Morning Brew Daily - How to Climb The Wealth Ladder with a Personal Finance Expert

Episode Date: July 4, 2025

Episode 619: Happy 4th of July! On this special episode of Morning Brew Daily, author and personal finance expert Nick Maggiulli breaks down how to elevate yourself financially. He explains how his six levels of approaching your finances will elevate your life long-term, and more! Get Nick's book, "The Wealth Ladder: Proven Strategies for Every Step of Your Financial Life", out on July 22nd here! Head to https://www.tacobell.com/morning-brew to learn more about Taco Bell’s new Refrescas! Subscribe to Morning Brew Daily for more of the news you need to start your day. Share the show with a friend, and leave us a review on your favorite podcast app. Listen to Morning Brew Daily Here:⁠ ⁠⁠https://www.swap.fm/l/mbd-note⁠⁠⁠  Watch Morning Brew Daily Here:⁠ ⁠⁠https://www.youtube.com/@MorningBrewDailyShow⁠ Learn more about your ad choices. Visit megaphone.fm/adchoices

Many employees can't afford a hefty medical bill that pops up out of the blue, but it happens. And employees who are financially stressed are, understandably, more likely to be distracted at work, costing their employers greatly in lost productivity. Luckily, AFLAQ plans help with out-of-pocket expenses not covered by health insurance and can be offered at no direct cost to businesses. Learn more at aflac.com slash morningbrewerdaily. That's aflack.com slash morning brew daily. Good morning brew daily show. I'm Neil Fryman.

And I'm Toby Howell. Today on July 4th, an interview about the American dream. Climb aboard the wealth ladder and don't look down. It's Friday, July 4th. Let's ride. Good morning and happy 4th of July. First, I want to salute all the grillmasters out there, preparing to sweat buckets over a Weber to feed the entire neighborhood.

Your efforts don't go unnoticed. Grill on, grill strong, just don't overcook the burgers. Today, we've got a super fun and informative special episode. episode for you. Toby and I spoke with prolific personal finance author Nick Majuli to chat about his new book, The Wealth Ladder, and learn how all of you can climb from one level to the next. This conversation completely changed my perspective on wealth in America, how to accumulate it, and also how not to squander it. We covered a range of topics from the importance of owning equity in a business to Trump's baby bonds to the most unrated strategy in personal finance.

Now, I hope you're listening to this while also getting called underrated in your 4th of July cornhole match. Make sure to spin the back. Don't throw it. Spin it. Enjoy the holiday and enjoy this episode. But first, a word from our sponsor, Taco Bell. Are you done? Yes.

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agrorefrescas are made with artificial colors and natural fruit flavoring and contain less than 1% juice. Rockstar Energy Refrescas contain 200 milligrams of caffeine and are not recommended for children. pregnant or nursing women or person sensitive to caffeine. Study and play. Come together on a Windows 11 PC. And for a limited time, college students get the best of both worlds. Get the unreal college deal, everything you need to study and play with select Windows 11 PCs. Eligible students get a year of Microsoft 365 premium

and a year of Xbox GamePass Ultimate with a custom color Xbox wireless controller. Learn more at Windows.com slash student offer. While supplies last, ends June 30th. terms at aka.m.s slash college PC. Nick, thanks for joining us. Thanks for having me on. Okay, so you devise this concept of the wealth ladder to help people improve their financial lives.

What are the basic rungs of this ladder? And what was your personal journey climbing it? So there are six levels to the wealth ladder. I didn't use rungs for marketing reasons. I think levels just sounds better than rungs, like, oh, I'm on rung one. But each level is a 10x increase from the prior level. So level one, this is a 10x increase.

is less than $10,000 in wealth, which you could just think of is your net worth, all of your assets, minus all of your liabilities. So that's like everything you own, your cash, your financial assets, etc., and then subtracting out all your debt, credit card debt, loans, et cetera. So level one is less than $10,000 in net worth. Level two is a 10x jump, which is $10,000 to $100,000 to $100,000 to $1 million in net worth. Level four is $1 million to $10 million. in that worth, level five is $10 million to $100 million in net worth, and level six is $100 million plus. In terms of my journey up, it's changed over time.

And so, like, I would say even though I started with like, I didn't have $10,000, I would consider myself in level two because I had a good education and everything. So I started in level two, kind of grew up in like a level two household. And over time, you know, I just worked hard on everything, saved money, got to level three. And then I started writing and doing all the blog and book and all that other stuff. And so that kind of helped accelerate me into level four. I would have gotten there. I think my initial projections were like in my 50s.

And then because of like, it's basically like having a second job that I do on the weekends, which is writing. So I've been doing for nine years. And so that's kind of how I got into level four. But I can talk more about that and give data on each one of those levels, a percentage of households in each level, et cetera. So writing a book about the levels of wealth allows you to climb up the levels of wealth.

There's some meta right there. Along with each level, though, you explain some of the freedoms associated with each one. So level two brings. Grocery freedom, level three, brings restaurant freedom all the way up to level six, which brings impact freedom. Briefly take us through what kind of those freedoms mean. So I think when a lot of people think about spending, like they usually just spend based on their income. And I think spending based on your wealth is a far better way of approaching this problem.

And when I say spending, I don't mean like all of your spending, just like on the margin. Like you go to the grocery store and you're like, oh, I kind of want that nicer thing. It's like, oh, at $1 more, should I get it? Right. And so if you're in level two, I think you should, you have the freedom to do that. You can spend that extra dollar, $2, et cetera. And if you're in level three, let's say you're at a restaurant, like, oh, do I want to buy, you know, the salmon for $35 or the burger for $25? That marginal difference is around $10, right?

And so as you start to think about this, you're like, oh, I'm in level three, I can probably start to buy what I want at a restaurant. And then it goes up from there. Level four is travel freedom, et cetera. But the thinking behind this is that if you take your wealth and you multiply by point 0.01% that's why I call the 0.01% rule. That number is going to end up being what this marginal amount is, right? So in level two, you know, $10,000 times 0.01% is $1.00. Another way to do the math is just divide your net worth by $10,000. That also gets you the same number. And so basically when you take your net worth, you divide by that, that just gives you a number. And that

marginal number is like how much your wealth generates every single day, like on average. And this a very conservative return. 0.01% a day is roughly, you know, 3.7% of you, which I think is a relatively conservative return. No one's going to be like, oh, that's too much or anything. So that's the idea. If your wealth is generating this, like when you're making decisions, like, about what to spend, like based on where your wealth level is, I think that's kind of how you unlock this quote, spending freedom to spend more in certain categories. If you're supposed to spend based on your wealth and not your income, that might be a problem for some people because I know my income, but I don't necessarily know the way.

wealth on top of my head. I don't know which level exactly I'm in. So would you advise people kind of know their net worth off the top of their head? You don't need to know exactly, but you should know, like, approximately what wealth level you're in. Like you don't need to know, I need to know down to the penny. But like, you would probably know, oh, I'm not in level four, or I'm in level three or et cetera. And so figuring that out, I think is incredibly important just to start. And of course, like you have to, like your income is your main pillar, which you have to spend through. This is more of like the splurge spending. So I want to give people freedom to spend more money, but without going overboard. And I think these levels, like, is a way to do that.

Because it gives you the freedom to spend more over time without worrying about like, oh, am I spending too much? Am I going to, you know, actually hold myself back? And the answer is no because of this equation and everything. You hear a lot of personal finance experts stress the importance of ownership, aka you'll never be a millionaire with a salary. In your view, how much is ownership a key driver of wealth? Ownership is a massive driver of wealth. And you can be a millionaire with the salary. It's definitely possible.

Your salary is probably going to be pretty high. And you have to just, I mean, you could do it just by saving in cash. But it's much easier if you're investing in income producing assets, right? And those are the types of assets. When I looked at the wealth ladder, the biggest difference between those in levels one to level three and those in levels four to level six, which is like the lower part of the wealth ladder and the higher part. is income producing assets, the percentage they own. In levels one to three, less than 25% of their wealth on average is in income producing assets. So things like stocks, bonds, real estate, private businesses. But on the upper half of the wealth ladder, levels four to six, over half of

their assets are in income producing assets. And actually just keeps going up. And each wealth level, it just moves up over time. And I have an image in chapter three of the book, which shows that. So in terms of the ownership society thing, like that is the biggest differentiator when you look at like a households balance sheet is like how much money do you have in income producing assets versus not. So we just did a story. Wall Street Journal also did a story on the stealthy wealthy, which was the level of one percenters who derive their income from, you know, very boring, often like regional businesses, like carpet removal or something like that. So it was interesting to see how, you know, ownership, people think it means like starting a million dollar,

a billion dollar tech company or something like that. But oftentimes it's something as mundane as removing carpet at elementary schools or something like that. But you also do make it pretty clear within the book that the only real shot of moving up the ladder is owning something. So for someone in maybe a cushy job where they're making $500,000 a pretty solid income, what's your pitch for why they should still consider building something of their own? They don't have to. I mean, if you have a cushy job, like if you're in 500K a year,

you're very likely to be in level four if you're not already there. And so, like, I think that's the big, one of the big points of the book is, like, you don't have to get to level five. I don't think this is necessary. Level five and six, that's the top two percent of U.S. households in the United States. I don't recommend it. I think you have to work really hard to get there. I think you can have an amazing life in level four, which is like the upper middle class. And so my pitch to them is like, do you, why do you want to do this? It's not even a pitch. It's a question. And if you have a good answer to that question, then maybe you can push yourself to start a business or do something to quote, get to level five, 10 million. plus. In the book, you looked at the science of can money buy happiness? What did you learn? So you guys have probably heard that old study that, you know, after an income of $75,000 a year, you know, money can't buy any more happiness. Well, there's a guy named Matthew Killingsworth, you came back and had a different study where he's like, no, my data shows that money keeps buying happiness all the way up as your income even goes up. And so he sat down with, with Conneman and Dean, and he looked at the paper and everything. And the long story short was the

original paper, that 75,000 figure, was showing that more than $75,000 does not prevent unhappiness. I know that's a weird because it's double negative, but basically, no matter how much income you make, you can't, like, that's not an antidote for not being happy, right? Like, anyone could be unhappy, regardless of their income. That's the takeaway there. So once they adjusted for that, they actually said, okay, if you're already happy, more money tends to make you happier. But if you're not happy, more money's not going to do a thing, right? So that's kind of the thing. So my summary of it is like, if you're happy, more money will likely make you happier.

But it's like it takes like a big jump, like a 10x, like a level jump, basically. If you're poor, more money is going to make you happier. But if you're not poor and you're not happy, more money's not going to do a thing. That's like the main takeaway of the research. I guess kind of on that topic, you kind of warn that at the higher levels of the latter costs often start to rise exponentially as well for relatively small gains. convenience or experience. For instance, there is one anecdote that some wealthy property owners in Seattle were spending $3,000 a month on landscaping alone.

So what is one maybe cost upgrade that you see some richer people start to make that they often come to maybe regret? I think it's just like the amount of labor you hire. And I don't know. I don't have data on like, oh, hey, have you regretted hiring all these people or doing all this stuff? but at some point, the costs get pretty large, right? And I think, like, even if you look at something like flying a private jet,

like the typical net worth of someone who flies a private jet is around $20 million, or they have a net income annually of about $2 million. That's, like, what the data shows. That's, like, kind of the middle of the bell curve. But these types of things are, like, it's just shocking that people spend this much money for, like, I mean, yes, it's a better experience, but is it that much better than getting a business class seat where you have to spend, like, you know, 10 X or more? Yeah, I don't know either, but like I just I can't believe it's that much better.

So yeah, what do they regret? I don't know the answer to that, but I would guess just overpaying, like having so many different people you're hiring and it's just, it's a large burn, basically. And is that, we've talked a lot about progressing up the ladder, but is that how you slide down the ladder the quickest? I think it depends where you are. Different things will cause you to slide down the ladder depending on where you are. If you're in level five and six, for the most part, it's over concentration, which is

like, oh, all my net worth is. in this one business. Like, I'm worth $100 million, but all I have is this business and I have like 200 grand in a checking account. Like, if you lose the business or it has a massive decline or something bad happens, like you're back to like level three, which is still good. I mean, you're still fine, but relative to that change is pretty large, right? So it really depends where you are that leads to these exits and I can talk about it in each, you know, level. Well, I want you to put your career coach hat on right now because you do emphasize the importance of choosing a career for someone's future wealth and the framework.

you lay out for deciding on one is, I think it's inspired by Scott Galloway. It's the intersection of A, what you're good at, B, what you're interested in, and see what people will pay for. But given the rise of AI and new technologies, it's not so easy to know what skills employers will pay for three years down the road. How would you use your framework to navigate the period of uncertainty that a lot of people are feeling right now? I think the thing you have to do right now is you have to say, okay, what's probably always going to be valuable? And I know everyone's like, well, you don't go into software engineering because you can't get an intro job. I agree with that, but at the same time, like, I am a little bit of a programmer. I'm not a full-on software engineer, but I've used these things, and they are pretty good, but you still need someone with technical skill. And there's so many people that have no technical skill, trying to code stuff up, and it just doesn't work. And at the end of the day, like, I think those are still valuable skills. So maybe not software engineering per se, but getting technical skills is one idea. Another is sales. If you can sell something, at the end of the day, like, I don't think robots are going to be selling us stuff.

It's going to be people. And so at least in face-to-face interaction, so if you can sell stuff, that's another huge skill, right? And then I think credentials, you know, lawyers and doctors, are they going to go the way of, you know, I think they have large lobbies. So it's going to prevent them from seeing their pay drop a lot as it is. I mean, even in the U.S. doctors get paid, I don't know, like five to six X more than in the UK for doing basically the same thing. So the fact that that can exist, I think there is some sort of mechanism there. that prevents that from moving forward. So in terms of just summarizing that, like sales, technical skills,

or finding some sort of credential thing that probably has some sort of protectionism around it. Or football player. Yeah. Oh, yeah. If you're a celebrity, yeah, by the way, I've agreed. Stini Boys, yeah, go do that, yeah. I thought you're going to say podcasting for sure.

You guess you'd ask me. No, I think podcast, I would not recommend that. Yeah. I heard the Google podcast, AI podcast, like they're pretty good. Although, of that framework, though, and you did touch on this a little bit in your book, what you're interested in, what people will pay for and what you're good at, what would you say you should put the most value on of that kind of

three-pronged framework? Depends where you are in your life, what wealth level. And the reason why is, you know, if you're in level one, you're starting out, you have to get paid. Like, that's just essential, right? And then the thing I would focus on after that is, like, what are your strengths? Because if you're good at something, I think you, and this is what Scott Galloway talks about, which I talked about in the book a little bit, is like, if you do something that you're good at

for a long time, like, you will get praise for that and you will start to like the praise. And so then you may even start to like the activity. Right. Like, I used to hate writing. And the reason why I started to like it is because I started writing about things that I cared about. I didn't have to write, you know, a 500-word essay on the Scarlet Letter, right? I'm like writing about, like, you know, money and wealth and other things that's more interesting to me. So one other line that I highlighted in the book is that the most expensive thing some people own is their ego.

What does that mean in the context of maybe managing your wealth? I think there's like the difference between people in level three, which is $100K to $1 million. and the difference between people in level four, which is $1 million to $10 million, I think a lot of it is ego. And what I mean by that is like people in level four and level three live very similar lives, right? Like they're on the same airplane. Like they're probably in roughly similar neighborhoods or they're close by.

They shop at probably similar stores. But the difference in terms of, you know, like what's the actual difference? It's a lot of it's just paying for status and all these other things, right? So I think when you realize that, I think a lot of people, and level three can start buying like people in level four as if like oh it's a much better life and it's their ego that's costing them that's preventing them from saving more so that's kind of where that comes from it's like you don't need to go and buy all these fancy things because a lot of them don't actually fundamentally change your life that much and on the same topic of ego you know when you're

climbing a ladder like in real life you're always looking up to the next level or wrong like that is the concept of a ladder you're looking up how do you know when it is okay to say i think i'm satisfied with how high I've climbed, it's getting a little, you know, we're at high altitude here, or is that just not possible? I mean, it's difficult because what's going to happen over time is as you kind of climb the well flatter, if you do start moving into nicer neighborhoods or hanging out in different areas, etc., take up more expensive hobbies, you are going to meet people who are even richer than you are and you're going to just end up seeing that next level, as you say, right?

And so the way to counteract that is to like kind of remember where you come from and like what do you actually value? So as I talk about in the book, like, what do I talk about in level five and six? Because like that's not going to be relatable to most people. It's not even relatable to me. It's realizing that your wealth amplifies different things over time. And once you get into level five and six, all of the non-financial parts of your life are amplified. And why is that? Because you can't buy these things. You can't write your kids a check and say, love me. You can't buy a new cardiovascular system because you've been neglecting your health. Right. So once you realize that, so people get to this point where they're like, yeah, I probably.

We have enough I can stop. So I think it's starting to focus on the non-financial parts of your life that improves that. So if I'm like a board at a public company, should I try to be incentivizing CEOs with something else besides stock compensation? Or, you know, are they still, I mean, Elon Musk, you know, is going to war over his particular compensation package. And he's already worth over $300 billion. Well, yeah, once again, the most expensive things some people own is their ego. So I think I would just rephrase that. Okay.

This is a little bit of a curveball, but let's say the government called you in and said, Nick, you're an expert at getting one person from level one wealth to level two wealth. But we were the government. We want to get millions of people from level one wealth to level two wealth. What ideas would you give them and how different would those be from the advice you would give to an individual? Oh, that's a great question. I mean, my initial reaction to this is like, because going from level one to level two, that first few thousand dollars is, you know, huge because it just you have so much more security like think about what happened during coven when when people got these stimulus checks i remember seeing on twitter people saying like oh my gosh i've never like felt this like more relaxed about my money because i have a few thousand dollars i'm not going

paycheck to paycheck now as much as i want to be like okay let's just have a big redistribution program the problem is a lot of that money is going to get spent that's going to create inflation so it's a lot more complicated when we start doing macro stuff so in terms of what you what i would do to try and get more people out of level one. I actually think this idea of starting like, you know, a baby fund, $1,000 put that in, the government pays for it. And then by the time they're 18, they're maybe out of level one, let's hope, right? Something like that is actually a decent idea. Of course, like, what are the long-term effects of that is hard to predict? So as much as I want to be like, oh, I want to control the government and do all that, I really don't know. And my guess is a

baby bond is the closest we're going to get. That's so interesting because on today's show, we're recording this a little bit in the past, but we talked about this idea of, you know, Trump accounts, which are doing exactly what you said is, is kind of giving a nest egg to every baby born in America of $1,000. Do you think investing it in the market, one of the reasons why they're doing is that they want people to dip their toe in and have, you know, skin in the game when it comes to investing in financial markets? So do you think that $1,000 account tied to investing in the stock market is like the best way to do that? I mean, it's one way to do it. I think that once again, the biggest issue with a lot of people lower on the wealth ladders, they have very little ownership of American society. And that's not going to change just from this thing, but it helps a little bit and at least opens the door to like continuing that idea. And once again, I think the biggest issue is income is income, like once you have income, it's much easier to buy all these things and to own income producing assets. So I don't want to, you know, skirt away the core issue, which is like most people lower on the wealth ladder just simply don't have enough income. It's not their spending. It's their

income. I talk about that. But thinking about opening up a more higher ownership society would make a big difference here. Okay, we've got a few minutes left. We're going to ask some fill in the blank questions. Fill in the blank. The most overrated thing in personal finance is cutting your spending to build wealth. Oh, so build income faster than cutting wealth. I love that. But also, you just recently had a tweet too that caused a little bit of a stir where you said one of the most overrated things in personal finance is, you know, passing on generational wealth. to your children. Talk to me a little bit about that and why that caused such a stir. I think it causes a stir because I have nothing against it, but at the same time, like,

a lot of the people who build generational wealth are like, oh, I came from nothing. It's like, okay, so then you want to then give your child every advantage so that they don't build the same character building qualities that you had. I don't know. It's a debate. I'm kind of open to it. So I think there's, you know, Warren Buffett has this great quote, which is like, I want to give them enough so they can do anything, but not so much that they do nothing. Right? So you want to help your kids, but you don't, like, maybe pay for their college. Through college, they're covered. After that they're kind of on their own, something like that. Once again, it's a personal issue. Everyone's going to be different about this. There's that scene from Succession that you put in your book, too, about cousin Greg, who gets a $5 million inheritance. He's like, wow, I'm good for life. But then I forget who it was actually come to and said, you're actually the poorest rich person. Why is actually $5 million? I mean, again, it's a show. But like, why is that kind of a bad level to be at in a way? Well, five, once again, like, you know, level four, I call that the no man's land of wealth because, like, the things that got you into level four, which is one million to ten million are very different than the things that get you out, right? Like, you can have a good salary, save, invest, get into level four. To get to level five and beyond, you got to start a business or do something completely different. So in terms of the no man's land, once you're in there, it's very hard to get out. Even if you have, let's say you hit a million dollars today and you save $100,000 a year, earning 5% a year, it would take you 23 years before you hit 10 million. Remember, that's saving $100K after tax.

It's a lot of money. So you see the math. It just gets really tough to get out. Here's the next fill in the blank question. I think you can probably guess what it is. The most underrated thing in personal finance is increasing your income, for sure. And the data is getting like every piece of data I've seen on this is overwhelming. I know that's like, well, Nick, isn't that an obvious answer?

Well, if it was so obvious, we wouldn't be talking about cutting lattes and avocado toasts and all the stuff, which I still see to this day, which is, I think, a distraction. I guess the final fill in the blank question is, which. People can buy your book, The Wealth Ladder, at Fill in the Blank. Amazon, everywhere books are sold, like Barnes & Noble, you name it. So thank you guys for having me on. I truly appreciate it. So this is your second book now, right?

And you're still, you know, shopping this book around. But what is a topic that you would want to dive in for potentially a third book? I have no clue. And that's a great. I only had two ideas. The first one was just keep buying my first book. And this is it. Yeah, I think I run out of ideas.

So we'll see it up. The book ladder. Level two is where you stop. I guess. I guess. Nick, I wish we could keep going, but that is all the time we have. Thanks so much for jumping on the show. I'm ready to start moving up the levels, baby.

If you enjoyed hearing Nick today, his book The Wealth Ladder, proven strategies for every step of your financial life, comes out later this month, but you can order it on, or pre-order it on Amazon whenever you listen to this. Nick, this was so much fun, man. Thank you. Thanks, Neil. Thanks, Toby.

Appreciate it.