Nick Maggiulli on The Wealth Ladder: How Your Money Strategy Must Change

It's not a coincidence that many of the most popular, you know, entrepreneurs out there and most famous and most wealthy entrepreneurs today all came from families that could have taken care of them in the upper middle class, right? Like if Mark Zuckerberg hadn't, you know, done Facebook, he would have been okay, right? If Evan Spiegel, like they all came from nice, you know, upper middle class families and they didn't have to worry, oh my gosh, if this fails, I'm going to be homeless on the street, right? That's not true of everyone else. And so I think thinking through that does make a difference in terms of the financial decisions you might make.

Thanks for having me on. I appreciate it.

I used to work in litigation consulting, which is like kind of law firms are hiring you to help them like represent a client. So, we were like, you know, helping some Fortune 1000 company and law firm would hire us. And it was a lot of billable hours, was a great job, but it was also very demanding and stressful and everything. And I saw like my future there and I was like it was limited and it was not a bad paying job but it was very busy and I knew the growth was limited so I was like I need to do something else. I don't know if it's going to turn into anything but let's see. And so my New Year's resolution back in 2017, it's been almost 10 years now, was to write one blog post a week. And I've kept that up for like 480 something, 87 weeks I think this week. I can't remember exactly. I'm almost at 500 weeks now of one blog post a week. And I've been doing that. And as a result of that, I was able to create enough content to write a few books and kind of go from there. But that was the original impetus of it was just to like keep putting out content, write about stuff you care about. For me, that was personal finance and investing.

So, I actually had the idea for The Wealth Ladder back in December 2019 and I posted it as a blog post and it was like my most viral post ever at the time and I was like, there's something here but like I'm not sure yet. And so when I was going to write my first book, which I was thinking about like in late 2020, I was like, "Hey, I feel like we're going to be trapped inside. COVID's still happening. Like I don't know the future, so like I should use this time." So I'm like, "I want to write a book." I had two ideas that I pitched my publisher on. And the first one was like, "Hey, let me answer a bunch of questions and like really do this deep data analysis on like personal finance and investing, right?" And that became what my first book was, Just Keep Buying. And the other one was The Wealth Ladder. And they basically said, "Hey, The Wealth Ladder sounds great, but it sounds like it's the more complex of the two. And since you've never written a book, focus on this other one. It should be easier." And they were right. It was the absolute correct advice. So, I put out Just Keep Buying in 2022. And then naturally, I'm like, "This is this idea I've been wanting to write about. I delayed for a few years, but I finally kind of found the data I wanted and I was like, I can write about this thing and the timing just worked out and I kind of went and I published it just last year in July 2025.

Yes. So the wealth ladder, it's all based on your net worth which is your assets minus your liabilities. So you can think of that as everything you own minus everything you owe to others. You can think of like cash in your bank account, your home value, your stock portfolio, 401k, all that stuff. That's the asset column. You subtract out any debt you owe, credit card debt, student loans, mortgage, anything like that. And that's your net worth. Right? Based on your net worth, I then classify everyone into one of these six wealth levels. The first wealth level is less than $10,000 in wealth. That's level one. Level two is $10,000 to $100,000. Level three is $100,000 to $1 million. Level four is $1 million to $10 million. Level five is $10 million to $100 million. And finally, level six is $100 million plus. Now, I use these factors of 10 because I think that's the size of the wealth jump you need to see a real big lifestyle change. Like for someone with $4 million or $5 million, they probably live the same lifestyle even though it's a million dollar difference. It's not like you're suddenly flying private if you have an extra million dollars, right? Like your lifestyle has to change with these really big jumps. And so that was the idea behind it. And also it's very convenient, easy to memorize because everything's just a factor of 10. Now, in terms of your question, like what percentage of American households are in each level. In level one, which is less than $10,000, that's about 20% of US households. Level two, which is $10,000 to $100,000, that's another 20% of US households. Level three, which is $100,000 to a million, that's 40% of US households. So just in levels one to three, that's like 80% of America. Level four, which is 1 to 10 million, that's about 18% of US households. And then level five and six, that's just the top. That's anything from over $10 million, let's say. That's the top 2% of households. And in particular, level six is so much money. It's like unfathomable to the typical person. Like there's less than 10,000 households that have over $100 million. So it's a very, very rare thing. As rare as level five is, 10 to 100 million, it's even more rare, you know, 100 million plus. And so when you look at the kind of the distribution, you see, okay, you know, 20% of America is kind of in that we'd say like the, you know, the lower class, 20% is in, you know, level two, which we would say is like working class. About 40% are in level three, which I would say is the middle class. And then 18% are in level four, which is that kind of upper middle class band. And then the upper class or the absolute rich is the top 2%. Right? So that's what I'm just seeing in the data. And of course, if you see this, you're like, wait, Nick, I'm in this level and I'm, you know, age is very correlated with this stuff. So you can't be like, well, I'm 20 years old and I'm in level one. That doesn't mean anything. That's not necessarily a bad thing. Like most people in their 20s are in level one and level two, right? They're not going to be, they don't have, they haven't had the time yet to build wealth. And my book covers that. I talk about, hey, if you're in this age bracket, here's the breakdown of the levels, and it's a little bit more instructive there. So, it's just something to keep in mind when thinking about this stuff.

Yeah. So that idea is like let's take this wealth ladder framework, all these levels, and now let's apply them to like general spending categories. And so what you were saying, level two, that's once again net worth somewhere between $10,000 and $100,000. By the time you're at the end of level two, I would say you have complete grocery freedom. But someone who has $100,000 in wealth, you don't have to worry about if you get the cage-free eggs or the pasture-raised eggs versus the normal eggs. Like that difference in pricing is not going to impact your life. So just get the thing you want, right? And then once again, once you're in level three, you can kind of keep applying this logic upward. And I talk about some of the math of that in the book, but the idea there is like as you kind of build more wealth, it unlocks more spending freedom. So you're allowed to spend more. And I like that because a lot of the advice on spending out there is like, oh, you have to live like a college student forever to build wealth. I don't like that. I also don't like the other side of it where it's like, oh, every time you get a raise, you spend it all. Like, that's not good either. So, where's the balance here? And I think this is a great way of doing that because it's based on your wealth, not your income. If you get a raise, I don't necessarily care and I don't think you should be spending more because you got a raise. I think you should be spending more as you build wealth, which is the thing we ultimately care about.

Yeah. So the idea there is you take your net worth and you multiply by 0.01% which is 0.0001 or more simply divide by 10,000. So you take your net worth, divide by 10,000, that's going to give you a number, right? That number is approximately how much your wealth is going to generate daily, right? In a very conservative sense, right? So like if you do 0.01% and you compound that every day for a year, it's about 3.7% a year. So it's conservative. It's less than even the 4% rule as you maybe have heard in retirement planning. So the idea there is your wealth is throwing off, is generating this much wealth conservatively every day. So if it's generating that, in theory, you could spend that every day and your wealth would stay flat, all else equal. Now, I'm not recommending people spend it, but hey, you go to the grocery store once or twice a week, you can go and upgrade. You can say, "Hey, I can spend a little bit more." So, if your net worth, let's use a simple example, is $50,000, right? Using the 0.01% rule or divide by 10,000, that means every day your wealth generates $5 for you. So, if you're like, "Hey, I want to get the..." I like using eggs because it's a very simple example. It's like, oh, I want to get the pasture-raised eggs. That's $5 more per dozen than, you know, the other eggs, the standard eggs. You can spend that. That $5 is not going to impact your wealth, right? But if it's like, oh, it's a $10 difference or a $20 difference, I would say you need to wait until you've kind of built up a little bit more wealth before you start making those types of larger marginal spending decisions. But the idea is that scales up the ladder. Like by the time you have a million dollars, that marginal spending decision is $100. By the time you have, you know, 10 million, it's $1,000. Right? All right. And so that's why I said level four, which is 1 million to 10 million, is like travel freedom. Because what's happening when you decide to go travel somewhere, the marginal decision is going to be in the hundreds to thousands of dollars, right? On a per night basis. Let's say you want to stay in a nicer hotel. Oh, this hotel's $300 a night. Well, this hotel's $500 a night. Okay, that $200 difference. I would say someone needs to have about $2 million in net worth to start spending like that, right? Relative to the baseline. So, it's just something to think about and it's another tool in your toolkit to make better spending decisions.

That's great. And that's what we want it to be. This idea isn't like, of course your income matters for your spending. If you have no income and you're spending money, you have to be drawing down on your wealth, right? But most people have income, they have some wealth, right? So, it's like you're working and the question is always that marginal decision. Can I afford this particular thing, right? You're not debating if you can afford groceries, right? At least many of us aren't, right? You're not. But at the other side of it, you're not like at the Lamborghini dealership. You know you can't afford that, right? So, like, you know, the areas where you can and can't afford things, right? It's that marginal middle area and that's where the rule is meant to help out. If you're like, I'm unsure, can I afford this thing? That's where it helps, right? I'm not trying to help you figure out if you can afford like your electricity bill or something. This is like those kind of upgrades or splurges, as I would call it.

I don't know. It's a great question. I haven't asked a lot of people about that. I think some people would be. I think you get both types of errors. You have some people who cross it and they just don't even think about it. But my guess is people who don't even think about it are not the types of people that are reading personal finance books. And then but here's the thing where I hear more of this from talking to readers. Oh my gosh, I used to go to the grocery store and, you know, nickel and dime every single thing and I, you know, this person has a net worth of $5 million and it's like, you don't need to do that, right? I think I get more of that reaction where it's people that have much more wealth than they need and they're like, yeah, I don't need to worry about my grocery bill, right? And I think obviously that's a place of privilege. I obviously understand that, but that's the type of people who are reading a lot of finance books, wealth building books, things like that are probably people who are already kind of doing the right things and they're just trying to optimize a little bit more, right? So, I think that's the thing I'm seeing.

I think that one of the biggest takeaways I've learned, like when I was learning chess growing up, like if you've ever played chess, you'll look at the board at a certain moment, you're like, "Oh, I should move my, you know, my knight here or my pawn here or whatever, like, oh, I can't do that cuz they'll do this." And then like you can look ahead maybe a move or two and you can see like, "Okay, yeah, like I can't do that." But a few moves later, they may have moved pieces around and then that old move that didn't make sense then now makes perfect sense, right? And I think that's how our life unfolds in a lot of ways. You might think, "Hey, I should check out this opportunity or I should do that" and you think it's the right thing for you and it isn't right yet, but one day it might be. And so I think when we're thinking of the context of the wealth ladder and how people invest and things like that, you asked about assets. The thing to keep in mind is like certain strategies might make sense for someone in level one and not make sense for someone in level six and vice versa, right? And so the simplest one I like to talk about is owning your own business, right? I think people are like business ownership is the key to wealth. And if you actually look at the data, the wealthiest people all own their own businesses, right? Like overwhelmingly that's true. I don't know if that's the right advice to give to someone in level one though because they don't have a lot going on. They don't have a lot of assets, at least financially. So, it's going to be really difficult for them to go out and take this big risk. They could end up further in the hole. You can understand how maybe they need to have a little bit of financial security before they can start taking those types of risks, right? And so when you're thinking about what asset choices to make and stuff like that, I think as you move up the wealth ladder, you can take more risk actually. So that's an interesting thing. As you can take more risk as you have more wealth and you can take those risks both in your career and in your portfolio because if it doesn't work out, you kind of have that base of safety and people don't talk about that. And when you look at this, people, I didn't know this anecdotally, like it's not a coincidence that many of the most popular, you know, entrepreneurs out there, most famous and most wealthy entrepreneurs today all came from families that could have taken care of them in the upper middle class, right? Like if Mark Zuckerberg hadn't, you know, done Facebook, he would have been okay, right? If Evan Spiegel, like they all came from nice, you know, upper middle class families and they didn't have to worry, oh my gosh, if this fails, I'm going to be homeless on the street, right? That's not true of everyone else. And so I think thinking through that does make a difference in terms of the financial decisions you might make.

It depends which level you're in. Right? I think for, we can go through like I'll go through, I'll give you a few examples. In level one, I think one of the biggest barriers for a lot of people is not relying as much on their network. Because when you're level one, you don't have a lot of financial assets and so you're like, "Oh, I don't have any assets." But your assets might be relational. You have friends or family that can help you out just to get you, you know, moving in the right direction, right? People don't think through those things. As you move up the wealth ladder, right? The types of barriers that come up is what strategy are you following? You know, you might have a great job and everything's going well, but at the same time, like what are the other things you could be doing that maybe pursue your interest or something that can allow you to transform your career? Does that mean starting a business? Does that mean doing content like what I do? I do content on the side, right? There's a lot of different ways you can do this. And I think you have to think through like what those barriers might be and what are maybe some beliefs you have about those that you might need to change going forward.