Levels of Income (Explained)

people like to look at income from a narrow perspective lower class less than you make middle class however much your current salary is upper class substantially more than you make but having started at the bottom and crawling our way toward the top of the financial food chain has allowed us to deeply understand the different stages of income and wealth someone goes through we created this based on the input from hundreds of multi-millionaires and billionaires that we've met and learned from in the past decade as well as our very own personal experience here are alux's 10 levels of income income levels explained welcome to alux.com the place where future billionaires come to get inspired level zero zero dollars you've got no income you're either too young a student and you fully rely on a third party usually your parents for financial support you're getting an allowance or some benefits from the state but it's not very much 500 cash in your pocket right now would feel like a nice amount of money your parents paid for the phone or laptop that you're watching this on you've never paid a bill in your life and you've got no idea how people pay taxes you do not generate income consistently you might flip some things on the internet try to learn about Investments and are consistently looking for ways to make money your mind is buzzing with ideas especially since you keep hearing and seeing young people who are already rich flexing on the internet this is frustrating because parents usually control you with money truthfully you realize you're not evolved enough to live on your own and the time will eventually come you ride the bus walk places and occasionally you Uber your friends are also relying on their parents money so they relate at this stage you should read learn listen to podcasts and educate yourself as much as possible level one one thousand dollars a month your starter income between 10 to 15K a year this is the first time you start making a little bit of money consistently your first hustle making your first one thousand dollars is one of the greatest feelings in the world the moment you get paid and the money hits your bank account or wallet you cannot believe it's real you feel like you might have a chance at Breaking Free at this stage you're usually careless with money because you never had money before and there are things you've always wanted so you buy a pair of sneakers some clothes maybe a PS5 if the situation requires it you might use some of that money to help around the house this is the first time you buy groceries for your family out of your own pocket and are shocked at just how expensive food is you know this isn't enough long term but if you focus and grind you're confident that this could evolve into something sustainable you feel Beyond confident in yourself and your friends start looking at you funny because they don't take you seriously your parents are happy for you but they worry you're not doing anything illegal or compromising your studies you either still live with your parents or have roommates in a shitty apartment but you love it because it makes you feel independent fifty thousand dollars is a lot of money to you level two three thousand dollars a month the I'm actually doing it income between 30 and 50k a year at this point you think you're king of the world for the first time in your life you have what you would consider to be a substantial amount of money on your hands you realize you can do this for the rest of your life you buy all the small things you wanted you take your friends and family out maybe you throw some money at a sibling to help them you rent a nicer place and spend your time looking at what kind of car you want or better said what kind of car you can realistically afford to buy eventually you buy yourself an older secondhand model but with a nice interior the leather seats feel nice and you're proud of buying the car yourself this is the first time you can afford to stay at a nice hotel or eat at a fancy restaurant you fly low cost or economy you're looking for deals and ways to maximize the return of every dollar you spend because your lifestyle isn't yet expensive for the first time you've got residual income at the end of the month in your account for the first time you're able to save some money from personal experience we can tell you the jump in happiness brought on by money will never be greater than the one you experience at this stage getting from three to five thousand dollars a month it feels like things have clicked for you that you've unlocked the secrets to the universe you start making spreadsheets and begin giving your friends Financial advice your friends are either envious or work for their parents business almost everyone can reach a level two income if they're determined which is why it makes up the majority of middle class earners going from level two to level three is the hardest income jump you'll ever have to make because what got you to three thousand dollars a month is nowhere near enough to get you beyond ten thousand dollars a month two hundred thousand dollars would be life-changing money for you you level three ten thousand dollars a month 100K to 150k per year this is when your side hustle becomes a real business or you've been promoted and hold a serious role in the company you work for you start feeling a lot of responsibility and you realize you no longer have the same amount of time that you used to at this level money is no longer increasing happiness the way it used to most research points to 100K a year as the cap between the happiness and income correlation basically more money isn't going to make you happier from this point forward you're officially in the top 10 percent of earners in the developed world you're no longer renting you're looking to buy but property prices feel like they're exploding you can afford a nice car clothes and an exotic holiday outside the country once or twice a year you make more than enough money to consider investing based on experience and rule of thumb one should not look at passive Investments until they cross one hundred thousand dollars a year in income why because you don't actually have enough to make a difference you're better off reinvesting all of it into yourself or your business to get you to the level three income stage and then invest at this level of income you've acquired enough valuable skill sets to be confident in your ability to support yourself and your household for the foreseeable future but your cost of living is also going up the nicer car the nicer place the new friends with the new hobbies they're all putting a little bit of stress on your finances but nothing you can't handle your partner mentions children and you start to realize that 100K per year isn't gonna cut it at least not the way that you want it to for you one million dollars is a lot of money level four thirty thousand to fifty thousand dollars a month the life upgrade income 300K to half a million per year this is the first time in your life where you feel like you're actually rich you earn substantially more than anyone else in your family you feel super confident in your ability to generate income if you could only keep this going for just a couple more years not only will you be a millionaire but you think you'll be set for life you purchased and paid in full for what you consider to be an incredible home probably a really nice apartment that you have fully furnished it took you longer than a year but you eventually moved in if you really want to you could even afford a brand new car but you're smart enough not to go for anything crazy you wake up in the morning and cannot believe how blessed you are your life is overwhelmed by gratitude this is when you mature for my financial perspective so Focus shifts towards stability you invest in real estate for passive income you have over one hundred thousand dollars invested in stocks preferably the S P 500 maybe you even invest in a friends business or a startup that seems promising you're disciplined with your finances and as long as you don't do anything stupid you know you will do well you've got more than enough savings to last you for over six months of no income or your passive Investments generate the bare minimum to support your household at this level you don't worry about bills groceries or most menial expenses as they're all taken care of when you travel you have lounge access you're no longer flying low cost but you cannot justify paying for first or business class so it's economy Plus for you but you get to choose your seats and they do all for food and champagne on flights so you feel great at this stage most people choose to do one of two things they either coast and play it safe or go for a big win where you risk most of your income into something new with an even higher upside the thinking here is that you are smart enough to work for the next four to five years and if it plays out you'll never have to work again for the first time in your life you realize one million dollars is not really a lot of money if you're under level 5 of income you can dramatically accelerate your growth by bringing in a mentor that's one or two levels up to show you the way the truth is you could watch as many Elon Musk or Ray dalio interviews as you want but it isn't applicable to your particular situation as their reality is just so so different from yours and these mentors are almost always impossible to find or too expensive for you to be able to afford them so we paid them on your behalf and made their advice and sessions affordable to everyone our mission at alox is to help you get there as quickly as possible and in order to do that we need to get you rich first go to alox.com app right now our app decreases the time it'll take for you to get from one level of income to another based on Expert advice from people who are one to two steps ahead you'll realize the advice goes well beyond money in every aspect of your life six months from now your reality could look completely different go to alux.com app right now and go do something about it level five 100K to 250k a month 1 million to three million dollars a year well congratulations my friend once you cross a half a million dollars a year mark You're now officially in the one percent of earners according to the economic policy Institute the average annual wage of the top one percent was eight hundred and twenty three thousand seven hundred and sixty three dollars as of 2020 a more recent study by smart asset points that the national average of the top one percent of earners is 597 815 the drop has been mostly coveted related but with inflation going up like crazy we expect these numbers to not hold on for much longer you are either a partner in a business or the owner of an established business you have multiple employees that earn between forty five thousand to one hundred thousand dollars a year you've recently signed a couple of big clients you no longer do the the little things in your organization you've got an assistant you're grooming someone to take over for you in a couple of years or preparing to sell your company you bought a house with enough bathrooms to make sure you never have to wait after anyone else again and a dressing room big enough to store everything you've purchased you have an extensive Investment Portfolio you can afford to go on any kind of holiday you want if only you had more time but you're working on that you've flown private a few times and have spent a summer on a yacht in Europe you think buying a Jet or a yacht is one of the dumbest things you can do but you secretly Wonder just how much money you would need to have to not care about how much you're spending you stay at the nicest hotels your entire family flies business class you eat at the nicest restaurants you bought your partner a really expensive car for their birthday you've retired your parents your kids go to a really nice school and you live in a nice neighborhood you worry about your children not being spoiled but you're proud of the Comfort you're able to offer them your friends are also rich and you spend most of your time talking about how blessed you are and how to improve your health you play golf you've been featured in magazines podcasts and people see you as a success story you really care about quality and convenience you've got no problem overpaying if you no longer have to deal with it at this level time becomes really important to you as you feel like you work too much you rationalize that you have enough and consider giving it all up and retiring somewhere on the beach but you know you still have a few years left to go to complete your story from a personal perspective this level of income is probably the most stressful of them all because it's a very peculiar financial position a net worth of 5 million literally makes you the poorest of the rich you have substantially more money than anybody you grew up with so your old friend can't relate to you at all and cannot afford to live life at your Rhythm but at the same time you're not really rich enough to keep up with a super wealthy who have net worths of over 25 million although you know you have enough money somehow you still feel like you don't have enough level six one million dollars a month between 10 million and 15 million dollars a year most wealthy individuals will agree that this is the inflection point one million dollars a month or a net worth of around 25 million from 25 million dollars and up more money does not contribute to your lifestyle or general happiness this is the money that can buy the happiness ceiling once you reach level 6 money no longer matters you feel like you and your family will never be poor again you can live anywhere you want to in the world and enjoy the same level of Lifestyle but you've settle down next to where your business is centered and fly around the world based on where you need to do business you made yourself really comfortable and even bought a couple of toys you've always wanted every couple of years you visit the place where you were born and realize just how far you've come business is booming and you're perfectly aligned with the marketplace your job consists of being in meetings and managing managers you've created a business and have a solid product the market loves you've successfully scaled and are now focused on fine-tuning every process your business has clearly defined systems offices departments and processes you've successfully built an entire infrastructure around you you've been sued a couple of times and you've won you have great accountants lawyers and wealth managers as your friends Investments independent of you generate over one million dollars a year in disposable income at this point you earn more money than you can spend you're confident that you'll be okay and can survive at least one divorce you're getting a fully new level of attention that wasn't there before especially in higher up more refined circles but you will never do anything to compromise the home you've built think of the kids you become more aware of people's intentions because now you have something to lose in Silicon Valley there's this joke running around of people achieving what's called Golden millionaire status this is when your net worth is at least equal to your age so if you're 35 having at least 35 million in Fortune would technically make you a golden millionaire which is kind of a nice goal to have don't you think since between 20 million and 80 million the difference in lifestyle isn't really that much you're impressed by those worth over 100 million dollars because they're the people who can afford to buy the Jets and Yachts that you're renting level seven 50 million to 100 million a year to take a company from 50 million dollars a year to one billion dollars a year in revenue is something extraordinary the person able to do something like that is a world class in terms of performance to get 50 to 100 million dollars a year in income as an individual you either own a very successful company or are the CEO of a multinational company doing incredible numbers the person able to build robust enough systems to take a company from let's say 100 million dollars in Revenue to one billion dollars in yearly revenue is worth this kind of salary just to put things into perspective in the United States alone there are over 40 CEOs earning over 100 million dollars per year as a salary your rewards in life will always be in exact proportion to your contribution want 100 million dollars well generate one billion dollars worth of value and retain 10 of that and although this might be as simple model to keep this particular video short and consumable owning a company doing over 100 million dollars per year where you can pay yourself dividends or an eight-figure salary isn't impossible let's just run the numbers for you as of 2023 statista estimates there are roughly 215 million companies operating worldwide out of these 215 million companies a close estimate would be that 55 000 companies generate revenues over 100 million dollars every year that's 0.02 of all companies so keep in mind that if you were to start a company today you'd have a one chance in 20 000 to get to 100 million dollars in Revenue to put things into perspective really quick the chance of winning the lottery is one in 292 million 201 338. even famous actors or athletes struggle to get to this level without building a company first at this level of income not only can you afford a private jet or a yacht but you're actively reshaping your environment you're one of the largest contributors to your local church or Charities you're actively acquiring new businesses some of which are your competitors at the same time you're being approached by investment funds who want to keep an eye on what you're doing for acquisition purposes you pique the interest of Industry leaders who will either compete with you or acquire you there's no doubt that you've achieved financial success you bought the houses the cars all the toys you wanted you live a very comfortable life from any material perspective you are friends with some really high profile individuals you're proud of everything that you've built so far but you start to question if anything you've done will have a lasting effect on Humanity money no longer impresses you unless that number starts with a b a billion dollars is still a lot of money to you level eight almost their income a couple hundred million but not yet a billion believe it or not there are people who earn in the hundreds of millions of dollars per year the most common are the ultra high-level hedge fund managers business tycoons and this includes heirs to Industrial Empires as well the rest are mostly outliers that might have a couple of good years but are never able to sustain it for decades hedge funds are institutions that manage other rich people's money with the purpose of generating High returns these institutions invest billions of dollars every year and get to keep some of the profits they generate the rule of thumb is two and twenty two percent per year from your initial deposit and 20 of all of the profit the fund is able to generate for you most of these funds require you to have a net worth in the tens of millions of dollars to even be allowed in the second category is that of business tycoons these are the ones who are actively reshaping the reality around you they build hotel chains shopping malls and the apartment complexes in which you really wanted to live in when you were back at level one and two you're in the business of buying businesses at this level you're forced to work with the government otherwise your projects might not get the green light so you get involved in politics you donate to your favorite candidate you help them to raise money by throwing charity dinners so that when they do get an office they make sure you're taken care of you have access to almost anyone in the world they will pick up the phone for you and a meeting can be arranged from celebrities to even the president you take security incredibly seriously you have a driver with a military background they've been with you for a couple of years now your kids study abroad alongside the kids of other ultra high net worth individuals you're tired most of the time because other people can't seem to grasp just how important it is what you're trying to do you've been in this game for so long that you've got personal vendettas with other Rich individuals and the only reason you don't stop is because you don't want them to have the satisfaction that they outlasted you deep down you're kinda scared that without your involvement everything you've built will go up in Flames as it becomes uncompetitive level nine three comma Club income one billion dollars or more per year these are your high level billionaires at this level we're no longer talking about income as much as we're focusing on the growth of someone's net worth the world's 10 richest people the likes of Elon Musk Jeff Bezos and Bernard Arno have added over 400 billion dollars to their net worth in a single year based on the Bloomberg index that tracks their net worth in real time you can see that since the beginning of the year these 10 have either made billions or lost billions shown in this chart under the year-to-date column people like Elon usually don't take a salary instead they get rewarded in shares based on how well the company does so if Tesla does well Elon gets more shares and thus his net worth skyrockets as hard as it is to believe as of 2023 there are people who earn over one billion dollars per year even as a salary remember those hedge fund managers we talked about earlier well the best performing eight of them earned over one billion dollars in salaries last year Jim Simons from Renaissance Technologies gets paid almost two billion dollars a year just to keep doing his job in comparison the CEO of Apple Tim Cook got his salary cut from 100 million to 50. we've met billionaires before meaning people who are worth over 1 billion dollars but never anyone who's actively earning over one billion dollars a year these people are usually super private their time is beyond valuable and you cannot request a meeting under any circumstances they're the ones who ask for the meeting at this level we imagine the only thing left is the impact you have on the human race and how you'll be remembered this is why Jeff is trying to compete with Elon in terms of space exploration why Peter Thiel is trying to solve death or why Gates and Buffett are donating most of their wealth to curing diseases if these people have gotten to this kind of level of income it means it is possible but you have to ask yourself if you are willing to make the sacrifices required to get you there now considering the topic of this video this seems like a pretty good question to ask what level of income are you currently at and what level of income do you intend to stop we really want to hear about you from this one in the comments and as a thank you for watching this video until the very end we've reserved a very special bonus for you the negative income and desire for more trap there are people out there with a negative income meaning that these people spend more than they earn they're in a hole and they can't stop digging these are the people who get a new credit card or a payday loan to pay off other credit cards you might not realize it but there are people out there who are actually poorer than the homeless at least the homeless individual is at level zero all of their possessions might fit in a tent but for others there's so much in debt that they're in the negative the moment they generate any form of income the debtors come to collect it at this stage you no longer own yourself so be careful when playing with debt make sure you know what you're doing now that we've established the complete list of levels we want to take the opportunity to share with you one of the golden nuggets that we've learned in the past couple of months and it has to do with how much money do you think you need because it's one of those questions that we've really been thinking about we started doing some proper research and it turns out there was actually a quite impressive study done on Millionaires and high net worth individuals you already know that once you cross the one hundred thousand dollars a year mark money no longer affects your happiness but what about your overall perceived need for money this study asked people with fortunes ranging from one million dollars all the way up to 250 million how much money do they still want before they think they have enough and look okay the result blew our minds on average people answered 3.2 times what their current net worth was so the person with 1.4 million said 5 million the one with 40 million sub 100 million the one with 73 million said 200 million now comparing the hundreds of responses resulted in an average desire of 3.2 as humans we perceive the next level of safety abundance and prosperity at 3.2 times what we currently have at least once money is no longer an emotional Factor what shocked us is when we asked ourselves what number would be sufficient for us our Instinct was 3x our current worth as well which makes us realize that this is a never-ending game the person with 1 million wants three we want to be over 100 the person with 70 million wants 200 the person with 300 wants 1 billion it literally really never ends so here's the most valuable lesson from this video money is a self-perpetuating game where you can only win by deciding that you've already won until then you will only trade one Rat Race for another where you simply are competing with a different kind of rat if this resonated with you write the word levels in the comments that way we know who's ready to start climbing if you need help getting there faster get the app a Luxor it'll be the best investment you'll ever make we guarantee it thanks for spending some time with us today Alexa we're so glad you did if you found value in today's video please give us a like hit that Bell icon to never miss an upload and hey don't forget to subscribe [Music]

Channel: Alux.com

Views: 266,119

Keywords: Alux, Alux.com, Alux Youtube, fine living, income, money, levels of income, stages of income, levels of money, levels of earning, earning, increase income, increase earning, investing, earn more money, income explained, levels of income explained, money documentary, money motivation, money education, money video, levels of income alux, levels of income video, best video on earning levels, levels of wealth, levels of money video, alux sunday motivation, income differences

Id: 4b-lPJv-kcA

Length: 28min 50sec (1730 seconds)

Published: Sun Mar 12 2023