Today, we will discuss the concepts of the wealth pyramid and the steps to reaching its pinnacle.
The Wealth pyramid is a concept that encapsulates 5 different levels of wealth from the lowest (Level 1-Debt) to the highest (Level 5-Wealth & Impact); it’s a concept that we should be teaching our young people throughout their school years. It’s a critical concept that if you learn and apply it in your life it can make a dramatic difference in your view of wealth, how you apply it personally and how you can use to make a difference in your life and the lives of others around you.
Let’s make one statement right now. Everyone deserves to be at the highest levels of the Wealth Pyramid. The Wealth Pyramid does not care what color you are, where you came from, what level of education you have or what gender you are. It does, however, mandate as a condition of membership that you be willing to transform your life, commit to the transformation, build an action plan/daily routine and execute it every day like your life depended on it.
So, let’s talk about the 5 levels of the Wealth Pyramid and what it means:
Level 1 (Debt)
This is the lowest level on the wealth pyramid and means you are in the negative due to the debt you carry. It’s no secret that America is a nation that runs on debt, but it may surprise you to learn that the overwhelming majority of U.S. adults owe money in some way, shape, or form. According to new data from Comet, a student loan refinancing company, here’s how many Americans have debt at present:
- 80.9% of baby boomers
- 79.9% of Gen Xers
- 81.5% of millennials
Are you in debt? Do you have a healthy relationship with money? Do you understand the concept of earning money, keeping it and growing it?
We push our children to get a college education yet most come out with a mountain of debt that many will never recover from or derails their financial future for many years. You have young adults with 80, 100, 200K plus in educational debt then you start out making 50 75, maybe 100k plus which is not enough to pay it off in a timely fashion. You can’t achieve wealth under a mountain of debt.
In a past life, I have been at the debt level of the Wealth Pyramid and know what its like to be scrapping for every penny. In my first marriage, I remember looking for change to buy groceries, freaking out to get bills in the mail and holding garage sales to make money to live. It was a time that I look back at as a reminder what hell was like.
Warren Buffet has a great quote that pertains to being in debt: Be careful of getting too far behind that the chains that hold you back may be too weak to be felt but too strong to be broken.
Level 2 is Scarcity
This level is better than Level 1 – Debt but according to recent statistics if you make under $72k a year you are in scarcity. Some of you listening may say “WHAT?” That sounds crazy doesn’t it; but I know couples who make over a $100k jointly and can barely make rent, let alone ever own their own home, by a decent car, retire comfortably.
If you find yourself living “paycheck to paycheck” then it’s possible that you’ve cultivated a scarcity mindset in relationship to money. At some point in your life you may have experienced an event which now dictates your mindset concerning your finances.
You may find yourself afraid to spend money or spending most of your money the minute it hits your checking account. While there are certainly emotional components associated with this, most important of all is the mindset you maintain around how you make and spend money.
Living in scarcity can become a dangerous limiting mindset that leads many to believe that this is all there will be versus seeking an abundance mindset of believing in positive financial outcomes due to a consistent and persistent application of sound financial planning.
Level 3 is Healthy
In Level 3, momentum is building as you aren’t living paycheck to paycheck any longer and have extra money to save and enjoy the basics of life. Many people when they get to this level can become complacent and be happy with the status quo and not make any further progress. Remember that Level 3 Healthy is the jumping off point to the promised lands of wealth; keep working at it and don’t look back at where you have been in the past.
Level 4 is Prosperity
This level indicates you are doing very well, are getting ahead and your financial condition is in a good space; you have more money than you need and can save money and keep yourself and your family in sound financial position.
The key to future success when you reach the Health level is being consistent and persistent in applying your plan to reach the highest level of success on the Wealth pyramid.
Level 5 is Wealth & Impact
This is the level we all aspire to and its where you can change the world and be what I call an “Impact Human”. An Impact Human is being that person who can impact and change the lives of those around you through time, money and effort.
We all would like to be at the wealth and impact level of Warren Buffet or Bill Gates but you can still at Level 5, have wealth and impact others on a smaller yet critical scale. I believe being at Level 5 for me has given me time, freedom and a new mindset. A mindset of how I can use what I have achieved to truly help others, change their mindset and bring them along the journey of wealth with me.
Getting from Level 1 – Debt to Level 5
Wealth & Impact begins with a commitment to transformation of your mindset from scarcity to abundance.
So, now that we have covered the 5 levels of the Wealth Pyramid, at what level do you find yourself at this point in your life? Have you thought about it? Do you care? Or do you feel you helpless to move up the pyramid from where you are today?
What are steps to help move me up the wealth pyramid? Here are 3 key steps:
Step 1 – Life Purpose (Why I am Here)
The sooner you know who you are the quicker you can move up the pyramid.
You are here on this earth for a reason. What is that reason? In my podcast 5 Steps to Transforming Your Life we have talked about committing to what and who you want to be.
Have you sat down and thought about who you want to be five years from now if no barriers were in your way. Think big, really big because your purpose should be big enough to scare you.
I believe that you have to die to whomever you are/have been in order to give birth to the person you want to and can be. Too many people become too attached to who they have become in order to become who they could be. Do you consistently look to reinvent yourself or do you like being the same person you were 10 years ago? How is that working out for you?
Step 2 – Win Friends and Influence People
To move up the wealth pyramid, you have to have powerful social skills and find the right social circle, mentors, business partners and investors.
There is a great concept of social networking that in order to move ahead you need to break your social circle down as follows: Socialize with 33% below your current status, socialize with 33% people at your level and, finally, socialize with 33% above you to move ahead. Remember you are the average of the 5 people you hang out with the most.
Warren Buffett told a graduate student earning his MBA at Stanford this little gem on the importance of communicating well when it comes to winning friends and influencing people:
“At your age the best way you can improve yourself is to learn to communicate better. Your results in life will be magnified if you can communicate them better. The only diploma I hang in my office is the communications diploma I got from Dale Carnegie in 1952.”
My Father graduated from the Dale Carnegie course and was one of the best communicators I ever knew; he was a man with a 6th grade education but because he was a master at winning friends and influencing people he became highly successful in all aspects of his life.
World-renowned author, speaker, and leadership guru Brian Tracy says, “Your ability to communicate with others will account for fully 85 percent of your success in your business and in your life.” Tracy built his legacy primarily by helping leaders and business owners thrive by mastering the skills of persuasiveness and building relationships.
Step 3 – Eliminate Procrastination and Become Consistent/Persistent
You can’t move up the pyramid if you procrastinate and aren’t consistent and persistent in the execution of your action plan and daily routine. To change your life, you need 66 days to make a new habit and it can’t happen if you don’t have a daily routine that is relentlessly executed every day until it becomes part of your DNA.
In closing, the wealth pyramid is here for all of us to scale and reach the pinnacle. It waits for you to roll up your sleeves, build a plan and be relentless in your execution.
Remember: Money is not the most important thing but it sure gives you options.