Anyway, inspired by those who\u2019ve written before, plus my personal experiences \u2014 here\u2019s my take on the levels of wealth:<\/p>\n
<\/span>Demo level<\/span><\/h2>\nYou\u2019re affected by the levels of wealth, though you\u2019re not actively participating.<\/p>\n
This is our childhood, where our\u00a0parents<\/a>\u2018 wealth determined the kind of food we ate and the toys we played with. Most of us transition out of this into a \u201creal\u201d level after university.<\/p>\nDepending on your level of privilege, you might get a longer Demo level \u2014 for example if you stay with your parents all the way to a PhD. On the other hand, some get kicked out early \u2014 think single-parent families where teenagers have to work.<\/p>\n
Where you end up after exiting Demo level also varies. If you\u2019re a trust fund kid who becomes a successful entrepreneur, it\u2019s possible to jump straight to Level 3. If you\u2019re like most of us though, you\u2019ll probably start in Level 0 or Level 1. Don\u2019t hate the player, hate the game.<\/p>\n
How demo level feels like:<\/h4>\n
You\u2019re either unaware about the levels of wealth, or starting to question lifestyle differences between yourself and others. \u201cWhy does my best friend fly to Europe for holidays, while I\u2019m stuck at home playing computer games?\u201d<\/p>\n
Regardless, the beliefs about money you develop during Demo level will influence you for the rest of your life.<\/p>\n
<\/span>Level 0: Broke<\/span><\/h2>\nIn terms of assets: You owe more money than you have.<\/p>\n
For example, someone who has RM 20,000 (RM 1 = USD 0.24) in\u00a0student loans<\/a>\u00a0and credit card debt, but only RM 10,000 in assets like bank accounts and retirement savings.\u00a0Negative<\/em>\u00a0net worth.<\/p>\nTechnically, if the people you owe money to demand for immediate payment, you wouldn\u2019t be able to do it. Not unless you enter the cheat code and borrow more money.<\/p>\n
Obviously this is a level nobody wants to be in. The challenge for most people in Level 0 though, is they\u2019re stuck in a\u00a0cycle of poverty<\/a>. Level 0 can be a nightmare loop of not making enough money, getting into more debt just to survive, then giving your kids a lousy education + upbringing. Repeat for generations.<\/p>\nThe ones who manage to win this level are usually someone like you \u2014 educated and employable, young enough to significantly grow your income.<\/p>\n
How level 0 feels like:<\/h4>\n
I\u2019ve visited Level 0 before, but thankfully had enough privilege\/potential to earn my way out. Knowing I was broke lit a fire under my ass \u2014 to be more disciplined and work harder.<\/p>\n
If you\u2019re down at the deepest, shittiest parts of Level 0 (e.g. you don\u2019t even earn minimum wage, and instead of a degree you have a criminal record), it can feel hopeless. Depression, suicidal kinda level. Typical personal finance tips don\u2019t work at this level of hell too.<\/p>\n
Spare a thought for those in Level 0, and see if you can help anyone win.<\/p>\n
<\/span>Level 1: Struggle<\/span><\/h2>\nIn terms of assets: You have more than you owe. But not very much more.<\/p>\n
For example, someone who has RM 20,000 debt, but RM 30,000 in assets. That\u2019s a\u00a0positive<\/em>\u00a0net worth of RM 10,000.<\/p>\nLevel 1 is way better than the dump of Level 0. But it\u2019s still not comfortable. Net worth is just a snapshot of your current financial situation. Think about it as a report card or a fleeting story on Instagram.<\/p>\n
What net worth doesn\u2019t tell you, is how you live \u2014 how you feel like on a daily basis. Which is where income level comes in.<\/p>\n
People struggling in Level 1 earn low salaries1<\/sup>. In Malaysia, I\u2019d consider this to be people making\u00a0below<\/em>\u00a0the \u201cLiving Wage<\/a>2<\/sup>\u201d benchmark:<\/p>\n\n- RM 2,700\/month for a single<\/li>\n
- RM 4,500\/month for a couple without kids<\/li>\n
- RM 6,500\/month for a couple with two kids<\/li>\n<\/ul>\n
How level 1 feels like:<\/h4>\n
Living from paycheck to paycheck. Counting down the days every month to salary day. Spending big (Pizza Hut LFG!) when it comes, only to skimp (Hello economy rice, my old friend) three weeks later before your next salary.<\/p>\n
Can feel like a\u00a0meaningless cycle<\/a>, filled with existential questions. \u201cIs this all there is to work and life?\u201d And anger: \u201cEat the rich!\u201d<\/p>\nSusceptible to scammy investment schemes and exploitative companies that promise you \u201cpassive income.\u201d<\/p>\n
One major emergency away from falling back into Level 0.<\/p>\n
<\/span>Level 2: Financially stable<\/span><\/h2>\nYour income is securely above the Living Wage benchmark. You lead a comfortable life \u2014 with money for entertainment, friends and hobbies \u2014 and can still save\/invest >20% of your monthly salary.<\/p>\n
You may have loans, but it\u2019s under control. Less than 50% of your gross salary goes towards paying debt.<\/p>\n
In terms of\u00a0assets<\/a>: You\u2019re on track to retire at 60.<\/p>\nEven if you lost your job today (or some kind of freak emergency), you have enough savings to maintain your current lifestyle for at least six months.<\/p>\n
How level 2 feels like:<\/h4>\n
You don\u2019t worry about day-to-day expenses. Lazy to cook today, and wanna order some McDonald\u2019s? Sure. Want to do it for an entire week? Go ahead.<\/p>\n
The biggest difference between Level 1 and Level 2 though is the mental peace it gives you. You don\u2019t feel rich, yet you know you\u2019re okay. You may not feel financially free, but at least you\u2019re in position to think about it. You have a stable foundation to build the rest of your life on.<\/p>\n
Level 2 is a reasonable target for most people. Get here, find work you like, raise a happy family, and that\u2019s a pretty good life.<\/p>\n
![\"Financial](\"https:\/\/static.imoney.my\/articles\/wp-content\/uploads\/2021\/09\/28102830\/happy-family_main.jpg\")
<\/a><\/p>\n<\/span>Level 3: Rich<\/span><\/h2>\nI once asked my wife what\u2019s her definition of \u201crich,\u201d and she settled on \u201cnet liquid assets of >RM 10 million.\u201d Liquid meaning assets that can be converted quickly into cash, like fixed deposits, stocks and crypto \u2014 but excluding property.<\/p>\n
At that point, my definition was much lower: net worth of >RM 1 million. (I\u2019m thankful despite not being rich, and the huge disparity between our expectations, she still agreed to marry me.)<\/p>\n
It turns out common benchmarks for a\u00a0High-net-worth individual (HNWI)<\/a>\u00a0\u2014 which is a rich person\u2019s way of saying someone is rich \u2014 are actually:<\/p>\n\n- In Malaysia: RM 3 million net assets (personal or with spouse) excluding primary home, or:<\/li>\n
- RM 300,000 income per year (or RM 400,000 with spouse)<\/li>\n
- Internationally: USD 1 million in liquid assets<\/li>\n<\/ul>\n
Riffing on the benchmarks, I\u2019m gonna propose another measure: If you decided to stop working today, you could maintain your current lifestyle for another 10 years. At least.<\/p>\n
People in Level 3 are comfortably in the top 10 percent of society by wealth.<\/p>\n
How level 3 feels like:<\/h4>\n
Your standard of living is more by choice than necessity. Your measurements of wealth are more numbers on a screen than tangible improvements to your daily life.<\/p>\n
Often, the most efficient way for you to do something is to pay other people to do it for you. You value time more than money.<\/p>\n
Financial Independence<\/a>\u00a0and\/or Early Retirement is possible, depending on how you control your desires.<\/p>\nLife is good, unless you get into the sadly common habit of comparing yourself with the 1 percent \u2014 people who have tens or hundreds of millions.<\/p>\n
<\/span>Level 4: Rich AF<\/span><\/h2>\nYou can stop whatever you\u2019re doing today, and enough money would still roll in forever.<\/p>\n
Assuming you have some financial skills, you\u00a0never<\/em>\u00a0have to worry about going broke.<\/p>\nEven if you have no financial skills, you have enough money to hire a team of people to manage your money.<\/p>\n
Of course, a true Rich AF-er doesn\u2019t worry about what level they fall into, but the pleb in me found out the benchmark for an\u00a0Ultra-HNWI<\/a>\u00a0is >USD 30 million in liquid assets.<\/p>\nNote: there\u2019s big variance within this level. Someone with 30 million might always fly first class, whereas Rihanna (single-digit billionaire) flies private, while the King of Saudi Arabia owns an airline.<\/p>\n
If you wanna geek out on the differences between these crazy levels of wealth, check out this Reddit thread:<\/p>\n
Depending on your level of privilege, you might get a longer Demo level \u2014 for example if you stay with your parents all the way to a PhD. On the other hand, some get kicked out early \u2014 think single-parent families where teenagers have to work.<\/p>\n
Where you end up after exiting Demo level also varies. If you\u2019re a trust fund kid who becomes a successful entrepreneur, it\u2019s possible to jump straight to Level 3. If you\u2019re like most of us though, you\u2019ll probably start in Level 0 or Level 1. Don\u2019t hate the player, hate the game.<\/p>\n
How demo level feels like:<\/h4>\n
You\u2019re either unaware about the levels of wealth, or starting to question lifestyle differences between yourself and others. \u201cWhy does my best friend fly to Europe for holidays, while I\u2019m stuck at home playing computer games?\u201d<\/p>\n
Regardless, the beliefs about money you develop during Demo level will influence you for the rest of your life.<\/p>\n
<\/span>Level 0: Broke<\/span><\/h2>\nIn terms of assets: You owe more money than you have.<\/p>\n
For example, someone who has RM 20,000 (RM 1 = USD 0.24) in\u00a0student loans<\/a>\u00a0and credit card debt, but only RM 10,000 in assets like bank accounts and retirement savings.\u00a0Negative<\/em>\u00a0net worth.<\/p>\nTechnically, if the people you owe money to demand for immediate payment, you wouldn\u2019t be able to do it. Not unless you enter the cheat code and borrow more money.<\/p>\n
Obviously this is a level nobody wants to be in. The challenge for most people in Level 0 though, is they\u2019re stuck in a\u00a0cycle of poverty<\/a>. Level 0 can be a nightmare loop of not making enough money, getting into more debt just to survive, then giving your kids a lousy education + upbringing. Repeat for generations.<\/p>\nThe ones who manage to win this level are usually someone like you \u2014 educated and employable, young enough to significantly grow your income.<\/p>\n
How level 0 feels like:<\/h4>\n
I\u2019ve visited Level 0 before, but thankfully had enough privilege\/potential to earn my way out. Knowing I was broke lit a fire under my ass \u2014 to be more disciplined and work harder.<\/p>\n
If you\u2019re down at the deepest, shittiest parts of Level 0 (e.g. you don\u2019t even earn minimum wage, and instead of a degree you have a criminal record), it can feel hopeless. Depression, suicidal kinda level. Typical personal finance tips don\u2019t work at this level of hell too.<\/p>\n
Spare a thought for those in Level 0, and see if you can help anyone win.<\/p>\n
<\/span>Level 1: Struggle<\/span><\/h2>\nIn terms of assets: You have more than you owe. But not very much more.<\/p>\n
For example, someone who has RM 20,000 debt, but RM 30,000 in assets. That\u2019s a\u00a0positive<\/em>\u00a0net worth of RM 10,000.<\/p>\nLevel 1 is way better than the dump of Level 0. But it\u2019s still not comfortable. Net worth is just a snapshot of your current financial situation. Think about it as a report card or a fleeting story on Instagram.<\/p>\n
What net worth doesn\u2019t tell you, is how you live \u2014 how you feel like on a daily basis. Which is where income level comes in.<\/p>\n
People struggling in Level 1 earn low salaries1<\/sup>. In Malaysia, I\u2019d consider this to be people making\u00a0below<\/em>\u00a0the \u201cLiving Wage<\/a>2<\/sup>\u201d benchmark:<\/p>\n\n- RM 2,700\/month for a single<\/li>\n
- RM 4,500\/month for a couple without kids<\/li>\n
- RM 6,500\/month for a couple with two kids<\/li>\n<\/ul>\n
How level 1 feels like:<\/h4>\n
Living from paycheck to paycheck. Counting down the days every month to salary day. Spending big (Pizza Hut LFG!) when it comes, only to skimp (Hello economy rice, my old friend) three weeks later before your next salary.<\/p>\n
Can feel like a\u00a0meaningless cycle<\/a>, filled with existential questions. \u201cIs this all there is to work and life?\u201d And anger: \u201cEat the rich!\u201d<\/p>\nSusceptible to scammy investment schemes and exploitative companies that promise you \u201cpassive income.\u201d<\/p>\n
One major emergency away from falling back into Level 0.<\/p>\n
<\/span>Level 2: Financially stable<\/span><\/h2>\nYour income is securely above the Living Wage benchmark. You lead a comfortable life \u2014 with money for entertainment, friends and hobbies \u2014 and can still save\/invest >20% of your monthly salary.<\/p>\n
You may have loans, but it\u2019s under control. Less than 50% of your gross salary goes towards paying debt.<\/p>\n
In terms of\u00a0assets<\/a>: You\u2019re on track to retire at 60.<\/p>\nEven if you lost your job today (or some kind of freak emergency), you have enough savings to maintain your current lifestyle for at least six months.<\/p>\n
How level 2 feels like:<\/h4>\n
You don\u2019t worry about day-to-day expenses. Lazy to cook today, and wanna order some McDonald\u2019s? Sure. Want to do it for an entire week? Go ahead.<\/p>\n
The biggest difference between Level 1 and Level 2 though is the mental peace it gives you. You don\u2019t feel rich, yet you know you\u2019re okay. You may not feel financially free, but at least you\u2019re in position to think about it. You have a stable foundation to build the rest of your life on.<\/p>\n
Level 2 is a reasonable target for most people. Get here, find work you like, raise a happy family, and that\u2019s a pretty good life.<\/p>\n
<\/a><\/p>\n<\/span>Level 3: Rich<\/span><\/h2>\nI once asked my wife what\u2019s her definition of \u201crich,\u201d and she settled on \u201cnet liquid assets of >RM 10 million.\u201d Liquid meaning assets that can be converted quickly into cash, like fixed deposits, stocks and crypto \u2014 but excluding property.<\/p>\n
At that point, my definition was much lower: net worth of >RM 1 million. (I\u2019m thankful despite not being rich, and the huge disparity between our expectations, she still agreed to marry me.)<\/p>\n
It turns out common benchmarks for a\u00a0High-net-worth individual (HNWI)<\/a>\u00a0\u2014 which is a rich person\u2019s way of saying someone is rich \u2014 are actually:<\/p>\n\n- In Malaysia: RM 3 million net assets (personal or with spouse) excluding primary home, or:<\/li>\n
- RM 300,000 income per year (or RM 400,000 with spouse)<\/li>\n
- Internationally: USD 1 million in liquid assets<\/li>\n<\/ul>\n
Riffing on the benchmarks, I\u2019m gonna propose another measure: If you decided to stop working today, you could maintain your current lifestyle for another 10 years. At least.<\/p>\n
People in Level 3 are comfortably in the top 10 percent of society by wealth.<\/p>\n
How level 3 feels like:<\/h4>\n
Your standard of living is more by choice than necessity. Your measurements of wealth are more numbers on a screen than tangible improvements to your daily life.<\/p>\n
Often, the most efficient way for you to do something is to pay other people to do it for you. You value time more than money.<\/p>\n
Financial Independence<\/a>\u00a0and\/or Early Retirement is possible, depending on how you control your desires.<\/p>\nLife is good, unless you get into the sadly common habit of comparing yourself with the 1 percent \u2014 people who have tens or hundreds of millions.<\/p>\n
<\/span>Level 4: Rich AF<\/span><\/h2>\nYou can stop whatever you\u2019re doing today, and enough money would still roll in forever.<\/p>\n
Assuming you have some financial skills, you\u00a0never<\/em>\u00a0have to worry about going broke.<\/p>\nEven if you have no financial skills, you have enough money to hire a team of people to manage your money.<\/p>\n
Of course, a true Rich AF-er doesn\u2019t worry about what level they fall into, but the pleb in me found out the benchmark for an\u00a0Ultra-HNWI<\/a>\u00a0is >USD 30 million in liquid assets.<\/p>\nNote: there\u2019s big variance within this level. Someone with 30 million might always fly first class, whereas Rihanna (single-digit billionaire) flies private, while the King of Saudi Arabia owns an airline.<\/p>\n
If you wanna geek out on the differences between these crazy levels of wealth, check out this Reddit thread:<\/p>\n
Technically, if the people you owe money to demand for immediate payment, you wouldn\u2019t be able to do it. Not unless you enter the cheat code and borrow more money.<\/p>\n
Obviously this is a level nobody wants to be in. The challenge for most people in Level 0 though, is they\u2019re stuck in a\u00a0cycle of poverty<\/a>. Level 0 can be a nightmare loop of not making enough money, getting into more debt just to survive, then giving your kids a lousy education + upbringing. Repeat for generations.<\/p>\n The ones who manage to win this level are usually someone like you \u2014 educated and employable, young enough to significantly grow your income.<\/p>\n I\u2019ve visited Level 0 before, but thankfully had enough privilege\/potential to earn my way out. Knowing I was broke lit a fire under my ass \u2014 to be more disciplined and work harder.<\/p>\n If you\u2019re down at the deepest, shittiest parts of Level 0 (e.g. you don\u2019t even earn minimum wage, and instead of a degree you have a criminal record), it can feel hopeless. Depression, suicidal kinda level. Typical personal finance tips don\u2019t work at this level of hell too.<\/p>\n Spare a thought for those in Level 0, and see if you can help anyone win.<\/p>\n In terms of assets: You have more than you owe. But not very much more.<\/p>\n For example, someone who has RM 20,000 debt, but RM 30,000 in assets. That\u2019s a\u00a0positive<\/em>\u00a0net worth of RM 10,000.<\/p>\n Level 1 is way better than the dump of Level 0. But it\u2019s still not comfortable. Net worth is just a snapshot of your current financial situation. Think about it as a report card or a fleeting story on Instagram.<\/p>\n What net worth doesn\u2019t tell you, is how you live \u2014 how you feel like on a daily basis. Which is where income level comes in.<\/p>\n People struggling in Level 1 earn low salaries1<\/sup>. In Malaysia, I\u2019d consider this to be people making\u00a0below<\/em>\u00a0the \u201cLiving Wage<\/a>2<\/sup>\u201d benchmark:<\/p>\n Living from paycheck to paycheck. Counting down the days every month to salary day. Spending big (Pizza Hut LFG!) when it comes, only to skimp (Hello economy rice, my old friend) three weeks later before your next salary.<\/p>\n Can feel like a\u00a0meaningless cycle<\/a>, filled with existential questions. \u201cIs this all there is to work and life?\u201d And anger: \u201cEat the rich!\u201d<\/p>\n Susceptible to scammy investment schemes and exploitative companies that promise you \u201cpassive income.\u201d<\/p>\n One major emergency away from falling back into Level 0.<\/p>\n Your income is securely above the Living Wage benchmark. You lead a comfortable life \u2014 with money for entertainment, friends and hobbies \u2014 and can still save\/invest >20% of your monthly salary.<\/p>\n You may have loans, but it\u2019s under control. Less than 50% of your gross salary goes towards paying debt.<\/p>\n In terms of\u00a0assets<\/a>: You\u2019re on track to retire at 60.<\/p>\n Even if you lost your job today (or some kind of freak emergency), you have enough savings to maintain your current lifestyle for at least six months.<\/p>\n You don\u2019t worry about day-to-day expenses. Lazy to cook today, and wanna order some McDonald\u2019s? Sure. Want to do it for an entire week? Go ahead.<\/p>\n The biggest difference between Level 1 and Level 2 though is the mental peace it gives you. You don\u2019t feel rich, yet you know you\u2019re okay. You may not feel financially free, but at least you\u2019re in position to think about it. You have a stable foundation to build the rest of your life on.<\/p>\n Level 2 is a reasonable target for most people. Get here, find work you like, raise a happy family, and that\u2019s a pretty good life.<\/p>\n I once asked my wife what\u2019s her definition of \u201crich,\u201d and she settled on \u201cnet liquid assets of >RM 10 million.\u201d Liquid meaning assets that can be converted quickly into cash, like fixed deposits, stocks and crypto \u2014 but excluding property.<\/p>\n At that point, my definition was much lower: net worth of >RM 1 million. (I\u2019m thankful despite not being rich, and the huge disparity between our expectations, she still agreed to marry me.)<\/p>\n It turns out common benchmarks for a\u00a0High-net-worth individual (HNWI)<\/a>\u00a0\u2014 which is a rich person\u2019s way of saying someone is rich \u2014 are actually:<\/p>\n Riffing on the benchmarks, I\u2019m gonna propose another measure: If you decided to stop working today, you could maintain your current lifestyle for another 10 years. At least.<\/p>\n People in Level 3 are comfortably in the top 10 percent of society by wealth.<\/p>\n Your standard of living is more by choice than necessity. Your measurements of wealth are more numbers on a screen than tangible improvements to your daily life.<\/p>\n Often, the most efficient way for you to do something is to pay other people to do it for you. You value time more than money.<\/p>\n Financial Independence<\/a>\u00a0and\/or Early Retirement is possible, depending on how you control your desires.<\/p>\n Life is good, unless you get into the sadly common habit of comparing yourself with the 1 percent \u2014 people who have tens or hundreds of millions.<\/p>\n You can stop whatever you\u2019re doing today, and enough money would still roll in forever.<\/p>\n Assuming you have some financial skills, you\u00a0never<\/em>\u00a0have to worry about going broke.<\/p>\n Even if you have no financial skills, you have enough money to hire a team of people to manage your money.<\/p>\n Of course, a true Rich AF-er doesn\u2019t worry about what level they fall into, but the pleb in me found out the benchmark for an\u00a0Ultra-HNWI<\/a>\u00a0is >USD 30 million in liquid assets.<\/p>\n Note: there\u2019s big variance within this level. Someone with 30 million might always fly first class, whereas Rihanna (single-digit billionaire) flies private, while the King of Saudi Arabia owns an airline.<\/p>\n If you wanna geek out on the differences between these crazy levels of wealth, check out this Reddit thread:<\/p>\nHow level 0 feels like:<\/h4>\n
<\/span>Level 1: Struggle<\/span><\/h2>\n
\n
How level 1 feels like:<\/h4>\n
<\/span>Level 2: Financially stable<\/span><\/h2>\n
How level 2 feels like:<\/h4>\n
<\/a><\/p>\n<\/span>Level 3: Rich<\/span><\/h2>\n
\n
How level 3 feels like:<\/h4>\n
<\/span>Level 4: Rich AF<\/span><\/h2>\n