Updated: Apr 21
I was inspired by a recent email by Shaan Puri about levels of wealth. Here is my take on the 6 levels for real estate agents. All numbers are gross income, before expenses and taxes. Of course, everyone’s experiences are different, and where you live swings these numbers to some degree. After 20 years as a Realtor, broker and investor, I launched my accounting firm, Alchemy of Money, to help other real estate entrepreneurs end the hustle, build a business, and reach financial freedom. The intention here is to give that financial freedom some structural guidance. Before I dive in, if you're on a mission to increase your net-worth in 2023, I highly recommend you sign up for my new 12-month coaching program. Watch the short video here to learn more!
Level 1: Broke ($0 - $200K)
You’re not making enough to support your business and your life. Let alone grow or invest.
Taxes eat a lot, making it worse.
If this is where you stay, you’d be better off getting a job.
ACTION: Create and execute a plan to move to Level 2 immediately. You stay here, you die. The plan needs only one focus: generate revenue.
ALCHEMY BONUS: Isolate your business income and expenses in a separate bank account with a separate credit card. This will help you see what’s really going on.
Level 2: Painful but Hopeful ($200K - $350K)
You’re feeling better but realize, as you grow, your business demands more expensive things. Like people.
Taxes are still a struggle.
You are thinking about investing but don’t really have enough cash to do that, and you realize you have serious limits in your financial education.
ACTION: Think bigger. Don’t get confused. This is still a very small and therefore fragile business, completely reliant on you. This can be a good place to live a comfortable lifestyle, but it will be very difficult, if not impossible, to invest for your future in a meaningful way unless you live on an extremely limited personal budget. Plus, if you can get here, you can get to Level 3 which is much more interesting, so why not push it?
ALCHEMY BONUS: Time to upgrade from your DIY model to professional bookkeeping and tax services at this level.
Level 3: Kinda Rich ($350K - $750K)
Finally, it all seems worth it and you can buy a more comfortable life and have additional capital to invest in your business.
Investing in other things starts to matter a lot more now.
You actually take some weekends off!
ACTION: Pat yourself on the back, take a breather, and decide what you want to do from here. This could be sustainable for a long time if you manage your expenses carefully. It’s still heavily reliant on you, but at least you have some help and no longer have to do everything. You’re wealthy enough to get out of the hustle and build financial freedom and your focus now moves to net worth. Keep doing what you’re doing and be willing to expand further. You might surprise yourself with what you’re capable of. Don’t let limited beliefs stall you.
ALCHEMY BONUS: Financial services need to be strategic and well-coordinated at this point, and you need to invest more time and resources in your own financial education. You have to figure out taxes. You can delegate the work, but not the understanding of it. (share on LinkedIn)
Level 4: Financially Free(ish) ($750K - $2M)
You have options with your lifestyle and don’t think much about money.
You realize investing could earn you more than your yearly income and you start focusing on that as the goal.
You have to diversify outside of the sales business to advance your income and net worth further.
Philanthropy really kicks in as an option.
ACTION: Learn money. If you have really good sales skills you can fake it up to this stage and might get away with it, depending on the market. But you’re not going any further without legit skills around money management and building a great team of financial professionals around you. Making money, saving money, and investing money are three different skill sets. You finally see that clearly, and are becoming obsessed with closing the gap. You also realize you need some new friends to stretch your thinking so you can continue to improve your life and those important to you.
ALCHEMY BONUS: The financial team you build to get you to Level 3 likely needs an upgrade at Level 4 and beyond. If you’re still using the same accountant as you did when you started in business, I’m talking to you.
Level 5: Rich ($2-$10M)
Materially, you want for nothing.
Responsibility managing your money is almost a full-time job.
You have multiple business ventures and investments.
ACTION: Keep doing what you’re doing. Live your best life. It’s working. But take some extended time off. Like a year or two. The reset will be transformational. Oh, and watch for long-tail big risks. It’s easy to get cocky here and make a big mistake. Stay humble.
ALCHEMY BONUS: Time to teach, write, and inspire. You’re in the best position to help those who you once were. Focus on giving back now that you’re a financial yoda.
Level 6: Like, really Rich ($10M+)
It’s now just more of the above. More $$ to buy the things you love. More $$ to support the people and organizations you care about.
This is not a linear progression. Be prepared to climb and fall back.
Watch self-judgment at various levels. You probably disqualify yourself in your mind from achieving at a certain level. Deal with that inner dialog, it’s holding you back.
Financial freedom doesn’t mean you can do whatever you want. You’ll have responsibilities you don’t have now. So consider freedom in the context of hiring people to do a lot of things you don’t want to do.
There is always someone richer than you. Don’t get caught in the game of scorekeeping with others.
Run your own race.