Wealth Sensitivity Calculator

A framework for understanding how wealth levels affect price sensitivity and spending decisions, based on the 0.01% rule.

Core Concept

• Take your net worth and multiply by 0.01% (0.0001) to find your "don't care" spending threshold
• Below this threshold, you become price insensitive and don't feel the spending impact
• This helps determine appropriate spending levels as wealth increases

Example Calculations

• At $1M net worth:

  • Threshold = $100
  • Become price insensitive for purchases under $100

• At $5M net worth:

  • Threshold = $500
  • Can freely spend on nicer hotels, restaurants without concern
  • Don't need to worry about purchases below $500

• At $100M net worth:

  • Threshold = $10,000
  • Much higher spending flexibility

Practical Applications

• Helps adjust spending habits as wealth grows
• Prevents maintaining unnecessarily frugal habits (like saving CVS receipts) when wealth has increased
• Creates framework for appropriate "splurging" based on actual net worth
• Can be used to determine appropriate price points when selling to different wealth levels

Key Insight

• As wealth increases, price sensitivity should proportionally decrease
• Many wealthy people maintain outdated spending habits from when they had less money
• The 0.01% rule provides rational framework for updating spending behavior