Bloomberg Businessweek came up with an interesting money index called a Global Wealth Number.
They did it because it seems as though saying “millionaire” is too broad – there are uni-millionaires, but they’re not in the same bracket as someone who is a decamillionaire or higher.
This is what it looks like:
So in the brackets from -2 to 2, they are a big chunk of the world – think subsistence farmers, those in poverty, or even people in debt and for a lot of us in First World countries, as you get older and save more money, you progress through this scale, especially if you’re a personal finance geek and reading this blog. Then you have the in-betweeners (the rest of us):
- $1000 = Median American renter
- $10K = Median American family headed by someone with no college education
- $100K = A lot of us personal finance geeks, or about 10% of the population if interest is anything to go by
- $1M = Again, lots of us as we age, keep investing and saving money, not totally out of reach if you invest early & consistently
And so on…The last bracket – 11 – is basically just two guys – Bill Gates and Jeff Bezos.
Most of us are grouped in the Wealth #3 to #6 range
If I look back at my wealth number journey, I was in the negatives at -2 for sure when I was clearing my debt in my early 20s. That’s what those negative numbers are for.
Currently at number 5 (along with Little Bun!!!), with the bottom of my bracket at $100K net worth, but in a few months I’ll be at number 6. Maybe at the end of my lifetime, I’ll be just kissing, or at the very entry-level of number 7, with a net worth of $10M or more. Who knows?
Even if I don’t reach Wealth Number 7 – I’m fine with that. I don’t really need all that money, it just ends up feeling more like a game or a challenge of how far you can go, the more you save, to be quite frank with you.
They also gave cute bracket indicators for each, like “can afford a second home now”, “able to purchase a major league team” (that’s number 10).
It’s another way basically, of separating the rich at the upper levels, to distinguish those with a million versus those with hundreds of millions – I completely agree that someone with $1M is not as “rich” as someone with hundreds of millions, but yet they’re both called “millionaires”.
The key is to move up as many wealth number levels as you can
Obviously if you start at a disadvantage it is going to be harder to go from $10K to $100K versus someone even at $100K to go to $1M.
It isn’t impossible but it takes discipline and hard work. You have to care about your money, no matter you income.
Once your basic needs are met and you have a good safety net of sorts, it makes it much easier to ascend this Wealth Ladder.
My Personal Money Principles
These are some basic b*tch and also controversial tips because not everyone agrees with them – I know right? We all have money, and yet no one can agree on the “right” path to get there, amazing; here are my personal principles:
- Start as early as you can – Today was already too late. I started while I was in debt because I was getting 100% return on my employer match.
- Save consistently – Automate your paycheque so you don’t see it, and just keep socking your money away into investments.
- Don’t time the market – Again, stick to your strategy, keep throwing money in. When the market is down, everything is on sale!
- Don’t go for sexy stocks or gains – See a mutual fund or stock returning 300%? It’s not sustainable / overhyped. Even if it isn’t, do you want to take the risk that it is? You could lose it all. Are you willing to risk 100% for 0%?
- Learn how to budget & manage your money to feel free – Save it, take care of it – don’t let small amounts just slip by.
- Read: How to create a budget
- Cut your expenses but don’t sweat over the small amounts – Snipping $5/day lattes (that’s how much mine cost) is a good cost savings of $300/month, but don’t spend 100% of your energy penny pinching in these areas when you could redirect them to save thousands a year such as getting your mortgage interest rates lowered, lowering your portfolio/management fees, moving to a cheaper rental, etc. These are BIG money moves that actually matter.
- Negotiate the f*ck out of life and your salary – I am trusting you’re good at your job, a hard worker and valuable, otherwise, disregard. Negotiate. Always negotiate, even services and in stores. If you don’t ask, you won’t get.
- Read: How to negotiate
- Clear your debt ASAP – Debt is a big noose around your neck that drags you down. Get mad AF that you’re servicing it at $500 or $1000 a month, and clear those suckers.
- Don’t assume home ownership is the path to wealth; do the math – Taking into account fees, maintenance, opportunity cost, home ownership may not be as lucrative as you think; it is only sexy because you have a physical home/asset that you own, but when you take everything else into account it could have been cheaper to rent & just invest the rest. Some people call home ownership forced savings and I don’t disagree but it sounds complicated if that’s the only thing you’re saving in/for and you have no investments outside.
- Avoid tax refunds – If you are getting a tax refund, you’re giving the government free money. You’re lending them that money that you’re losing earning interest on because you’re paying them TOO MUCH out of your paycheque each month.
- Avoid fees – As much as you can, avoid bank fees and paying dumb AF ATM withdrawal fees. Get organized and take your money out for free. Only pay fees when it is worth it to you (e.g. credit card where the rewards are greater than the cost), and analyze where your money is being sucked out
- Choose your life partner wisely – I have dated losers, and a couple of winners. Don’t settle for someone less than your equal match. My partner is truly my equal and we share similar values, although not opinions (we fight so much on topics), but at the end of the day, we are a match and on the same money page as each other
- Learn how to spend your money – Live a little. Life is too short to not enjoy your money. Find creative ways to save for what you want, even if it is a YSL Sac de Jour that costs $5300 but brings you immense pleasure.
- Shop secondhand – I wish I knew this when I was younger, I would have had a kickass wardrobe for much cheaper. You can buy a YSL Sac de Jour for $1600 this way, which means the retail cost burden was paid for by someone else, and you benefited.
- Figure out what makes you feel rich – I get croissants every Saturday morning and feel like a queen when I munch on them. I also allow myself lattes outside in cafes because I like the convenience, ease, and the experience of working outside.