Our Thresholds for Wealth: The 5 Levels of Money & Independence

I thought about minimum wealth thresholds that would change your life, and came up with my own rough map of it.

(I totally distinguish between income & wealth – You can be a high income earner without much wealth, or you can be a low income earner with a lot of wealth saved.)

The ideal combination is High Income Earner + Wealth Saved, obviously, but we should all be clear that Income does not equal Wealth.

DISCLAIMER: All of this is extremely privileged thinking.

I understand 100% that the median income and wealth is NOWHERE near to what we are describing here, and people can be equally as comfortable on a lot less. This is just personal opinion / musings for our situation.

So talking about WEALTH…

These are ‘agreed’ upon levels by bankers, wealth people, etc.

• UHNW (Ultra High Net Worth) – Having assets of $30 million USD or greater
• VHNW (Very High Net Worth) – Having assets from $5 million USD to $30 USD or greater
• Wealthy – Assets from $1 million to $5 million

Then we also have the idea of 1% in Canada.

Top 1% in Canada Metrics

This is the total wealth to make it into the top 1%. Not sure if this is individual or household, but based on the sources used, it seems to be household net worth not individual as I suspect it would be difficult to split the two (more data points).

I feel like this distinction is important – individual or household – because it helps single people (or even people like me), understand what it means when we are tracking our own journeys, not our journeys with someone else.

And seeing in the statistics that most of these households are headed by white men, you could reason out that they may have partners who make less/don’t work at all, so the whole net worth that you see, should truly be split in half.

Here’s the top 1% in Canada for households

• Age 25 $405,737  CAD
• Age 30 $811,472 CAD
• Age 35 $1,622,945. CAD
• Age 40 $2,434,417 CAD
• Age 45 $3,651,626 CAD
• Age 50 $4,868,834 CAD
• Age 55 $6,491,778 CAD
• Age 60 $8,114,724 CAD
• Age 65 $9,737,667 CAD
• Age 70 $8,114,724 CAD
• Age 75 $6,491,778 CAD
• Age 80+ $5,680,307 CAD

And here it is if you split it out by household versus individual (50%):

Net Worth Canada Percentiles – Top 1%, 5%, 10%, and 50%  in Net Worth

Again, this is likely household, not individual.

• The top 1% of net worth in Canada in 2021 = $9,737,000
• The top 2% of net worth in Canada in 2021 = $2,500,000
• The top 5% of net worth in Canada in 2021 = $980,000
• The top 10% of net worth in Canada in 2021 = $840,000
• The top 50% of net worth in Canada in 2021 = $482,000

Canada’s Net Worth Dollar Amounts Between Percentiles

• The amount of net worth required to go from 90 to 95% = $140,000
• The amount of net worth required to go from 95% to 99% = $8,757,000

Average Net Worth Canada Statistics – Provinces

• What is the average Net worth per household in Canada? $679,792
• Average net worth per household in British Columbia (BC) = $943,742
• Average net worth per household in Ontario = $714,796
• Average net worth per household in Alberta = $700,171
• Average net worth per household in Quebec = $470,325

Average Net Worth Canada Statistics – Cities

• Average net worth per household in Vancouver = $1,144,204
• Average net worth per household in Toronto = $966,698
• Average net worth per household in Calgary= $840,417
• Average net worth per household in Montreal = $520,725

And if we look at what you need to earn to be in the 1% of earners:

Source & Source

Note:

I dislike that I have to put net worth thresholds on all of this because someone in a LOW cost of living area, with $1M is living very well, versus someone in a HIGH cost of living city with $1M. Everything just costs more, and if your dollar barely does the minimum, you’re the working rich.

That said, I put GENERAL net worth brackets…

1. Basic minimum bare bones living: $DEbt – $0 – $300K

This is what my partner grew up in, and my mother lived through. We are talking no money for anything but food and rent. Sometimes neither in my mom’s case.

In my partner’s case, his parents were just so scared of not having any money that they didn’t spend any of it except on basic essentials – shelter and food. Even clothing wasn’t considered essential, and they welcomed ALL secondhand clothing which has given my partner a complex about wearing anything secondhand. It was so frugal that his father even once considered not buying a fridge when it broke because he wasn’t sure they needed it.

His mother was a typical woman living under the patriarchal mindset and didn’t say a word (or felt she had the right to), so she hauled their fresh milk, yoghurt and food for 5 people back and forth, TWICE A BLOODY DAY for A MONTH before his father saw it was unsustainable and bought a fridge. I can’t say I love this story because WTF… but that’s how far they went.

My mother just didn’t have food. She starved. She stole food where she saw it, even from household pets when their owners left scraps of food out for them on the steps, and to this day feels guilt and hatred for pets (which makes no sense to me to be honest, as these pets helped feed her in a way).

2. Comfortable living but not YET financially independent: $300K – $900K

At this point of wealth, some people might have no debt but a mortgage to clear, and once they clear their mortgage, maybe they have a bit more money saved to actually retire on the wealth saved later on.

This is when you can breathe a little. You can afford to spend a little, but not extravagantly because if anything happened, you’d be in trouble. You have an emergency fund of at least 3-6 months and you can weather a $500 issue without spiralling into debt.

3. Financially secure: $1 – $4M

This would mean never having to work again if you do not want to, and on a bare bones budget up until a comfortable life but without many frills.

At a bare minimum there is NO debt at this level, and there is a small amount of income coming in, enough to at least cover 100% of your BASIC needs bills (home, shelter, food, utilities), but there are no extras like vacation, clothing, and so on.

Then you have the middle ground where you have a bit more income coming in (dividends perhaps?) and you can afford to take one local trip per year.

The upper end of this, would be that you have a comfortable amount of money coming in, you are taking 1-2 international trips a year, and you are certainly able to cover all your bills and then a little wiggle room.

This is such a grey area.. really .. lol

4. Give zero fks rich: $5m – $50M

I am thinking $5M or higher would be a significant amount of wealth where you truly can buy any “normal” thing you want (like a $1M-$3M house max but not $200M), and live very comfortably and stress-free because you have almost half of your money leftover for living and retirement.

You are able to pick up a home that is quite $$$ and clear it in full if you wanted (or not, take a mortgage if the rates are low!).

5. Rich beyond belief: $50M

This level is $50M or higher I think. I mean even at $11M that’s rich beyond belief to me, but we were trying to come up with thresholds that would make us think: OK there’s nothing to say at this point. There’s so much money, I am not even sure what you’d do with it all except give it away.

At this level, your things become more luxurious but the “needs” stay the same.

Think about it:

Your car, is no longer even a luxury car, it’s now a chauffeur who drives you around. Or you have a private jet that you own. (Not that I would want a private jet, think of all the emissions!!!!)

Your house is now not just a comfortable 2000 square foot – 4000 square foot home with or without people to help out occasionally like hiring a weekly cleaner, it’s 10,000 square feet with full-time staff.

That sort of thing.

I am not sure it is any more intrinsically enjoyable than at the lower levels of 3-4, because it is in the end, just stuff and services, but it all depends on what you consider to be useful for your life.

If you’re into having a personal chef and housekeeper, driver, etc.. then by all means that’s your thing – go for it!

Personally, I am not sure what I would do with all that. I would likely be starting full-grown charities at that level…

Do you ever think about such things?