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-million 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.

Level Zero: $0
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: $1,000 a month
Your starter income is between $10,000 to $15,000 a year. This is the first time you start making a little bit of money consistently. Your first hustle, making your first $1,000 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. $50,000 is a lot of money to you.

Level Two: $3,000 a month
The "I'm actually doing it" income is between $30,000 and $50,000 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 $3,000 to $5,000 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 $3,000 a month is nowhere near enough to get you beyond $110,000 a month. $200,000 would be life-changing money for you.

Level Three: $10,000 a month
$100,000 to $150,000 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 $100,000 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% 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 $100,000 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 $100,000 per year isn't going to cut it, at least not the way that you want it to. For you, $1 million is a lot of money.

Level Four: $30,000 to $50,000 a month
The life upgrade income is between $300,000 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 from a financial perspective, so the focus shifts towards stability. You invest in real estate for passive income. You have over $100,000 invested in stocks, preferably the S&P 500. Maybe you even invest in a friend's 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 6 months with 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 serve 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. For the first time in your life, you realize $1 million is not really a lot of money if you're under level five 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 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 Alux is to help you get there as quickly as possible, and in order to do that, we need to get you rich first. 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. Scan the QR code on screen right now to get yourself a yearly subscription for 25% off.

Level Five: $100K to $250K a month
$1 million to $3 million a year. Well, congratulations, my friend! Once you cross a half a million dollars a year mark, you're now officially in the 1% of earners. According to the Economic Policy Institute, the average annual wage of the top 1% was $823,000 as of 2020. A more recent study by SmartAsset points out that the national average of the top 1% of earners is $597,500. You're a partner in a business or the owner of an established business. You have multiple employees that earn between $45,000 to $100,000 a year. You've recently signed a couple of big clients. You no longer do 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, and 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 and 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 friends 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 the 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: $1 million a month
Between $10 million and $15 million a year. Most wealthy individuals will agree that this is the inflection point—$1 million a month, or a net worth of around $25 million. From $25 million 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 six, money no longer matters. You feel like you and your family will never be poor again. You can live anywhere you want in the world and enjoy the same level of lifestyle, but you 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 $1 million 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 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 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 a year to $1 billion a year in revenue is something extraordinary. The person able to do something like that is world class in terms of performance. To get $50 to $100 million 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 in revenue to $1 billion 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 $10 million per year as a salary. Your rewards in life will always be in exact proportion to your contribution. Want $100 million? Well, generate $1 billion worth of value and retain 10% of that. Although this might be a simplified model to keep this particular video short and consumable, owning a company doing over $100 million per year, where you can pay yourself dividends or an 8-figure salary, isn't impossible. Let's just run the numbers for you. As of 2023, Statista estimates there are roughly 25 million companies operating worldwide. Of these, close to 55,000 companies generate revenues over $100 million 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 in 20,000 chance to get to $100 million in revenue. To put things into perspective really quick, the chance of winning the lottery is one in 292 million. 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 peak 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've 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 there 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 and 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 a 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 "2 and 20": 2% 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 want to live 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 kind of scared that without your involvement, everything you've built will go up in flames as it becomes uncompetitive.

Level Nine: Three Comma Club income
$1 billion or more per year. 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 Arnault, have added over $400 billion to their net worth in a single year. 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 $1 billion per year, even as a salary! Remember those hedge fund managers we talked about earlier? Well, the best performing eight of them earned over $1 billion in salaries last year. We've met billionaires before—meaning people who are worth over $1 billion—but never for anyone who's actively earning over $1 billion 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're 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 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 $100,000 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 $1 million all the way up to $250 million how much money 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 said $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 $3 million, we want to be over $100 million. The person with $70 million wants $200 million, the person with $300 million wants $1 billion. It literally 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 Aluxer. It'll be the best investment you'll ever make; we guarantee it.