#82: The Different Levels of Wealth

Welcome to the Passive Income MD Podcast where we talk about creating your ideal life through multiple streams of income. I'm your host, Peter Kim. If you enjoy hearing about this stuff, make sure to hit subscribe so I can bring it to you every week. Now let's get on with the show. Hey everyone, hope you're having a great week. Of course, this is the week of gratitude. It's the week where we spend time, you know, take time of our out of our lives, our busy lives, to think about the things that have really brought value to our lives and things that we're thankful for. I know that 2021 was probably pretty crazy for most people still, but hopefully there were some moments of joy in there that you can look back on and reflect and think how lucky we are to be healthy and to have the things that we have. I want to let you know that everyone here at the Passive Income MD Podcast, we're grateful for you, the listener. Thank you for participating, being part of our community, for sending us messages, nice messages of how you've gotten value from this, for leaving reviews and for sharing it with your friends. We just want to say we are thankful for you and without you, obviously this thing wouldn't happen. I want to also let you know that this week or this weekend, Black Friday to Cyber Monday, we're also going to have a little bit of a sale going on. Many of you have been part of our Leveraging growth summits in the past as well as our PIMD cons, our Financial Freedom Through Real Estate conferences. You probably watched a bunch of the talks, maybe you weren't able to get to all of them and you wish you could have watched some of them before, you know, they were taken down. Well, here's your opportunity. It's to buy the VIP All Access pass for those past years and we're kind of doing some bundles as well at a deeply discounted price in a way to say, look, it's almost a no brainer. Go back and, and I promise you that you will get way more value out of this investment than what the cost is. And so that's what we tried to make it, you know, a no brainer decision for you. So definitely check it out. Eventually it will make its way on its show notes here whenever that is live. And also we'll be announcing it on our newsletters as well. So look out for that. Now for this week we're gonna be talking about wealth. Now there are different levels of wealth and there it's defined in so many different ways, but I wanted to try to explain it in simple terms that, you know, that actually made it make sense for me, at least realistically. So, I mean, I like to listen to a bunch of podcasts as well. And one of my favorite podcasts is it's how I built this. I don't know if you ever heard of that podcast. In it, they interview entrepreneurs about their journey. And in this one particular episode, they interviewed Stuart Butterfield, who is the founder of Slack. Now, you probably all heard about Slack. It's a communication tool. It's a collaboration tool. We use it, our own team uses it. And it's used by some of the largest, most well known companies in the world. And it's an amazing, honestly simple communication method. And it was founded in 2013, it saw tremendous growth and actually sold to a company called Salesforce recently for 27 or more than $27 billion. Now that's not too shabby right? Now, in the podcast interview Butterfield, he recounts a really inspirational story, right? He talks about a story of failure, pivoting, endurance, success. I mean, it's all super motivating, but it's not the reason I bring it up today. Now, the real reason I was really fascinated by the interview was that at the end of it, the host, Guy Raz, asked Butterfield one question about his newfound wealth. He said, does that eliminate stress in your life? Does that mean that everything is set, everything is taken care of? So I really loved Butterfield's response. I thought it was really fascinating. I had to play it back several times to get the full effect. He said that he believes that there are three levels of wealth in the world, and knowing where you're at depends on how you think. So here are his three levels, which are really three different types of mindsets relating to finances. Here's level one, I'm not stressed about debt. So it means that people no longer worry about their credit card bills or student loans. That's like level one. Level two, it's I don't care what stuff costs in restaurants, right? Meaning that when you go out to eat, you don't even think about how much you're spending on a meal. So that's like this nice place to be. That's like level two of his wealth, kind of like tiers. And number three, it's I don't care what a vacation costs. And to him, this is like the ultimate level, meaning that you don't care how expensive a hotel is or which flight to take. You just want to go and have the best experience that you can have and money in that case doesn't matter to him. That's like the ultimate level of wealth. I mean, he said beyond this level, honestly, additional wealth doesn't really change or impact his life in any other way. In fact, he talks about how he really aims to give away most of his wealth, which I thought was like, again, it was, it was just really fascinating to hear that because he's pretty sure he doesn't get additional happiness from spending more of it. Right. And he, there's like tons of suffering inequality in the world. He feels like if he can help in some part in some way and contribute to that, then it would make him happy at the end of the day. And I thought these were really powerful words, but I really liked how he distilled the really complex nature of wealth and finance down to really simple terms. You know, when I talk about wealth, I tend to talk about it in like specific numbers or like certain landmarks, like reaching financial freedom for medicine. And I think that's important. But what I realize is that, you know, what really matters about wealth is how it impacts like your daily life. So anyways, I felt that there were actually probably a couple additional levels of wealth to what Butterfield said. And so I want to share those with you here. But before we do that, I want to talk about this real quick study that he actually referenced as well. And you might have heard this reference. It's about happiness, wealth and income. The study is titled, or one of the studies is titled Happiness and Income Satiation and Turning Points around the World. It's a huge like large analysis study. It was published in Nature Human Behavior and they aggregated answers from about like 1.7 million people over 150 countries. And the study found that the ideal income for individuals is about $95,000 a year to achieve life satisfaction. And if you want like just general emotional, good emotional well being, you need to make somewhere between 60 and $75,000. Now that was for individuals. Now obviously if you have a family, you have some children, it would require a little bit more. But what they found was that above these amounts, it doesn't seem to improve your life any further when it comes to happiness. I mean, you probably know this. The problem is that with more money in this type of situation, people tend to just kind of inflate their lifestyle. They call it the hedonic treadmill or whatever you want to call it. They spend more, cause more issues, more money, more problems. You probably heard it's. So what happens is that even though you make More money, you're actually not any happier. So many of you that are listening to this, I'm guessing almost all of you listening to this, you're probably above that income level, right? So you're probably at that place where you've achieved kind of full potential happiness and that ultimate level. So it's kind of up to us to kind of realize, all right, what level of wealth do we actually have? Let's thinking just past numbers. What do we, what can we do in our daily lives to really take advantage of that and appreciate it and just enjoy life as we have it right now? So I actually think there are five levels of wealth and I like to think of it like Butterfield does in terms of real life situations. This takes into account the cost of living, depends on like what your lifestyle is like. But using this basic framework, I like to think of wealth like this. And again, this is adapted from what Butterfield said. Okay, level one, wealth level. This is how you feel. I'm not stressed about having a roof over my head or a basic meal. I mean, I believe that nothing in life matters if you don't have these basic human needs covered. At this point, it's all about survival, Right? There are plenty of people who are below this line. Unfortunately, it's a problem which our society hasn't found a solution yet. But I think it's pretty safe to say that physicians high net worth individuals were above this level and don't have to worry about this now. Level two is you're not stressed about debt. Now, obviously, as high income professionals, we've been through many years of education to get where we're at. We're no strangers to debt. And you know, according to the aamc, the association of American Medical Colleges, you know, the average medical student pretty much averages close to $200,000 in debt and it just continues to creep higher. Now I did a poll in Passive income Docs a couple years ago actually, and that's our Facebook group, and about 25% at least had over $250,000 in debt. And to many of you that seems like a small number. And so I remember teaching residents and I've heard numbers in the fours and fives. I think it's nuts, but that's kind of what it takes sometimes to get where we're at. But if you're not stressed about debt and you've gotten to that level, that's like level two. Level three, I thought again, Butterfield had a great one here. I don't care about what stuff costs in Restaurants. I mean, I'm just wondering, like, do you have to eat quite a bit or you eat at home? We like to do a little bit of both, my wife and I and our family. You know, if you're at this level, because, I mean, do you base your restaurant choice based on, like, the type of food you want to eat, or is it based on, like, budget? Do you ever think, ah, this is a $3 or $4 restaurant, like on Yelp, let's avoid that one. Or when you go to a certain restaurant, do you want a certain item, but you look at the price and you let that dictate what you order? Well, once you're free of that, like, once you're free of that, like, menu price looking, and you're able to go to a restaurant and just get the food that you want to eat, and you just want to enjoy that experience, you want to enjoy that certain restaurant. You know, it's not always about eating at the most expensive restaurants, but it's trying different types of experiences. But maybe, you know, you like a certain hole in the wall, but you like a really nice place. But the fact that you're choosing based on your budget, if you're not doing that and you're able to just enjoy, man, that's. You're at level three. Now that level four is, again, what Butterfield said. I don't care what a vacation costs. I mean, I don't think this necessarily means that you're obligated to stay at, like, the nicest hotels and always fly first class. It's just that you can do whatever you want depending on the experience you're looking for. You know, all of this comes down to choices, right? And having that choice. Now, for traveling with children, for my wife and I, we often look for the hotels. Not the fanciest hotels, but the hotels that have the best amenities for children. Like, it's going to be fun there. It's going to make our lives easier as parents. Now, if you're traveling to Europe, you might want a little bit more of an authentic experience or something like. Or you want to pay for some unique experience that costs a pretty penny, but you don't worry about that. So imagine that whenever you book a vacation. Again, price is not the issue. It's the type of experience that you want and the location that you want to go to. Now, how many of you are at this level? This is what Butterfield consider the ultimate level. And I think this would be an amazing level to shoot for. Okay, now the fifth level, I Think there is a fifth level. Now, the fifth level person says this. I'm giving away a majority of my wealth over my lifetime. Now, I don't know how many of you have heard about the Giving Pledge. According to their website, the Giving Pledge is a commitment by the world's wealthiest individuals and families to dedicate the majority of their wealth to giving back. Now, it was started by somebody famous named Warren Buffett, you might have heard about him. And also Bill and Melinda Gates were part of it as well. There are pledges and if you go look at there, there's people like Mark Zuckerberg on there, Michael Bloo, Bloomberg, Richard Branson, George Lucas, they're committing publicly that they're going to be giving away the majority of their wealth over their lifetime. Now, it sounds good to give, and I know we all like to give, but to give a majority of your wealth, to give the majority of what you made, it's. It's actually easier. Sounds easier than it actually is. Now, something that, you know, in my life that I've tried to implement even when I didn't make so much, you know, something somebody once told me back years ago was that, you know, if you can't give a dime out of a dollar, you're not going to give $10,000 out of $100,000. Right. I think many of us kind of get to the point where we say, hey, you know, once I have a certain amount I'm going to be able to give. You know, it's something that I am always working on too as well, is to remember to have that gratitude to give back. And you know, I always tell people to keep me accountable for that because it's something I've been working on. But if you can get to that place where you're able to give majority of your wealth over your lifetime doesn't impact your lifestyle, you're able to grow, contribute in any way, in the best way possible. I think that is the ultimate level. That is what just so everyone knows that is what I am going for with all the different streams of income, with the passive income stuff. My goal is to be able to say I am at that ultimate level where I can give freely, live freely and do all these sorts of things. And so I don't know what level of wealth you're at, what your goals are, but I thought I'd just share mine with you today. Anyways, hope you have a great week. Spend time for yourself, for your families and your loved ones, and hopefully you come back refreshed and we'll talk again soon. Thanks. Enjoy the show. Let me know by dropping a review in the podcast app you're listening to us in. And if you haven't already, make sure to hit subscribe. Are you part of our community yet? Join thousands of physicians who are also on this journey to creating their ideal lives through multiple streams of income. You can join us on our Facebook group Passive Income Docs, and you can always learn more at our website, passiveincomemd.com thanks again for allowing me to be a part of your journey. See you next time.