Survey of Consumer Finances – Economist Writing Every Day

The Wealth Ladder is a 2025 personal finance book from data blogger Nick Maggiulli. The core idea is good: that the best financial strategies will be different based on your current wealth level. Maggiulli divides people into 6 net worth levels based on orders of magnitude, from less than $10K to over $100M. The middle of the book has separate chapters with advice for people in each level, so a book that is already a fairly quick and easy read as a whole could be even quicker if you skipped the chapters about levels other than your own.

The beginning of the book tries to develop some simple rules phrased in a way that they can apply across every level, because they are based on a percentage of your net worth. I like the idea but don’t think it really worked. His “1% Rule” says you should only accept an opportunity to earn money if it will increase your net worth by at least 1%. But in practice, whether an earning opportunity is worth your time depends less on how many absolute dollars in generates as a % of your net worth, and more on how many $ per hour it generates. The “0.01% Rule” (don’t worry about spending money on anything that costs less than 0.01% of your net worth) is better. But whether it is a good rule for you will depend on your age and income.

In short, while tailoring his advice in 6 different ways for the 6 wealth levels of his ladder is an improvement on one-size-fits all personal finance books, even this much tailoring isn’t enough. Having a $1 million net worth is normal for a household in their 60s but would be exceptional for one in their 20’s; and vice-versa for a household with under $10k net worth. Chapter 10 explains the data on this well, but it kind of undermines the ideas of the previous chapters. Households with the same net worth should be making very different decisions in their 20s vs 60s.

The strongest part of the book is the use of data from the Survey of Consumer Finances and the Panel Study of Income Dynamics to show how people differ by wealth level and how people move from one level to another. For instance, he shows that the poor have most of their wealth in cash and vehicles; the middle class in homes; the wealthy in retirement accounts and stocks; the very rich in private businesses. Americans tend to climb the wealth ladder slowly but steadily; over 10 years they are twice as likely to move up the ladder as to move down; over 20 years, 3 times as likely. The median person who made it to one of the top 3 rings (i.e. the median millionaire) is in their 60s.

If you get ahold of a copy of the book it’s definitely worthwhile to flip through all the tables and figures, but I won’t be adding to to my short list of the best personal finance books. The core metaphor of the ladder carriers the implicit assumption that everyone should be trying to get to the top of the ladder. But if someone is satisfied with less than $10 million, why should they take on lots of time and effort and risk to start a business for a small chance to go over $100 million?

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The Federal Reserve Bank of Philadelphia just released the first report on a new survey they are conducting quarterly. Some highlights:

Respondents in January 2024 were more positive about their income prospects than respondents a year earlier; one-third believed their income will increase, compared with 29 percent in January 2023

Younger, more affluent, male, or non-White respondents report a more positive outlook, compared with one year prior. Those who are older than 55 or earn less than $40,000 report notably negative changes in their personal outlook, compared with respondents in the same demographic segments surveyed a year ago

When asked about their ability to pay all of their bills in full this month, 23.5 percent of respondents in January 2024 indicated that they could not pay some or any of their bills; this was 1.5 percentage points higher than in January 2023 (22.0 percent) and the highest rate in the last five quarters

Overall, I’d say it shows an economy with mixed performance, but leaning more positive than negative.

It will be interesting to see if this ends up taking a place in the set of Fed surveys that are always driving economic discussions, like the Survey of Consumer Finances and the Survey of Professional Forecasters. If they keep it up and start putting out some graphics to summarize it, I think it will. My quick impression (not yet having spoken to Fed people about it) is that it will be the “quick hit” version of the Survey of Consumer Finances. It asks a smaller set of questions on somewhat similar topics, but is released quickly after each quarter instead of slowly after each year. If they stick with the survey it will get more useful over time, as there is more of a baseline to compare to.