5 Levels of Wealth in 5 Minutes

Where Does Your Wealth Put You in America? (0:00)

Bo: Do you know where your wealth puts you in America? And more importantly, do you know how to move up? Today, we’re going to walk you through each level of wealth, share some shocking stats of each, and walk you through how to keep climbing. I have been a financial adviser for nearly two decades, and I am so excited to share this with you. So, let’s dive right in.

Level 1: Stability (0:19)

Bo: Let’s start with the first level, stability. This is where a staggering 67% of Americans find themselves. They are literally living paycheck to paycheck. At this stage, you’re either living right at your means or even worse, above them. Every dollar coming in is spoken for before it even hits your account, and there’s no breathing room at all. If you’re stuck here, the path forward requires some hard choices. You need to make a plan, ruthlessly cut expenses, or get creative with your income. The goal is simple, but not easy. You want to get to where you’re living below your means, and then you want to stay there. The last part is critical. Staying there is what separates those who escape this level from those who keep cycling back.

Level 2: Strategy (1:03)

Bo: Once you’ve created that gap between what you earn and what you spend, you’re ready for the second level, strategy. This is all about building a financial barrier between you and the world around you. Think of it as your first line of defense against life’s inevitable surprises or desperate decisions. And unfortunately, only 46% of Americans have an emergency fund covering 3 months or more. What this means is that more than half of Americans are just one unexpected expense away from financial crisis. This might be a car repair, a medical bill, or a job loss that could derail their entire financial life. To move beyond this stage, our goal for you is to aim to build a 3 to 6-month emergency fund. But how much exactly? Well, it depends. I knew it. If you’re in a dual income household where both partners earn relatively similar amounts and you have some decent job security, a 3-month fund might be sufficient since you’re not entirely dependent on one income. But if you’re a single earner or you have kids or maybe your income is volatile, if you’re like a gig worker or you earn based on commissions, you might want to push closer to six months. This financial cushion directly reduces anxiety by giving you the psychological security to face unexpected expenses without panic or fear.

Level 3: Security (2:34)

Bo: With your emergency fund in place, you enter the third level, security. This is where you secure your financial future. This is the journey to building wealth. And honestly, it’s the longest and perhaps the most boring stage of wealth building. But here’s what makes it so powerful. It’s in these years with these dollars that tremendous things can start to happen in your life. The average age when people start investing is 33. So if you’re younger than that, start today and you will have a massive head start that your future self will thank you for. If you’re older than 33, let this be your wakeup call to begin now. And the key to moving through this stage, keep going and be patient. There’s no shortcut here. This is where compound interest does its quiet, invisible work, where the money that you invested years ago literally starts working harder than you ever could. It’s not glamorous, but it’s essential.

Level 4: Freedom (3:28)

Bo: Eventually, if you stay disciplined through the climb, you reach the fourth level, freedom. This is when you hit your number, the point where you don’t have to work anymore. How do you calculate that number? Well, the 4% rule is a helpful place to start. Let’s say your household makes $100,000 a year in today’s dollars. Using the 4% rule calculation, you would need a retirement portfolio somewhere around $2.5 million. Now, that’s in today’s dollars, which means you’ll need to account for inflation and adjust your cost of living for however many years you are out from retirement. Then, you would want to adjust the portfolio need accordingly. The 4% rule is designed so that you can in theory withdraw this amount without ever running out of money, but it’s not one-size-fits-all. If you withdraw less, or if you have a more aggressive investment allocation in good market years, you might need less to retire safely. If you want to retire early with more income, you might need to plan on needing more. This stage is really about figuring out what enough means for you and working towards that number. Though the 4% rule gives you a solid benchmark and a good place to start with.

Level 5: Abundance (4:36)

Bo: Finally, there’s the fifth level, abundance. This is where wealth meets purpose. Psychologically, you’ve reached a point where you’re no longer crunching the numbers or anxiously checking statements to see where your money is. You are literally free. At this stage, you’re able to focus on what truly matters to you. Whether that’s family, philanthropy, or passion projects, or maybe it just means living a life on your own terms. This isn’t just about having more money than you need. It’s about the mental and emotional freedom that comes when financial concerns no longer dominate your thoughts and decisions. It’s the intersection where financial security enables you to live a life with both intention and purpose. If you want to know more wealth milestones by age, check out this video. And as always, keep building towards your great big beautiful tomorrow.