Here in the US, with higher standards of living than pretty much any other place on earth, Americans have surprising difficulty getting their finances to a healthy point. But here’s the truth: I believe with all my heart that it is possible for anyone who has time, mental health, and true commitment to become a multi-millionaire, and even potentially a deca millionaire within their life.
I have broken down the levels of net worth by category. The numbers I chose are somewhat subjective. But I believe they paint a picture of what true riches look like here in the US.
Before I start the list, I want to clarify what net worth is. Net worth is the value of everything you own, minus what you owe. For this example I have decided to focus solely on financial assets (not clothes, furniture, or cars), which are things like that can be sold at roughly what they’re worth (like houses, stocks, bonds, etc…)
1. Upside-down Wealth – Net worth anything less than $0:
This is a position that many young people, particularly college graduates find themselves in. They get out college with loans, no money and therefore are upside-down with wealth. How can you move up to the next level? Work your way into a job, continue to live like a college student and pay off those loans.
2. Poor (real or fake?) – Net worth between $0 and $10,000:
If you find yourself in this circumstance you have to pick one of two decisions: 1) are you going to stay here forever, or 2) are you going to make the move to the next level? This is a position many people are in. Maybe they have a house, but have only a few thousand dollars of equity. Or maybe they are just starting out in the workplace. Either way, being “poor” should not only be a temporary situation, you should run from it as fast as possible.
You know what you need to do: get a better job, live on less, and begin paying off consumer debts.
3. Currently Broke – Net worth between $10,000 and $50,000:
No one I know wants to be here long. At this point you have enough to feel a little room in your finances, but even just a new roof and a few bad emergencies can wipe you out completely. While stopping by broke on your way up the levels is a necessity, staying here for longer than you need to is too risky.
4. Middle Class – Net worth between $50,000 and $500,000:
The most sought after class of all the classes is the middle class. This is what the “typical” two parent, two kid household is supposed to look like. Maybe you own a home, a couple cars, have a retirement account, yet carry a small credit card balance.
Middle class can feel nice… while you’re working. But what happens when you’re 70 years old and think, “I can’t keep working forever”? You need more wealth to be able to have the flexibility and peace of mind that’s necessary for a happy life. Here you can stand on your two feet financially speaking, but you know there’s something more.
5. Upper-middle Class – Net worth between $500,000 and $1.5M:
Almost everyone knows it – $1M isn’t as much as it used to be. But it definitely isn’t easy to achieve. When you’re net wroth approaches $1M it’s easy to think, “I’ve made it.” But really you haven’t – yet.
The truth is, what happens when you want to help someone else out financially? Or what if you want to explore Europe for a few weeks? Or what if you want to retire a decade early? It’s harder than ever to do those things on $1M.
6. Well-Off – Net worth between $1.5M and $10M:
It is completely feasible for most people in their mid 20’s or 30’s to reach this level in their lifetime. It simply takes hard work, steady contributions to retirement accounts, and a full-blown commitment.
7. Rich – Net worth anything more than $10M.
By now you know what you’re doing. You may not know everything, but you have a skill set that is very useful to say the least. You have discipline. Use this discipline into the future on whatever goals you set for yourself.
I hope this exploration of levels has helped you conceptualize where you’re at and what you can become. It’s never too late or early to start. Right now has never been better.