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5 Levels of Wealth AND How to Achieve Them! (2022 Edition)

Mar 21, 2024
Five Levels of Wealth and How to Achieve Them is brian preston the money guy brian I'm really excited about this show because the love of the world is kind of an idea that you and I came up with right when we started talking you know , for working. with rich people and

wealth

y families over the past, you know collectively over 30 years ago, now you know it seems like there are different stages in this

wealth

creation journey, there are different stages in how we approach our financial life, maybe It would be helpful if I kind of explained to our people what each of those stages are and how you can check where you are now so you don't put yourself in a box of stereotypes, but you're always excited, I'm actually excited, I'm excited today because we're going to drop bombs of fundamental knowledge.
5 levels of wealth and how to achieve them 2022 edition
If you've ever wondered how do I build wealth, where do I accumulate it, we're going to load you up today, so this is really going to be one of those programs that I always feel pressured to make sure this program ticks all the boxes because it's going to be amazing if you can. absorb all this and the first thing I always share with people is that wealth creation is surprisingly simple but not easy at all and I even divide it into three. main ingredients or fundamental things that go into creating wealth and the first is discipline and probably the most important is understanding the concept of deferred gratification by creating margin in your life, that margin leads to money, that is the second ingredient that then can be invested to start. by becoming your army of dollar bills, they can work harder than you with their hands, their brains and then if you give that invested money enough time, the third ingredient, that's where the real magic really happens, We talk about compound growth all the time. talk about the concept of 88 times more, that's really what I want to help unlock when we cover the five

levels

of wealth and so what I think is cool is that you start to understand those three unique ingredients and discover how to use those ingredients to your advantage throughout your life cycle, this is how you move through these

levels

, this is how you go from the first level to the fifth level, so we just want to go through each of these stages . for you, in the first stage of wealth, we call it the stability stage, yes, this is something basic and this is actually going to leave the step or stage one of the levels of wealth and it will be like Man, I'm a little sad for States United because the reality is that most of our peers, the people we know in society and around us, if you look at the population as a number, they don't even take the step.
5 levels of wealth and how to achieve them 2022 edition

More Interesting Facts About,

5 levels of wealth and how to achieve them 2022 edition...

Yes, there is a reason we call this the five stages of wealth, not the five stages that current Americans fall into, they are actually people who are on the journey where they are moving towards a positive place, so the first thing we do. I want to think okay for someone who is in the stability phase for someone who is here what does that look like what are some traits that describe that person uh is it someone who can comfortably pay their bills every month that they no longer calculate I figure out how I can get there at the end of the month I know I can keep the lights on keep food on the table and they are spending less than they earn they have discovered this idea this thought about discipline they understand that I have money coming in I don't need money going out and they have recognized that High interest debt is not something they want to play with.
5 levels of wealth and how to achieve them 2022 edition
They have gotten out of that trap of letting it work against

them

instead of working well for

them

, as I shared. This is kind of an indictment of Americans who fall or fall prey to the traps of this consumer machine that America is built on because 40 of Americans have trouble meeting their basic needs, so when I hear you say that that suggests to me he just said that someone the stability stage can cover their basics 40 of Americans are not there 40 of Americans don't even enter what we would call the first level or the first phase of wealth creation and then you know , we cover this every year and the number ranges from 59 60 61 the bank rate publishes this and it's how easily could Americans have access to a million, I mean, to 1,000, I just said from a million dollars to a thousand dollars, I mean, that sounds pretty basic and it's just If you drop your phone in the toilet, you want to know if you can cover it if the car doesn't start in the morning, how are you going to make the repair?
5 levels of wealth and how to achieve them 2022 edition
That's what I have in mind. it's at least to make sure that you don't have to make desperate decisions and unfortunately 61 of the most recent data can't even get a thousand dollars so again this number of 40 percent of people can't cover basic needs. or 61 percent can't get a thousand dollars, there are many people who don't even reach this stage of stability, which is sad, it's a horrible indictment on where we are as a society, however, it's not the truth for maybe If you're listening right now, that's not the truth for what we like to call our financial mutants in the money guy audience because chances are you guys are in this phase or you're close to this phase or maybe you've already passed through this space.
I always think when I talk so much about stability that we have made content about happiness, money, your relationship, you always hear that the figure of 70 to 75,000 is the income level to create happiness, that is not the case. To me, true happiness is stability, it means that you can now comfortably house your family, feed your family with the basics of life and that is what we are trying to

achieve

for people with this first level of wealth creation and , therefore, what we want. This type of tour is fine if you're sitting there and you want to do a self-assessment, how do I know I'm doing it right or how do I know that I've satisfied what the level of wealth stability is?
Well, number one, you have your risks covered, that could mean you have your deductibles covered, you follow the financial order of operations, you have the first step, you have your wrist covered, the second thing you know is that you are just. not leaving free money on the table so that's step two of the financial order of operations if you have a matching employer or if your employer will put money in your hsa if there is free money available for you to get, know that you can take it, the third thing you know is that your emergency fund is building up, you're not going to fall into that trap that 61 of Americans fall into where they can't come up with a thousand dollars, that's not going to be what defines you and then the La Fourth thing is that you don't have any credit card debt, so there is something that is behind all of this: the original ingredient of wealth creation, which is discipline and something that I think most people go on to enter. level one of wealth creation and even graduating to level two, you have a budget, you must know where the dollars that come into your home go so you can be a good field general and allocate them efficiently at all times, you already know how to save and then invest too.
I think a lot of people struggle with just paying for their basic needs, so make sure you don't skip all the steps, like the discipline of creating a budget so you know what's coming in and what's going out of your finances. Interesting Brian because I've heard you say this a few times before that like you, you don't necessarily budget anymore in the traditional sense of how we think about a budget, but I bet if you remembered when you got out of college. When you first got married, when you first got married, I bet you probably budgeted right, yeah, you definitely need to know what's coming in and what's going out, so how do you diagnose what the problem is?
If you have a car, what comes first? so difficult, you know, they always want to hear what the sound is that your car makes, you know if it comes in, if you try to describe it or you know it never is, it's actually something that you need the expert to hear. What's happening? What is the car? Sounds good. The budget is your diagnostic tool to know. How much am I spending across all of these categories so I can see where the leaks are coming from? I'm actually not being really efficient in how my money is spent. and inverted, that's perfect, so we want to give you if you're in the stability stage and you're trying to think about how do I make sure I keep things within the guardrails, how do I make sure I stay where I'm supposed to? be so that you can move on to the next level of wealth creation, there are some general rules that we just want to remind you, we call them money type rules, the first is when it comes to buying a car, which is one of the first big purchases you most of us do want you to follow 23.8 20 down payment no financing for more than three years and the monthly car payment cannot exceed eight percent of your gross income yes and then of course look this is thing from the people.
See car payments now because of inflation and everything else it's not uncommon for people to have car payments of 800 to a thousand dollars at all and what makes me sad is when I find out they have car payments of a thousand dollars and only They are putting in 300 a month. or yes, I said 300, but even that is unbalanced, you have to invest more monthly than you are making for your car payment and realize that 23.8 is only for basic cars. I'm not talking about luxury brands. Luxury brands need to be treated. Same thing as cash because you don't want your eyes and your desire to look good getting in the way of building long-term wealth and then when it comes to housing, you want to make sure you keep all of your housing.
You spend the cost of your housing below 25 of your gross income and you want to make sure that all of your debt payments, so you know, student loans and housing and car payments, all of that doesn't need to exceed 35 of your gross income if you can answer those the questions say man, I'm doing those things that I follow, I've checked those boxes, I'm adhering to those rules, congratulations, you're already in the top 40 of Americans, between 40 and Top 50 percent just for being in this. first stage of wealth stability to close the type of stability I want to make sure that we put an asterisk or an exclamation point on the fact that many of those traps that we just discussed were all debt induced credit cards, remember that in We actually give you the ability to use credit cards as a tool, but you can't use credit card debt.
These things must be paid monthly. If you can't pay your credit card debt monthly, you can't do it. He just can't do it. do it and then cars will be that financial napalm that will ruin your life yes you look great yes you get those dopamine hits for just a few weeks but it won't help you build wealth in the long run have a healthy relationship with lifestyle with discipline with decisions so that you can then move from stability to the next level of wealth, which is strategy, yeah, this is where I think it starts to get, I don't want to say fun, but it does start To have fun here because you start to believe that you have a plan, you know what you're doing, why you're doing it, and where you're going, so we wanted to talk about what someone who's in the strategy phase does looks like what are some traits that would describe them well.
Here is the first one. They are saving 20 to 25 for retirement. They got it, man. I understand that wealth creation is made up of disciplined money and time and what I go for. What I have to do is the rest of the time I can save. I am going to have the discipline to live with less than what I earn and I am going to save between 20 and 25 for the future. Yes, the second thing they understand is that they have some money. Clearly defined financial goals and chances are they probably wrote those things down. They probably put them in writing.
Hey, this is what I want to do. This is where I want to go. They know they are not letting life happen. know exactly where they are trying to go, the third thing is that your finances are on autopilot, what do you mean Brian when you say your finances are on autopilot? Well, I just want you to automate a lot of your life because there are so many opportunities to get to this point. Actually, remember I said that wealth creation is surprisingly simple, but it's not easy at all. This is the part where we can really make it easier for you.
Don't get distracted by all the consumerism and lifestyle that expands every time you get a raise. You will be proactive and put everything on autopilot because you can automate how much is coming into your cash reserves each month, how much you are contributing from your monthly payroll to make sure your employer matches and maximizes the free money. how much goes toward all your other retirement savings, all of that can be updated automatically so you set it, forget it and focus on living your best life because you already checked the box of saving 20 to 25 of your gross income and whendo that, you put yourself in this place in this position, Brian, I'm going to give you credit for this because I think this is what you came up with.
This is a trademark of Brian Preston Money Guy. You are using forced scarcity to your advantage you feel comfortable living in this man's world. I always feel broke, not because I'm broke but because I have my money going where it needs to go when it needs to go there and I do it first so I know I'm building my ultimate financial goals, so scarcity is one of my words that I use because I I like the idea of ​​creating self-imposed boundaries for myself, so that every time I get a raise or I get more money, and now look, I let some of that into my lifestyle.
I'm not a miser, I'm not Ebenezer Scrooge, who makes sure that I tell my spouse to turn the heat down to 62 because we're saving a few more dollars, I'm not talking about that, but what I'm saying is that, As good things happen in your life, in regards to your career or your income streams, if you have some alternative sources of income I want you to create limits and forced savings so that even if more money comes in, you don't feel the weight or feel that you can do anything without at least respecting why we don't do it. increase our savings because that's something we've talked about often many people you'll be inspired you'll find the money guy program you'll hear about compound growth with the 88 88 times plus you'll find out about roth you'll go and say you know what I could do with 500 a month on my roth ira and I'm going to set it up and when you're 23 years old, when you discover this program and start saving 500 a month, I want to go five years in the future, but now, instead of making about forty-five thousand dollars, you're making a hundred thousand dollars and you find that you never change every five hundred dollars a month, that's not what I consider scarcity in action. you need to expand what you're doing for your financial life and not just focus on letting the lifestyle grow, that's a big risk, so I think one of the interesting things is one of the first things that when you get into the In the strategy phase we say that you need to save between 20 and 25 of your gross income, so one of the questions we all want to answer is: how do I compare to my peers?
How are other people doing this? How are other people handling it? Well, look at this data and it's from bankrate.com. They found that overall savings rates for Americans now include all money saved, so not just for retirement savings, it's like money going into Sam's accounts and otherwise five percent of respondents said they don't know how much they're saying well, if you don't know how much you're saving, what does that mean Brian? You're probably at that point where you didn't save anything 21 but you're a little embarrassed 21 say they don't save anything 20 of Americans say they say 5 or less 28 say they say between six and ten percent ten percent say they say between 11 15 only 16 save more than 15 of their income and remember we said that to be a true financial mutant if you want to advance through the levels of wealth you should save between 20 and 25 percent, only 16 people in this country are reaching that mark of 15, we have a savings problem, we definitely have a savings problem and I want people because I don't I want you to think well guys, what did you do?
You saw this number and you saw 15 and you heard other commenters say 15, wow, well you know what happens if you have 15? I'm going to do 25. That's not how we do things here at Money Guy, you know, we're analytically driven, we're a little nerdy about things, so we actually wanted to pull back the curtains and show you some data and some research that We have compiled to show you how. Did we come up with 25? Yeah, it's pretty exciting, so let's look at a kind of simple case study. Let's assume that when you invest you can earn a conservative rate of return of six percent and let's say that for all your years of working as you your income increases about one and a half percent per year and let's say that you want to retire at age 65, right, That is what we are explaining well if you are 20 years old and you calculate I discovered that I can start saving 25 of my gross income when you reach 65 and it is time for you to retire.
You can actually count on your portfolio to provide 167% of your pre-retirement income. That's right, you accepted a raise to retire from your portfolio. Well, this is where we give it some fun. That's why it's 20 to 25, because I know most Americans, even people who are financial mutants, who watch the show, because I'm going to be absolutely sure that I wasn't. I saved 25 percent of my income at 20. I wasn't even investing at 20 yet, so we're giving you a little grace so you don't have to be 25 at 20. You'll see how this all lines up here. Now, then, maybe you think maybe you finish college and say I'm going to start at 25.
Well, even if you start at 25 and you can start saving 25 by the time you get to 65, if you do that. that you can replace 131 percent of your early retirement, they can't do it again. If you work until you're 65, you'll likely take a raise if you wait until you're 30, and this is where the magic number comes from if you're 30 and just starting this journey and saving 25 of your gross income by the time you reach the 65, you will be able to replace one hundred percent, in reality it is 102 of your previous income. -retirement income there it is that's where the number is there comes the 25 and I think that's very powerful because, by the way, if you're someone watching this and you're 35 years old or even 40 years old and they're like oh no, yeah that is the break-even point of why many indicators make 25, you don't have to get one hundred percent of your retirement income when you really reach financial independence, it's because there are other sources where you can have pensions, you may have security social and some other things that will help you supplement what you spend in retirement, so there are even more opportunities for those people who have not started before age 30.
Yes, if you don't start until age 35, you could still replace almost 80 percent of your pre-retirement income, if you don't start until age 40, you can still replace almost 60 percent. Well, the reason we say calculate 20 to 25 percent as soon as possible is because the sooner you figure it out, the more time you have, the more your money will grow for you, and the more options you will have in the future, maybe you don't want to work until 65, maybe you want to retire at 60 or 55 or 50 the sooner you can figure this out the more options you'll have later in life so we've been talking about saving and this is something I think I'll say is sometimes a criticism towards us because when I talk about saving, I just assume and maybe this is the financial mutant in me that we are putting that money to work, but it is, but we need to make sure we clarify our language to talk about saving versus investing, yeah, like that that this is something that Brian and I want to do again I want to give you tons of crap, man, I've learned a lot from you, it seems like probably that whole narrative, the best illustration I've ever heard of this was an illustration that you give between your parents. and your in-laws and how powerful the difference can be between saving versus investing, because you can be a great saver and still not do the things that we talk about in this program; there's another component and that's exactly what you said putting your money to work well, I think about my childhood, my parents, because I told them that the three components of wealth creation is discipline, it's the first part that drives, creates a margin that then drives the money, the money that can be invested and that money invested.
Over time it becomes something truly amazing through compound growth. I have parents and grew up in a home where money was not wasted. I attribute a lot of my skills to being good with money and if you talk to any of my childhood friends, they will. I confirm that I was always the guy who had the coupons and did everything so that money didn't go to waste in my home, but there is a big separation in that wealth creation list of three key components. The money was never actually invested, it was just saved because my parents The idea of ​​investing or really making money was to save money and then put it on CD and save, the hardest part, they did the hardest part right so I wanted to do it. because you know I shared them before my father passed away in December 2000. um, it's a little hard to believe that we are quickly approaching his 21 years in which he has no longer been with us, so I have had a lot of time to reflect on what were some of those key years of your life saving professionally. and the creation was probably in the mid 80's until he passed away in 2000 and what I think is that when Jennifer and I got together, I met her parents, who are also very good at saving money, but there is a key difference between my parents and his parents and the fact that his parents actually invested his father's money.
I can remember we had many discussions about him buying Fidelity Magellan when Fidelity Magellan was like the bee's knees. I was very happy about that meanwhile my parents. Remember these are cash CD type investors and I will blow your mind during this period we cover here. My parents made more like five and a half to six percent, depending on how many years you're looking at with CDs right now. We're all looking at our CDs and our savings, you know what our banks pay and we think, man, I only get one point three percent or one point, you know, or half a percent in my savings account, how the hell does that sound? great if someone could give me five and a half six percent all day no you wouldn't because there's always this opportunity when you invest there's what's called an equity risk premium so even when you go through periods of high inflation like we're experiencing Right now, just like we experienced in the early '80s and late '70s, you'll notice that when people say I want to lock in my CD rates, you won't because what's really happening is the years in that CD rates are really high, your equity returns because the equity risk premium where you make a profit by taking the risk of investing the money is going to be tremendous, so we did a case study where We said, let's take someone who puts two families, each, fifty thousand dollars each into an investment to see what that turns into from this period from 1985 to 2000 and here are the two things they did, one just putting the fund Fidelity Magellan, this is not hypothetical, it is a real fund that you could have invested during that time period and the other.
The family just bought one-year CDs and continues to renew the one-year CDs, so they got interest rate increases over time. Well, here's what happens with that 50,000. Over this 15-year period from 1985 to the end of 2000, the CD investor would have become That 50,000 became almost 120,000. Still, I mean the money grew, compound interest occurred, grew the one who figured out how to invest and not just save, although they were able to turn their 50,000 into almost 836,000. and this is just over a 15 year period, what you do with your money is important , you want to discover how you can make your money work even harder than you do.
Saving is the hard part, don't let investing be the part that stops you. of building your dollar bill army, I don't want to get into a sidebar because I want to cover how you know you're doing the strategy right, but a lot of people are going to look at this and find the money guy for the money guy show for the first time they are going to invest I don't I just don't know what to do I don't come for money and we have found a way to do this incredibly simple what should someone do if they are new to investing open their first Roth ira to get that tax-free growth and get 88 times more?
How do you do this? Yeah, I think it's a great thing that everyone can use, uh, and this because The technologies that enable this now are what are called target retirement index funds. Basically, all you have to do is decide what year you think you'll want to retire. Is it 2040? Is it 2045? 2050 and you buy the fund that corresponds to that. year and a lot of fun companies have these, there are fidelity freedom funds, their cutting edge target retirement funds or several others. What I love about this is that there are only two questions you have to answer, when do I think I want to retire and how much?
Can I save money? Do those two things and let the rest take care of itself because what will happen is that as we get closer and closer to your retirement date, those funds will naturally adjust for you, so you won't have to guess whether to buy. Should I sell? How do I do it? All you focus on is how much I'm saving, when I want to retire, and watch your army of dollar bills grow once again. Creating wealth is incredibly simple, but it's not that easy, but you have to do it. I just shared onehuge tool.
If someone, if you don't come with money, doesn't know how to invest, don't let someone try to turn your head and make this too complex. Take advantage of those two questions. I just asked how much can you save and invest and when do you need the money and index target retirement funds because they have super low costs, no fees, that will be your bridge to take you to the next level of wealth creation and abundance. If you're listening to this, what are some things I can think of? How do I know if I am doing the strategy stage?
Here is number one. You have a full three to six months emergency fund. You are working on your financial operations. and you have a full emergency fund, now you're starting to think about how can I not only save taxes currently, but how can I save taxes throughout my investing life using tools like Roth IRA and health savings accounts to put to work your money effectively and then you're working to get that 25 percent of your gross income into retirement. We all know life happens, you know, maybe let's start. We're single, we're saving a lot, but then we get married and then we have a kid and then we buy a house and our savings rate has to go down.
You have that constant motivation in the back of your mind that says: you know what I am. I'm going to get to those 25 as fast as I can and I'm going to do it for as long as I can and you'll be surprised what the financial journey is going to be like if you do it, I think a lot of people, because strategy is so important, you want to make sure that you feel Hey, I don't know what I don't know, how do I know I'm doing this correctly? We've created the financial order of operations and lo and behold, there's a free deliverable.
Visit moneyguy.com. Resources you can download the exact same thing I'm holding up here, but there's also a better resource if you go into that free deliverable, wow yeah, but I need details, I need some meat, I need to know what happens in this different scenario, go learn . moneyguy.com we actually have a course that will accelerate the wealth creation process. Look, I don't like selling things. I'm going to tell you straight, but I believe so strongly that this will really speed up your abundance creation process. Could I be doing you wrong if we don't push this right?
Then you've probably put this together as we move through the levels of wealth that build on each other once you've figured out stability. It helps you start developing your strategy well. Once you've made the strategy and you've been doing it for a while, you enter this third level of wealth and we call it the third level of wealth security. Yes, now I want to be honest. with everyone because we live in a give it to me yesterday society and you can't help, I mean, I love social media because we're doing it, you know, I think we're doing our virtual classroom for anyone you know.
You're getting your master's degree in wealth creation right now as we speak, but there's a dark side to the fact that a lot of people are out there showing off their cars, showing off their lifestyle, presenting their courses and other things that they're trying to tell you. they got the perfect shortcut and when I talk about the next level of wealth that you're at in your wealth security stages, it's not one that has come quickly and I think there are a lot of younger people and I've shared this statistic before Ramsey. Solutions has shown in their research that the typical millionaire is 49 years old when they cross one million dollars and in my own personal journey I didn't feel like I was really out of that messy middle of trying to fight for survival on top of being disciplined and building. what it fundamentally took to maximize compound growth until I was in my early 40s sure I'm jealous now I think you're going to do it and you're already doing it and you're significantly younger so yours is happening when you have about 30 years, I mean, there's something to this security, but I wanted to be transparent and honest that this might not be something that happens overnight.
It's going to take a while to get over the financial order of operations and get over the mess. in midlife, so if you're hearing that and you're thinking, well, how do I decide what the traits are? How do I know if I'm really in the safe phase? Well, here's the first one you shouldn't do. Not only do you have a plan, yes, but you've been planning well enough during your strategic phase to have a plan b, a plan c, a plan d, hey, if something were to happen and I passed away prematurely, my family would take care of themselves. .
If I lost my job, I'll be able to pivot here if the market doesn't offer 15 rates of return each year. I'll be fine because I've done x, y and z, not only have you built a strategy, but you've been able to build a moat around the strategy that you have in place, so you also feel less pressure every month, like every month you feel like, hey, there's a little extra money out there now, one of the big ways we already said you can combat that is by thinking about strength shortages, but even when you're doing that and you hit that number 25, you start to say man, I've got a little more, maybe there's something else I can do and then because you took care of the big things from the beginning and again this takes time to take care of the big things the little things don't matter as much the 20 I'm going to use numbers here I'm going to stereotype The 20-year-old version of yourself and the way that person ordered it in restaurants or traveled or made purchasing decisions may be different than the 40-year-old version of that person, although there is a risk to that third party because you took care of The important things I do because I think that look that we all think when we get out of high school, especially if you're the nerdy kid like you know some of us were, you know that your financial mutants didn't get here without having a little clumsiness and being out there, I think everyone, I think if you surveyed the general population, we all feel like weirdos in some way, although I say this to my daughter all the time, is that even the cool kids probably have their own feelings. like they're outsiders or weirdos or things they don't want the public to see properly.
I think when you grow up that's going to change, I don't mean that you'll find that everything becomes different because you graduate from college. and there's every risk that you overbuy the car because you're faking your lifestyle and then you fast forward until you're 40 instead of making small decisions and by the way a car is not a small decision but no It's about buying an iPhone or your car payment, those are great deals, but in reality, when you start buying new luxury cars, that's right, you start buying the biggest house because you want to hold them down and you can't give up.
Realize that you're in this hedonic rut of trying to figure out how I keep getting those dopamine hits and you never feel satisfied, those are the decisions that are going to keep you from being truly safe because you're just going to keep pushing, pushing, pushing for more. and increasingly, be careful not to make mistakes in those big life decisions and look, you will recognize it as you go along on your wealth journey, just as we talked about, sometimes it goes through the financial order of operations. and you may have to take a step back for a season, the same goes for your journey to wealth.
You may be a young, single person who has been saving and doing great and you feel like there is some extra money around you. I feel like, oh, things feel pretty good, I'm pretty sure, but then you get married and then you have kids and then you buy a house and all those other lives that you're like, oh man, I gotta get back to strategy because now my circumstances they've changed. changed, okay, that's part of the process, that's part of the journey, your goal should be to carry out your strategy phase for as long as it takes until you can start to feel some of that security, feel some of that margin and you open to enjoy the little things, maybe your thing is that you know how to walk on your burrito without feeling guilty, maybe that's what you can do in the safety stage that you wouldn't have done before, so talk to them about how you know What are you.
You are doing it right because it will allow you to escape. Just thinking about yourself can expand this a little bit, even thinking about the kids a little bit, yeah, so this is one of the things you're probably doing. In the security phase you started thinking about future expenses and maybe those future expenses are to pay for college, maybe those future expenses are a special vacation, maybe those future expenses are to improve the house or upgrade the car or whatever. whether you have started. thinking and planning for those, you're not just trying to figure out how to pay off what's right now in front of you, if you're over 45, you might even consider eliminating some of that low, low, low interest debt, like a mortgage, you could start saying, "Hey, one of our goals is to be debt free and since I feel confident that I've done the other part too, I can start focusing on being debt free and I can start paying my mortgage early and now you can have a little luxury in your life that's that whole idea around you you know what I used to do I used to do the uh what's that what's the overnight flight why did I go blank when you drew a flight and it's Overnight you talk about red eye, red eye You used to do the red eye flights because it was the cheapest you could get on and you had to connect six different places and it took you, you know, 10 hours to traveling three hours at this stage maybe you say you know what's good, I'll pay a little more, I'll do what I do, I'll fly, it's okay to have those kinds of luxuries when you're in this phase, oh I'm definitely on board. with that I tell my wife all the time that no, we are any flight that comes too early or too late, all you are doing is yes, you may be getting a deal, but you are borrowing from the memory theft that you could be creating and What I like about this really is what we're focusing on here when you get to safety in the level of wealth and where you are in creating this, you're really in steps eight and nine of the financial order of operations which is so powerful and what What I like is how well this all lines up with the financial order of operations because I told you on my own personal journey that I didn't feel like I had graduated to this level until I was 40 years old.
I had automated much of my wealth creation through Investing and making sure things happened automatically. Once I hit 45, it was no longer just about building wealth, it was about preserving it, so you could feel completely comfortable paying off that low-interest debt because it's no longer about maximizing, it's about doing. I'm sure we're sure we've created a plan, it's a good plan and this is what I like. If you like coffee, oh yes, we are big coffee drinkers. You hear about the café au lait effect that goes out the window when you go on stage. three of security is because, since the important things are happening properly, if you go like you said, improve the flight, drink the cups of coffee several times a week, who cares, because you have checked the boxes and you have done it right Congratulations, you're in. the wealth security phase and, again, these phases complement each other.
What I think is cool is that you've done this strategy long enough to get well into the safety phase if those two things take place over a long enough period of time. It's time for security to be in place and stay in place while the strategy continues to work in the background that takes you to the fourth level of wealth we call freedom. Yes, I think you know when I talk about freedom, especially stage four of where you are. in levels of wealth this is what people aspire to both this is this is what you want you're thinking about when you're daydreaming is that 20 something because look, I always said that when I was 20 I was going to retire at 55.
I see 55 just over the horizon, I could retire now, but I'm not in that anymore and we'll get to that in a minute, but it's something I think about when we get to freedom. Now you realize that we did a program on the five levels of wealth, we are only at step four and here we are already talking about financial independence. We need to talk to them about who it is, what we are talking about freely. Yes, so someone who has financial freedom, that level of wealth, what they have really done is through their dedication, hard work, they now have the ability to pay for all their current and future needs, but they can pay powerfully today and tomorrow without have to pay. to go do anything else, don't do it without having to generate or create anything else, now you've covered the cost of what your life cost you, uh, and you already said this, Brian, this is what people aspire.
Most of the people who come to talk to us. What they're really trying to

achieve

is for us to help them figure out how I get the freedom point. Yes, how do I get to this point in life where I can achieveFinancial Independence? Well, I think the moment to put down the microphone for most people is financial independence. It's that you do what you want, when you want and how you want, you think, boom, I'm done, I'm leaving here, I've figured it all out and look, I want to give you a moment to celebrate what that means to you, but there's a little more in that, you need to check some to make sure that you're doing it right to make sure that you can go from fetal freedom to even getting that optimal abundance that we're going to cover in a minute, you need to put in a little effort to make sure that you're maximizing this opportunity.
Now we see many people reach the stage of freedom. I mean, it's kind of like what we do in our daily work. We help people get to this stage, how well it works for you and how successful you are. In reality, you have to know what you want, when you want it, and what you want it to be. We talk often. to people who are chasing a number, hey, I'm just trying to get to a million, I'm just trying to get to five or I'm just trying to get to 10 million dollars and we said great, what does 10 million dollars do?
For you, well, I don't have to worry about anything, okay? Great, the day after your account reaches 10 million. What are you going to do? Where you're going? How are things with you? One of the things we always tell people is that if you're trying to get to this stage of freedom, you don't just understand the path, the journey. What you are leading by leaving behind you need to be very clear about what you are moving towards it is not just what you are retreating towards or away from but what you are retreating from so the more clearly you can define that, the more likely it is that if you want to set yourself up for success at this stage you would say you would start with the index and this is what I think is interesting because you are about to go through this bo that we talked about earlier in the level two strategy.
There is so much homework that I feel like we are asking the financial mutants to do what they have to do, they have to create the plan they have to do, it is no longer just a budget, now that they have their investments working, they really know how to handle it. debt, everything is automated, this feels like we're going back to where it's no longer set up and forget about it, we actually have some work to do to make sure we're doing freedom properly, yeah, one of the first things What you need to do is make sure that your plan has I mean your plan up to this point was go to work, go to earn, I understand the three components of discipline for wealth creation, money and time, I understood it, but then something changes and you have to do the stress test again, you have to rethink it.
Do I know that this pot of money or this pot of wealth that I have accumulated is going to provide me for the rest of my life? One of the ways we do it here at our firm, how we help people classify. To navigate, we use long-term cash flow retirement planning software. We can apply variables like what happens if I want to move or what happens if I want to retire at this age or what happens if I want to pay. a wedding or what if I want what if I want what if I want what if I want what if I want what if I want we add all these different variables in there and say okay if we want to do all these things and we go through a thousand different iterations of different different market environments scenarios different circumstances what is our probability of success to be able to continue doing what we want when we want how we want in our opinion, freedom is only truly reached when that question can be answered you can continue living that life no matter what the world throws at you , that's how you know you have a really good plan, yeah, what I like about this, this is actually going to answer that question, do I need to work more?
I am truly financially independent, don't skip this step because you are too and I will tell you that I am worried about when you reach freedom because a lot of this is numbers, people, I get it, but you also have to make sure that you will be. happy in freedom, you know, because a lot of people need to know what you retire to, what your hobbies are going to be, what you're going to do with your time, because I care about maximizers, entrepreneurs, real estate people and others like to build, build, build, and they just never get to the point where they're taking money and taking risk off, taking risk off the table to preserve wealth, not just build wealth, that's something that really needs to be understood. your plan has been stress tested;
You have reached that critical point where now your army of dollar bills that you have been working on and building your entire career is now working hard enough and probably even harder than you to cover all your financial needs, you no longer have You have to wake up and clock in and out because your money does it for you and as a result of that, you no longer need to work. We were very specific in how we chose this word. It doesn't mean you have to stop working. Some people say, "Hey, I'm never going to retire.
I have a lot of money. I can do whatever I want. I can do it whenever I want. I can do it however I want. But I really love it." work, I really love doing what I do for a living, okay, the freedom stage allows you to work because you want to, not because you have to, yes, and that is a powerful thing when you have the freedom to know that you are working because you are determined, you feel like the chains have fallen off and then I love that it allows you to transition into kind of legacy building, giving things away, being very charitable, by the way, you know, don't wait until you reach level four of your wealth . construction path we consider this when we talk about the financial order of operations, we always talk about charity, it should be a kind of step zero.
I want you to have an abundance mindset when giving, but this is what I'm talking about, it's on this level. four freedoms, you can even think big, you can open charitable giving funds, you can do qcds with your required minimum distributions, really powerful things you can work on at this level, so if you need help, as you are kind. of thinking through trying to figure out if I'm ready for the freedom stage what that looks like what a tool is visit our website moneyguy.com resources we have a free deliverable available to you called the retirement money guy's guide here's just nine kinds of things that will help you think and say: Oh man, I'm ready for the next phase.
I'm ready for the next stage. This is completely free. Is available. moneyguy.com resources. If you're at or near that point, check out this guide. I'm excited to talk about level five because this, you know, if you ever thought that, hey, Brian and Bo, they'd be great guys, whether we're going to a sporting event, having a beer, or sitting around a campfire. and let's talk. about the stories, man makes us talk about abundance because we spend a lot of time thinking about what money is, you know how to maximize it as a tool, but also make sure it doesn't prevent you from understanding what your purpose is, what your why is, what .
Are we even on this planet to do it? Because this is abundance, it's a powerful, powerful concept and we've already heard four: Freedom is what the typical person aspires to for financial independence, so if we get into abundance, this generated a lot of discussion when we were. doing content meetings and I have to tell you that I evolved in this discussion because at the beginning I was thinking, well this has to be about net worth, yes, abundance must be this amount of money 10 million dollars 20 million 100 million yes, I mean, it could be anything and then say no, that's actually no, because that doesn't work, that doesn't make sense and then say, well, that's a goal attainment because maybe if we said, hey, that's the step.
Three, you don't have to worry. about the latte effect and then step four you don't have to work anymore so maybe abundance is for you now you do private jets that's right because this is the next stage you know financial freedom you don't have to be burdened to be financially free, so maybe it's about private jets, maybe it's about people who have three or four houses or who are CEOs of companies and we say no, that doesn't make sense either because and here's why rich people can still I'm extremely depressed and I was like wait a minute, wait a minute, wait a minute, you're telling me that someone can reach freedom, the fourth level of wealth and not be happy, and I'm like yeah, so that's it. something I believe.
It's so powerful that people understand it is that you can be rich and be depressed and you're thinking wait a minute I thought if I can do whatever you want whenever you want how can you not I'm done I'm out of this but no let me give you some statistics that They will leave you speechless. If these were dollar amounts, you wouldn't have statistics like this. CEOs are depressed at more than twice the rate of the general public, which is already in their 20s, so it means that about 40 percent of CEOs are actually depressed, which you wouldn't imagine, because they don't.
They have nothing but freedom, they have a lot of money, they have all the details of what success would be like and yet they fall into depression. Dads, let me tell you something that will blow your mind and scare you to death. Rich children are more depressed and anxious than their middle- or low-income peers. That's terrifying. It is more common in rich countries than in less rich and less industrialized ones. The poorer countries in the United States are actually less depressed, they are less depressed, which in my opinion means they are probably happier. I mean, you go to Jimmy John's and I think you go to the bathroom.
I'm sure they probably update them, but I always have that whole fisherman thing, oh, the rich hedge fund guy who is saving and investing so he can go buy the big fishing boat and then thinks he's going to go fishing when it's gone. Retire and be super happy in the meantime, the fisherman you know. in this town where he's on vacation it's like he's already doing these kinds of things that I've done, so he really is. I tell them that abundance is different than freedom because it's not about a dollar amount, it's not about the math and that's hard for two analytical types to talk about this is the mindset this is understanding where the wisdom is with creation of wealth where is the attitude with that you have to go beyond the numbers and this is what I think is sad and this is simply because we do this professionally, in our opinion, very few people manage to reach abundance, many people achieve freedom, many people are capable of doing those things, but few people are able to clearly define what we would do. call it like being in the abundance phase of life and that is knowing who you are, knowing what you value and knowing what brings you purpose, that is not a monetary thing, it is not a million, 2 million, 5 million, 10 million , it's much deeper and I think. much more important and impactful than that, well, yeah, I mean, because the purpose is why I shared it when we were doing level one, when you're just talking about basic stability, you hear the statistic all the time that 70 to 75 000 is the happiness income people need to cover the basics, I'm telling you, that's not true happiness, true happiness to me is contentment, which means when you wake up in the morning you know why you were put in this planet and you're doing it, it's not about a dollar amount like I said, I used to daydream when I was 20 that when I hit 55 I'll be out of it and now I can't imagine retiring f5 we have a lot of work to do we're in the making too many fun things that are making the world a better place let's keep doing this that's the purpose that's something that I think people go beyond freedom, which means you have enough money in the bank, abundance, you know because?
You are on this planet to do what you are doing very well. So how do I know if I'm in this phase? How do I know if I'm doing it right? Here's the first kind of sign instead of wanting something bigger and more important things, even if you can afford a bigger house, maybe don't buy the bigger house, even if you can go get the yacht, maybe you don't really want the yacht. , even if you can fill in the blank, you may not choose to do so. that because you have a feeling of being content and being satisfied it's not this constant desire I think someone I even saw someone put this in the comments oh well yeah the problem is when you get to 20 10 million then you have to get to 20 million and then you get to a point where you recognize that yes, maybe that's not the goal and then you focus on what you love and what makes you happy, it's no longer about the dollars and the meaning and what is . about what really gets you out of bed in the morning, what, as you said Brian, gives you purpose and satisfaction on this earth when you realize that you are in the abundance phase in thethat you have built a level of wealth. that allows you to spend your time focusing and diving into that well and we've talked about this in other shows is that the real research into that happiness, also known as fulfillment, is that you're focusing your time and your resources on your relationships and your friends. . you're focusing on giving you're focusing on how to make the world a better place that's what excites me so much to take it to the next level and move on from the freedom that, like I said, most people are thinking that's the time to drop the microphone that you aspire to, I tell you there is a whole different stage with bonus points when you reach abundance because you feel very determined and you are probably trying to figure out, do you know what this is?
I've come across you, you know, I don't understand you, you, your financial advisors, are creating all this free content. There's a reason I called it the abundance cycle. I want them to come, learn, apply, grow, achieve a level of success that they realize. There is no way I can do this on my own. I'm going to need someone to help me handle this because I don't know what I don't know. I'm too busy to make good decisions and that's where I hope this cycle of abundance ends. create a graduation point where you will take our relationship to the next level and work with one of our advisors because we work with people all over the country trying to help them maximize all five levels of the wealth creation process, so if you are interested in taking our relationship with the level, uh, visit our website aboundwealth.com or moneyguy.com, check out the work with us page or maybe you're not ready at that point but you're still in one of the early stages of wealth and you're just looking for some really great resources to help you.
Visit moneyguy.com resources, we have tons of free deliverables available including our financial order of operations which will help you take your finances to the next level or if you even want to go deeper you can check out our course at learn.moneyguide .com and you will be able to tour a personally selected program. course on exactly what you should do with your next dollar, guys, thank you very much, I'm your host, brian preston, mr bo hansen, money guy team, cycle of abundance, five levels of wealth.

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