The 3 Levels of Wealth Creation
May 11, 2024Read time - 3 minutes / Disclaimer
Today let's review the 3 levels of wealth creation.
Learning the different levels can help you:
• Make more money.
• Retire sooner than later.
• Build generational wealth.
Unfortunately, the different levels aren't widely known.
Society Needs Employees
Levels 2 & 3 of wealth creation aren't well known due to:
• Schools create employees.
• Employment is the norm.
• Employment is easiest.
Learning the other levels can increase your earning power.
I spent 10 years working in banking.
Learning how people made money was the most interesting part.
Here are the 3 levels of wealth creation:
Level 1: Trading Time For Money
School prepares us for level 1.
We learn to trade time for money. It's how most people earn a living.
All jobs require:
• Knowledge of a topic.
• Good attendance.
• Reliability.
Having those skills help keep you employed.
Most jobs pay hourly or are salaried positions.
But there's only so many hours in a day. And there's only so many days in a week.
Earning potential is limited.
Moving to the next level requires more skills but also offers higher earning power.
Level 2: Providing A Service
Starting a service business can boost your income.
It also requires skills like:
• Running a business.
• Finding customers.
• Hiring employees.
There are several types of service businesses such as:
• A window washing company.
• A tree trimming company.
• A plumbing company.
A service business helps you leverage time for money.
For Example
If you started a window washing company.
And you had 3 employees.
And each had 4 window washing jobs per day.
4 jobs per day x 3 employees =
12 total jobs
If each job paid $300.
12 total jobs x $300 per job =
$3,600 per day
That's before subtracting any expenses of course.
You can earn more money with a service business.
You're no longer trading time for money by yourself.
If you run the business well, you may be able to sell it.
These types of businesses have limitations as well.
A lot of time is spent on each customer like:
• Setting appointments.
• Providing quotes.
• Doing the work.
Level 3 requires fewer customer interactions and higher earning power.
It also requires more skills.
Level 3: Providing A Product
Selling a product can explode your income.
It also requires skills like:
• Creating the product.
• Delivering the product.
• Providing customer support.
You may sell a physical product like candles or clothing.
A physical product requires the most work since it involves creating, selling, and shipping.
Or you may sell a digital product like an ebook or a digital course.
A digital product requires less work since it doesn't require shipping.
For Example
Tim loves to snowboard.
He talks about snowboarding and posts his adventures on social media.
He has 30,000 followers between his social channels.
Tim decides to create a 2-hour digital course.
It's a "how to" course for beginning snowboarders.
Tim works on it 3 hours a day.
A month later, the course is ready to go.
Tim decides to sell the course for $75.
He adds it to his social media pages and talks about it regularly.
1% of his social followers buy the course each month on average.
1% of 30,000 followers =
300 purchases
300 purchases x $75 =
$22,500 per month
Tim's audience can easily buy and watch the course online without his help.
Selling products can generate millions of dollars per year.
Level 3 is about selling a product in large quantities.
It's also about minimizing the time it takes for each sale.
You're no longer trading time for money on your own like level 1.
And you're no longer spending time with each customer like level 2.
Conclusion
The 3 levels of wealth creation are about time and leverage.
Level 1 requires the least amount of skills.
Level 3 requires the most amount of skills.
Moving to the higher levels is not easy.
But they offer many rewards.
That's all for today.
See you next week.
