Nick Maggiulli: The Wealth Ladder Has Six Rungs (and Most People Never Climb Past Four)
#629: Here's the thing about personal finance advice: what works when you have $10,000 won't work when you have $1 million.
Yet most financial guidance treats everyone the same, whether you're scraping together a $1,000 emergency fund or deciding whether to upgrade to business class.
Nick Maggiulli, author of "The Wealth Ladder," joins us to break down how money strategies must evolve as your net worth grows. He's mapped out 6 distinct wealth levels, each requiring different approaches to spending, saving and investing.
The levels start simple.
Level 1 covers anyone with less than $10,000 in net worth — that's 20 percent of American households. Here, bad luck gets amplified. A flat tire that costs $200 could spiral into job loss and debt if you can't afford the repair.
Level 2 spans $10,000 to $100,000 in net worth. Maggiulli calls this "grocery freedom" — you can splurge on the nicer eggs without checking your bank balance.
Level 3, from $100,000 to $1 million, brings "restaurant freedom."
Level 4, the $1 million to $10 million range, unlocks "travel freedom."
Getting beyond Level 4 — into the $10 million-plus territory — requires business ownership or extreme patience. Maggiulli calculates that even saving $100,000 annually after hitting $1 million takes 23 years to reach $10 million, assuming 5 percent annual returns.
The data shows income matters more than frugality, especially in the early levels. The median household income in Level 1 is $32,000, but in Level 4 it's $197,000, and in Level 6 it reaches $4.3 million.
We discuss why homeownership dominates wealth in Levels 2 and 3, how investment assets become crucial in higher levels, and why many people in Level 4 choose "Coast FIRE" over the grinding path to Level 5.
Resource Mentioned:
Nick's book: The Wealth Ladder: Proven Strategies for Every Step of Your Financial Life
Timestamps:
Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths.
(0:00) Introduction to wealth ladder concept
(1:35) The 0.01% daily spending rule
(3:43) Six wealth levels breakdown
(7:35) Level 1 survival mode focus
(11:21) Six levels population data
(13:02) Level 1 bad luck amplification
(15:08) Level 2 skills development priority
(17:55) Income and wealth correlation data
(25:28) Level 2 education strategies
(28:05) Income opportunity heuristics discussion
(32:24) Level 2 mobility statistics
(36:38) Asset composition shifts by level
(39:28) Level 3 to 4 progression
(46:52) Level 3 and 4 similarities
(50:14) Level 4 to 5 math
(53:29) Business ownership requirements for Level 5
(56:07) Level 5 and 6 non-monetary focus
(59:07) Wealth movement bidirectional data
(64:09) Key takeaways summary begins
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1:15:42
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1:15:42
Why Nice People Struggle with Money, with Dr. Sandra Matz, Professor at Columbia Business School
#628: You follow all the right personal finance advice. You know you should save more, invest regularly, and build an emergency fund.
So why does it feel so much harder for some people than others?
The answer lies in your personality.
Dr. Sandra Matz, a professor at Columbia Business School, studies the intersection of psychology and money management. She joins us to explain why one-size-fits-all financial advice often fails.
Her research found that agreeable people — those who are caring, empathetic, and put others first — have a harder time saving money.
The solution isn't better budgeting apps or stricter rules. It's reframing financial goals to match your personality type.
For example, agreeable people save more effectively when they view their emergency fund as protection for loved ones or a way to help others during tough times.
By contrast, competitive personalities respond better to framing savings as getting ahead in life.
This personalized approach extends beyond personality assessments. Algorithms can now predict your financial behavior using digital footprints — social media activity, spending patterns, even smartphone usage. With just 300 Facebook likes, artificial intelligence understands your money habits better than your spouse does.
The conversation also covers the darker implications. Companies exploit these same psychological insights to manipulate spending decisions. Dr. Matz discusses data cooperatives as a solution — member-owned entities where people collectively benefit from their shared information.
We dive into negotiation strategies for salary increases, breaking out of financial echo chambers, and using AI to optimize your money management without losing your decision-making autonomy.
Resources Mentioned:
Dr. Matz's book "Mind Masters"
sandramatz.com
Timestamps:
Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths.
(0:00) Big data meets financial psychology
(3:34) Psychology and computer science intersection
(6:26) Algorithms vs spouses at predicting personality
(7:21) Curly fries predict intelligence
(9:01) Self-talk reveals emotional distress
(11:04) Nice people struggle with money
(14:03) Personality-based savings strategies
(22:21) Privacy versus convenience tradeoffs
(24:36) Data privacy management burden
(26:28) Organ donation defaults
(30:40) Data cooperatives concept
(36:01) ChatGPT for financial advice
(40:04) AI as unlimited intern
(44:06) Breaking financial echo chambers
(53:14) AI negotiation training
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1:14:11
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1:14:11
Q&A: When Being Good With Money … Isn't Good Enough
#627: Jlyn and her husband are 20 years from retirement, but they’ve got their eye on a second home they’ll live in when the time comes. Should they make the purchase now, or keep saving?
Reese was recently laid off, and she’s struggling to choose between two financially responsible paths. Should she continue her long-term disability insurance? Or is it wiser to save money?
Kip’s youngest has finally graduated from college, and he’s looking forward to an early retirement. But, with the eyewatering costs of long-term healthcare, is this still a viable path?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
Enjoy!
P.S. Got a question? Leave it here.
Resource mentioned:
Reese's original question in Episode 417
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1:00:47
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1:00:47
The Hidden Psychology Behind Failed Dreams, with Yale’s Dr. Zorana Ivcevic Pringle
#626: A software programmer and an accountant walk into retirement planning. Are they being creative? Dr. Zorana Ivcevic Pringle, a senior research scientist at Yale University's Center for Emotional Intelligence, says absolutely.
Pringle defines creativity as something that's both original and effective, whether you're solving an accounting problem or planning an unconventional retirement.
We explore the gap between having ideas and actually implementing them. You have this brilliant vision for starting a business, changing careers, or retiring early, but somehow you never take the first step. Pringle calls this the implementation gap, and she explains why it happens.
The conversation centers on a hypothetical couple: both 55 years old, one a programmer, the other in middle management. They want to retire at 57 and travel the world. Pringle uses this example to illustrate how creative problem-solving works in real life.
She explains that creativity requires comfort with uncertainty. When you're doing something new, you don't have a blueprint or checklist. There's always the risk that your early retirement plan could fail spectacularly — imagine having to return to work at 59 after the market tanks and your portfolio gets crushed.
Here's the key insight: you don't need full confidence to start. Pringle compares creative confidence to fuel in a car. You don't need a full tank — you can start with just a quarter tank and refuel along the way. Each small success builds more confidence for the next step.
The bottom line? Innovation happens through constant iteration. Your final destination might change throughout your career and retirement, and that's completely normal.
Resources Mentioned:
https://www.zorana-ivcevic-pringle.com/
Timestamps:
Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths.
(0:00) Implementation gap intro
(1:00) Creativity beyond arts
(2:00) Original plus effective
(3:00) Ideas to action gap
(5:00) Retirement as creativity
(7:00) Openness drives creativity
(8:00) Problem finding process
(10:00) Big Five traits
(12:00) Openness and creativity
(15:00) Traits can change
(18:00) Uncertainty creates risk
(20:00) Courage versus comfort
(23:00) Self-efficacy challenges
(25:00) Quarter tank confidence
(28:00) Creative failure recovery
(32:00) Creative blocks
(36:00) Pivoting versus quitting
(39:00) Emotions as information
(42:00) Metrics versus intuition
(50:00) Implementation strategies
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1:10:16
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1:10:16
JL Collins Part 2: What Happens When You Don't Need to Work Anymore?
#625: What do you do when you've reached financial independence? JL Collins says it depends entirely on your spending rate, not just your net worth.
Collins joins us for part two of our conversation about what happens after you reach financial independence. He tackles the question of whether you should invest differently once you've "won the game."
Someone with $5 million spending $100,000 per year sits in a completely different position than someone with the same amount spending $200,000 per year. The first person can afford to stay aggressive with stocks. The second person needs bonds to smooth the ride.
Collins walks through his withdrawal strategy using his daughter as an example. She stepped away from corporate life in her early thirties and now follows an 80-20 stock/bond allocation.
She pulls dividends from both funds into her checking account, covering about 2.5 percent of her target 4 percent withdrawal rate. Vanguard automatically sells shares to cover the remaining 1.5 percent.
We cover Collins' thoughts on the 4 percent rule, which he calls extraordinarily conservative. He references Bill Bengen's research showing that 5 percent withdrawals succeed 86 percent of the time.
Collins would take those odds to escape a soul-crushing job, especially since most financially independent people end up accidentally making money anyway.
We discuss the tension between frugal habits that build wealth – and learning to spend money once you have it. Collins flies first class, but he drives a basic car.
Collins explains why financially independent people often stay engaged with work — the problem was never work itself, but working without agency.
Timestamps:
Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths.
(0:00) Intro
(2:00) Investing when you've won the game
(5:30) Spending rate versus total wealth
(8:00) Three-year versus ten-year timelines
(11:00) Adding bonds gradually or all at once
(14:00) Why 4 percent is extraordinarily conservative
(17:00) Soul crushing jobs and 5 percent risk
(24:16) Withdrawal frequency and dividends
(27:16) Automatic share sales setup
(31:16) Starting business while financially independent
(36:16) Accidentally making money after retirement
(47:09) Agency versus having to work
(50:09) Spending advice for frugal philanthropists
(54:09) Charity auction magnifying effect
Resources Mentioned:
https://affordanything.com/377-how-i-discovered-the-4-percent-retirement-rule-with-bill-bengen/
https://affordanything.com/bill-bengen-created-the-4-rule-now-he-thinks-we-can-withdraw-more/
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You can afford anything, but not everything. We make daily decisions about how to spend money, time, energy, focus and attention – and ultimately, our life.
How do we make smarter decisions? How do we think from first principles?
On the surface, Afford Anything seems like a podcast about money and investing.
But under the hood, this is a show about how to think critically, recognize our behavioral blind spots, and make smarter choices. We’re into the psychology of money, and we love metacognition: thinking about how to think.
In some episodes, we interview world-class experts: professors, researchers, scientists, authors. In other episodes, we answer your questions, talking through decision-making frameworks and mental models.
Want to learn more? Download our free book, Escape, at http://affordanything.com/escape. Hosted by Paula Pant.
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