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Published on October 5th, 2013 | by Matt Haberfeld


The Four Levels of Wealth in America

The Four Levels of Wealth in America

What does the average American really want out of life? We all know what Americans say they want; they want a mansion, a solid gold boat, and an even bigger boat to tow the first boat around in front of their friends. But the reality is that mansions have a lot of rooms to dust and vacuum, the gold boat would sink, and the bigger boat would be dragged into the murky depths along with it. The American Dream does not consist of a miserable life making monthly payments on expensive toys. The real American Dream is to become wealthy enough to provide one’s children with inherited wealth. In effect, everyone wants to give their children all the things they never had.

One arrives at such a hypothesis by eliminating all other alternatives. Americans do not live purely for physical or emotional gratification. We have access to all the best illegal drugs in the world, but most people never even try them. Even in the realm of legal entertainment, we have television, video games, bacon cheeseburgers with 4 beef patties, you name it. America has the coolest toys. However, these toys are a diversion, not the goal. They actually sidetrack us from the American Dream.

Americans do not live for intellectual gratification either. I would like to use a classic example that my philosophy professor used in my class to illustrate this point. If you’ve ever watched the show Cheers, you know the character named Norm. Every time he walks into the bar, everyone affectionately yells his name and Woody asks him a setup question, which he knocks out with a witty comeback and everyone laughs. He sits in the same barstool every episode and drinks the same beer. Over the course of the show’s many seasons, we learn a bit about Norm. He wears a suit and tie, and we eventually learn that he is an accountant. This means that Norm has been to college and had access to all the intellectual gratification he could possibly want. Yet we see him every day in the same bar, drinking the same beer, and he seems happier there than anywhere else in the world. Norm has effectively shunned the intellectual side of life for something far simpler and more appealing. Any hypothesis involving intellectual pursuits cannot account for this type of behavior.

Some Americans do not strive for solely personal satisfaction. My own life is a good example of this. I try to live on an extremely tight budget. Roughly 75-80% of each paycheck goes into savings or the stock market. It’s a Spartan existence, free of golden boats, or even gold-plated jewel encrusted boats, and to be honest I could probably cut my food budget in half and still get by. My entertainment budget is roughly $50/month, which means no DVDs, no trips to the movie theater, no expensive restaurants. This may sound like a fairly unhappy existence, and despite the unusually bullish periods of the market, it sometimes is. Yet, it’s self imposed; I choose this lifestyle.

Why would I deny myself the simple pleasures of a nice meal and a fun night out each and every day? It’s fairly obvious that I’m not doing it for me. I make a lot of sacrifices to my personal happiness in the pursuit of wealth. Yet, it is also apparent (at least to me) that I would never spend that wealth on myself. The only logical explanation is that I’m planning for the future. Not my future; I have enough money to quit my job and sit at home watching Star Trek reruns and writing White Collar Slavery articles for several years. The money is going towards my family, so they can have a better upbringing than I did, and be more successful and have more children. The bottom line is, I am determined to see my progeny succeed, and willing to make personal sacrifices so that my children don’t have to work so hard.

Luckily for me, the United States of America is one of the best places to do this. It is one of the successful countries in the world because we maintain a middle class. It acts as a buffer between the rich and the poor, and everyone has a reasonable financial goal to shoot for to increase their social status and attempt to achieve the American Dream. Roughly 97% of people fall into one of four categories, the four levels of wealth in America.


Those lucky enough to have wealthy parents are born into the first level wealth, inheritance. Inheritance is the only level of wealth that a human being cannot achieve for themselves. The best you can hope for is that you make so much money that your children will be born with everything they could ever want. This, as they say, is the American Dream.

Why this dream? Because all fiscally responsible and well discliplined people know that once you achieve a certain level of wealth, you can literally buy money. You don’t even necessarily need to know anything about your money. You can buy stocks, real estate, corporations, it is largely irrelevant. Hire an accountant, and an investment specialist, and just be patient. By surrounding yourself with people who cultivate money for a living, your money is virtually guaranteed to make more money, giving you vast amounts of free time to spend figuring out how to dredge your solid gold boat out from the bottom of the lake.

However, even if one’s parents are rich, inheritance does not guarantee wealth for an individual. The irony is that the more one spoils their child, the less likely the child is to be successful. Giving a child too much early in their development warps their expectations and distorts their understanding of money. Failure to appreciate how difficult it is to earn money usually leads to a lack of motivation in life and an inability to make smart financial decisions. I’m sure everyone knows at least one person with rich parents who turned out to be a total failure, and I’m sure that fact filled them with just the tiniest bit of satisfaction, even if it is undeserved. What inheritance does is provide the maximum opportunity for an individual. You get the best food and shelter, the coolest toys, the best education, the most prestigious social network. Everyone who inherits wealth at least has the chance to stay reasonably wealthy.


If your parents aren’t rich, then the next best thing is making friends with someone who is. Nepotism is the third most powerful force on the planet, slightly behind gravity and stupidity (respectively). You yourself don’t have to have to be smart, aggressive, ambitious or lucky. You just need good social skills. If you surround yourself with success, people will think you are successful. Wealthy and influential friends can not only offer you career opportunities, but introduce you to more wealthy and influential people. It is an exponential adventure in good fortune. Remember, it’s not always what you know, but who you know. The hard part is making that first wealthy friend, and putting yourself into that circle of success.


The third level of wealth is the exploitation of one’s talents by someone higher up the chain. You are not wealthy, nor is anyone you know. So you go to college, you get a degree, and you get a job. Trust me when I tell you that no matter what you are being paid, your bosses and their bosses are making vastly more money than you. For example, people where I work in my position make between $30,000 and $65,000. My bosses make between $100,000 and $120,000. Their bosses make about $5 million per year. I freely admit that I am being prostituted for my knowledge about computer systems validation and FDA regulations. My bosses refuse to admit that they are being prostituted for their management skills, including the ability to drink mocha lattes and read the Wall Street Journal from the comfort of their offices, while taking credit for everything positive and blaming me for everything negative.

Let me stress that there is nothing wrong with living on the third level of wealth. A job is a job, and there is no shame in being a productive member of society. However, sometimes your ambition exceeds your financial capacity. For these people it’s a hard road to try to break out of the third level of wealth. You will have to teach yourself how to use an extremely limited amount of money for maximum gain, and most of your adult life will probably be spent marginally increasing your children’s opportunities for success. (With no guarantee that they will take advantage of the opportunities you worked so hard to offer them!)


The fourth level of wealth in America is slavery. You may think that slavery was abolished sometime in the 19th century, but you’d be wrong. Slavery still exists in America, but not in the form you’d think. Slavery is driving an hour to work, getting paid minimum wage, and spending almost your entire paycheck paying off the loan for the car. Slavery is finding out that you maxed out the limit on your credit card, and thinking that you need another one.

Everything in America is cleverly designed to appear affordable, when in reality it’s not. This is designed to trap you into making payments on something so that it becomes vastly more expensive than it should be. Take a house for example. If a house costs $200,000 then you could pay $200,000 up front and be done with it. But most people don’t have that kind of money just lying around, I know I don’t. So you take out a loan for the house, and make mortgage payments. How does this affect the price of the house? Depending on the interest rate, the house might cost $300,000 now, just in smaller chunks. It’s the same with your credit cards, and your car payment. At the end of the month, roughly half the money you use to pay your bills is being thrown away.

Slavery is in fact the inverse of wealth, because it makes no difference how much money you earn. Slavery is achieved by spending as much or more money than you make, by living above your means. If you are pulling down $100,000 a year, but you’re running up $250 bar tabs on the weekends and making payments on your 3rd car and your 2nd house, you’re still a slave. The key to financial independence is living below your means, whatever that is. It doesn’t matter how much money you have, or how much you earn. If you can’t control how much you spend, you will eventually end up in debt, a victim of your own lack of discipline and planning.


Roughly 97% of people fall into one of these four categories. I’m trying to become one of the other 3%, someone who gets to the top levels of wealth without help from someone already there. This is what makes America a great nation; I am not forced into a caste or prevented from success based on my genetically inherited traits or my parent’s social standing. To a sufficiently determined individual, the sky is the limit as long as they are willing to make the sacrifices to get there. Most people are not, and that’s ok. More solid gold boats for me, right?

Breaking out of the slavery or prostitution levels of wealth is hard. It means avoiding debt at all costs, and always living below your means. Just like everyone else, I had to take out a loan for college. Thankfully, you don’t have to start making payments on education loans until 6 months after you get out of school. I spent my free time and my summers selling Everquest items on Ebay. With a great deal of help from my parents, I managed to get out of $100,000 of college bills with under $6000 in debt.

I saved my money and lived below my means as much as possible. I had the distinct pleasure of graduating from a liberal arts college and the one thing they neglect to mention is that when you graduate you have no marketable skills. So when you make $7.40/hour stocking shelves at a grocery store until you get your first job in your chosen field, living below your means is very difficult. It basically meant eating meals for under $1.50 2 times a day, and relying completely on free entertainment. I finally got a job as a software tester for $14.50/hour. That was heaven in comparison, and I was saving $1000/month. Although that job was short, it was enough to put on my resume to get a better job, for more pay. More importantly, I took with me the lessons of a tight budget and allowed me to start my journey towards living the American Dream.

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