want to enter level 6 wealth ($100M+) then you will run into what may be called “rich people problems” – basically when people know you are rich, they can try and take advantage of you – in honest and dishonest ways.

• First, there is the fact that you are presented with so many opportunities to consume and indulge yourself, this can become a costly affair if you are not careful.
• You are also presented with so many “opportunities” for investing your money, people will call you and say that “this is the next Google / Uber / Tesla / Alibaba”, whom do you trust?
• You may also find yourself in a costly legal battle if you (or something you own) injure(s) someone – that is why it makes sense to be super careful while you drive (or better, get a driver), have comprehensive insurance for basically anything, have your dogs trained so they do not bite, not have any places on your property where people might get hurt, proper employment contracts, workers’ compensation insurance, and clear workplace policies protect you from employment-related claims and so on.

That is why having a trusted group of advisors is very important. In fact, having competent advisors in three areas is particularly important as your wealth grows: law, tax, investing. A good lawyer, accountant and wealth advisor will give you much more in return than what you will pay in terms of their fee.

Imagine you’re selling your business for $15 million. Without proper advisors:

• Tax implications: You might structure the sale as ordinary income, paying 45% income tax ($6.75 million), leaving you with $8.25 million.
• Legal oversights: The buyer’s contract includes a broad indemnity clause that could expose you to unlimited liability for 5 years after the sale.
• Investment mistakes: You put the proceeds into high-fee products recommended by your bank, paying 2% annual fees whilst earning market returns.

With competent advisors (costing perhaps $150,000 combined):

• Tax advisor: Structures the sale to qualify for Business Asset Disposal Relief (10% tax rate), saving you $5.25 million in taxes.
• Lawyer: Negotiates liability caps, escrow arrangements, and representations & warranties insurance, protecting you from potentially devastating future claims.
• Wealth advisor: Creates a diversified, low-cost portfolio (0.3% fees) and helps you develop a tax-efficient withdrawal strategy, potentially adding $2-3 million to your wealth over the next decade.

In this example, spending $150,000 on advisors could save or generate an additional $7-8 million. The return on investment is extraordinary—roughly 50x what you paid in fees.

Besides financial risk at level 5-6 wealth, there is also a risk that many do not realise until it’s too late: risk of harm to mental health and personal relationships.

• Trust and Isolation: At extreme wealth levels, it becomes difficult to know who values you for yourself versus your money. Friendships become complicated—when you pick up every restaurant bill, is it generosity or creating dependence? Romantic relationships carry the constant question: would they be with me if I weren’t wealthy? You may find yourself increasingly isolated, surrounding yourself only with other wealthy people who “understand”
• The Grind Never Stops: The psychological toll of maintaining and growing wealth at this level is immense—every decision involves millions. Example: A property developer at Level 5 wakes up at 4am worrying about a £20M project. One mistake could wipe out years of gains. The stress is relentless. Unlike a salaried professional who can “clock out,” business owners carry the mental burden 24/7. The fear of losing it all can be paralysing, leading to anxiety and burnout
• Family Relationships Suffer: The hours required to build and maintain Level 5-6 wealth mean missing your children’s formative years. Example: A tech entrepreneur missed his daughter’s school plays, football matches, and even her graduation because he was “building something important.” Years later, she barely speaks to him, despite him offering to buy her anything she wants. Marriages strain under the pressure—one spouse is always working, the other feels like a single parent. Divorce rates are notably higher amongst the very wealthy, and divorces at this wealth level are particularly acrimonious and costly
• The Spoiled Children Problem: Children raised in extreme wealth often lack the struggle that builds character and resilience. Example: A hedge fund manager’s son, given a £100,000 car at 18 and unlimited credit cards, developed substance abuse problems and never held a job. At 35, he’s still financially dependent and resentful. Without proper guidance (which requires time you may not have), children don’t learn the value of money or hard work. They may feel entitled, struggle to find purpose, or face immense pressure to live up to a parent’s success. Wealthy parents often try to compensate for their absence with material gifts, which only worsens the problem.
• Loss of Purpose and Identity: When you’ve “made it,” the question becomes: now what? The chase that gave your life meaning is over. Example: A successful entrepreneur who sold his business for £50M found himself deeply depressed six months later. He had no reason to get out of bed, no challenges to overcome. Money solved all his practical problems but created an existential crisis. Some turn to philanthropy to find meaning, but others spiral into depression or destructive behaviours.

As Maggiulli underscores: “… evidence suggests that at some point more wealth stops having a positive impact on your life and can actually start to have a negative impact.”.

Level 6

Welcome to the first and only wealth level where “… more money should be the least of your concerns.”. Level 6 is like level 5 but on steroids, all the “rich people problems” I mentioned in level 5 just get amplified in level 6. While previously you needed just one good lawyer, accountant, and wealth advisor, now you need teams of all three.

As extreme poverty places physical stress, extreme wealth places mental stress:

• Trust and Isolation—Amplified: At Level 5, you question whether friends want you for your money. At Level 6 ($100M+), this becomes exponentially worse. You attract not just opportunistic friends, but sophisticated con artists, “business partners” proposing elaborate schemes, and entire entourages of people whose livelihoods depend on maintaining access to you. You may need background checks on people before meeting them. Simple social interactions become transactional.
• Security Concerns—New Dimension: Whilst Level 5 wealth might require good insurance, Level 6 wealth makes you a kidnapping target, especially if you have children. You may need personal security, secure transportation, gated compounds, and extreme caution about publicising your whereabouts or your children’s schools. Your family cannot live a normal life. Maggiulli pointedly writes: “… as your wealth grows you should be prepared to get sued more often.”.
• The Grind Never Stops—Higher Stakes: At Level 5, a bad decision might cost millions. At Level 6, a single mistake could cost tens of millions or destroy your reputation entirely. The pressure intensifies because you’re managing larger portfolios, more complex business structures, and deals where even a 1% error represents staggering sums. The mental burden becomes crushing. As Maggiulli writes: “One of the other downsides of getting wealthy is how you can be influenced to strive for more even when it isn’t necessary.”.
• Family Relationships—Complete Breakdown: The time demands that create Level 6 wealth often mean you’ve essentially abandoned your family for decades. By the time you “arrive,” your children are adults who resent you, your spouse is a stranger, and no amount of money can recover those lost years. Families often splinter completely at this level. And when it comes to marriage especially, Maggiulli writes: “Spending the time to understand yourself and your partner is an investment that will pay off in spades. This will be true both in your personal life and your financial life.”.
• The Spoiled Children Problem—Generational Wealth Curse: At Level 5, your children might struggle with entitlement. At Level 6, they may never need to work a day in their lives, which often destroys their sense of purpose entirely. They become targets for exploitation, may develop severe substance problems, or create public scandals. Managing wealth transfer becomes a nightmare—how do you give them enough to be comfortable without ruining them?
• Loss of Privacy: At Level 6, you may appear on rich lists, attract media attention, and face constant scrutiny. Every business deal, every purchase, every family drama becomes potential news. You cannot move through the world anonymously.
• Existential Crisis—Profound Meaninglessness: At Level 5, you question what’s next. At Level 6, you’ve definitively “won” capitalism, yet the emptiness can be overwhelming. You’ve sacrificed everything to get here, and now you’re trapped in a gilded cage, unable to relate to normal people, surrounded by sycophants, and wondering what it was all for.

Success is relative, and even those who have achieved remarkable financial milestones can find themselves feeling inadequate when constantly comparing themselves to others with even greater wealth. The psychological phenomenon of “keeping up with the Joneses” doesn’t disappear at high wealth levels—it simply shifts to keeping up with billionaires instead of neighbours. This comparison trap can leave even the objectively wealthy feeling like failures.

To resist these corrosive psychological effects, you must cultivate a strong sense of self that exists independently of your net worth. This means regularly reconnecting with your core values—what truly matters to you beyond money? Is it family, creativity, service, learning, adventure? Write these down and revisit them frequently, especially when you feel the pull towards pursuing more wealth for its own sake.

The ultimate skill of the wealthy is learning to derive pleasure and meaning from their resources without allowing those resources to define their identity or self-worth. Your money should be a tool that enables the life you want, not the measure of your value as a person. When your sense of self becomes entangled with your bank balance, you become psychologically vulnerable—market downturns feel like personal failures, and you can never accumulate enough to feel truly secure.

Practically, this means consciously creating boundaries between yourself and your wealth. Spend time in contexts where your money is irrelevant—pursue hobbies where you’re a beginner, maintain friendships with people of varied economic backgrounds who knew you before you were wealthy, engage in activities where skill matters more than resources. Give generously but anonymously when possible, so you experience the joy of impact without the ego reinforcement of recognition.

Consider, too, the legacy you’re building. At this wealth level, the question shifts from “How much can I accumulate?” to “What will I leave behind?” Your legacy isn’t just about the money you pass on, but the values you instil, the positive impact you create, and how you’ll be remembered. As I often like to remember: It’s a poor sort of legacy that leaves behind only money. Many at Level 6 find meaning through establishing foundations, mentoring the next generation, or funding causes that align with their deepest values. Building a meaningful legacy requires intentionality—it won’t happen automatically just because you’re wealthy. What do you want your grandchildren to say about you? What change do you want to see in the world? These questions become increasingly important as wealth grows.

This psychological separation is how you safeguard your wealth from your own worst instincts—the tendency to take foolish risks to prove something, to spend recklessly to fill emotional voids, to sacrifice everything meaningful in pursuit of a larger number. By maintaining a clear-eyed view of money as a means rather than an end, you protect not just your financial resources but your mental health, relationships, sense of purpose, and the legacy you leave behind. In the end, your wealth’s greatest threat isn’t market crashes or bad investments—it’s your own psychology.

Good things take time

How long should you expect your ascent up the wealth ladder to take? Though each higher level is exponentially more difficult to reach than the one below, you are generally looking at a ten to twenty year horizon beyond level 2 to reach the next higher wealth level.

Yes, you can buy happiness

Now it is time to add some wisdom to our discussion that, till now, has been focused on wealth.

First, the bottom line on the latest view on the age old question: “Can money buy happiness?“ – If you are dirt poor (level 1) then, yes, more money will mean more happiness for you, and if you are not dirt poor (≥ level 2) but generally happy then, also yes, more money will make you happier.

Making money without any goal for it to serve does not help either, and at levels 5 and 6 (or even the higher reaches of level 4) when the climb becomes more difficult with every step, the same financially beneficial activities that used to bring you happiness can feel like a chore. Therefore, as with everything else in life, moderation is the key. I cannot say it any better than Maggiulli himself, the “… ideal strategy for maximising happiness seems to be to have enough money to alleviate struggle and worry, then focus on things other than money.”.

Things other than money

Maggiulli calls money “the great enhancer” and likens it to salt. We use salt to increase the taste of the food we eat, it brings out flavours previously unknown to us, but salt is not an appetising thing to eat on its own. Similarly, money can be used to enhance the experiences in our life:

• Travel experiences: If you love exploring new places, money can enhance this by allowing you to visit remote destinations, stay in comfortable accommodation, or hire local guides who deepen your understanding of a culture. Without the underlying interest in travel, simply having money to go places wouldn’t be fulfilling.
• Relationships: Money can enhance time with loved ones by enabling special meals, trips together, or removing financial stress that causes conflict. However, money alone cannot create meaningful relationships—it only enhances connections that already exist.
• Hobbies and passions: If you’re passionate about photography, money can buy better equipment, workshops, or travel to stunning locations. But without the genuine interest in photography, expensive cameras are just unused objects.
• Health and wellbeing: Money can enhance your health through gym memberships, nutritious food, or medical care. But it can’t replace the personal commitment to actually exercise or make healthy choices.

Like salt making food taste better but being unpleasant on its own, money works best when it amplifies things you already find meaningful, rather than being pursued as an end in itself. The question then becomes: “What should I be salting?”. Maggiulli takes a leaf from Sahil Bloom’s recent book, The Five Types of Wealth.

Social Wealth

Social wealth—the richness of our relationships and connections with others—stands as perhaps the most valuable form of wealth we can cultivate. Research consistently shows that it’s not about having a large network of acquaintances; rather, the depth and authenticity of our friendships matter far more than their number. A handful of genuine, meaningful relationships provides more value than dozens of superficial connections.

Financial wealth can serve as an enhancer of social wealth. Money can provide opportunities to spend quality time with loved ones—through shared experiences, travel, celebrations, or simply having the freedom to be present rather than constantly stressed about finances. It can’t buy friendship or love, but it can create the conditions where they flourish.

Mental Wealth

Mental wealth rests on three foundational pillars: meaningful work, stress management, and a healthy sense of self-worth. By strengthening these three dimensions, you can significantly enhance your psychological well being and overall life satisfaction.

Physical wealth

Research has demonstrated that maintaining good physical health carries substantial economic value—studies suggest it’s equivalent to earning an additional $400,000 annually in salary. This finding highlights just how precious physical wellbeing is when we attempt to quantify its worth.

Among all non-financial assets examined by researchers, physical health emerged as unquestionably the most valuable. No other non-monetary resource came close to matching its significance in contributing to overall life satisfaction and wellbeing.

Time wealth

Time wealth represents your capacity to exercise genuine autonomy over how you allocate your hours and days—the freedom to choose activities that align with your values and bring you satisfaction, rather than being perpetually constrained by obligations.

Historical perspective reveals a remarkable transformation: over the past hundred years, people in developed nations have experienced an unprecedented expansion of leisure time compared to any previous era in human history. What was once the exclusive privilege of the wealthy elite has become increasingly accessible to broader populations.

Consequently, authentic time wealth shouldn’t be measured merely by counting unscheduled hours on your calendar. Instead, the meaningful metric is this: what proportion of your discretionary time do you invest in pursuits that genuinely resonate with your values, develop your capabilities, strengthen your relationships, or contribute to causes you care about? Time wealth is ultimately about alignment between how you spend your hours and what you find genuinely worthwhile.

Win some, lose some

Regrettably, it’s impossible to simultaneously maximise all forms of wealth—pursuing one type often requires trade-offs in another. For instance, dedicating extensive hours to building financial wealth may diminish your time wealth and potentially compromise relationships (social wealth). Similarly, prioritising leisure and time freedom might limit your ability to accumulate monetary resources. The key lies in conscious prioritisation: understanding which forms of wealth matter most to you at different life stages and making deliberate choices about where to invest your finite energy and attention.

Financial wealth functions as an amplifier or multiplier of the other wealth dimensions you’ve already established in your life. Money enhances and extends what already exists—it enables you to spend more quality time with loved ones (amplifying social wealth), access better healthcare and fitness resources (amplifying physical wealth), or gain freedom to pursue meaningful work (amplifying mental wealth).

However, if these foundational forms of wealth are absent or underdeveloped, additional money simply multiplies with zero, yielding nothing of real value. This is why lottery winners often report returning to baseline happiness levels—the money magnified an empty foundation. The crucial insight is to build robust non-financial wealth first, then allow financial resources to enhance what you’ve already cultivated, rather than expecting money alone to create wellbeing from scratch.