ERE Wheaton Levels

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ERE Wheaton Levels are an adaptation of the Wheaton Eco Scale concept to personal finance. It is named after Paul Wheaton, who recognized that in a field as deep and complex as permaculture, people would have varying levels of understanding according to their level of mastery. While people at adjacent levels are able to judge relative competence, there is also a fog of comprehension effect where people separated by multiple levels have difficulty relating to each other. The problem arises because increasing competence is a difference in kind rather than degree.

ERE Wheaton Scale

The ERE Wheaton Table (image link) identifies a few representative mindsets along the personal finance journey as mastery is developed in spending efficiency. Refer to the forum discussion for additional context.


At the low end of spending efficiency, scarcity is characterized by two things: extreme market-dependence and needs/wants exceeding income. Lack of discipline results in paying for stuff several times over through the use of high-interest consumer debt. The inefficiency of spending makes it very difficult to build wealth.


The accumulation mindset stresses playing the financial game as most people know it. Avoid high interest debt. Build up the credit score. Set aside some savings for an emergency fund. Use a budget to prioritize spending.

Exponential Growth

This kind of person is what most people think of as a smart consumer. They always buy stuff on sale. Research the best deals. Most normal people envy this level of efficiency but won't strive for it due to incompatible mindset. On the financial side, there is an emphasis on saving and investing to take advantage of "the magic of compound interest."

Embracing Efficiency

The average person thinks of this smarter consumer as a cheapskate. Realizes that used stuff works as well as new, and the deals are even better. This kind of person is the "millionaire next door" that drives a car that is 10 years old... and replaces it with a used car of similar age when that breaks down. (Normal people don't aspire to this.) Refuses to take on any new debt and pays off existing loans aggressively, including the mortgage. Knows a bunch of frugality tricks. Uses budgets to control spending.


Breaking through the limitations of consumerism requires a different attitude altogether. Two things distinguish optimization from the previous levels: a producer mindset and low waste. This is really a generalization of the principles underlying the frugal practices usually presented as a list of tips. While others may DIY as a hobby, at this level building and fixing stuff is a way of life, making low expenses inevitable. Use of financial capital is Pareto-efficient. Uses budgets as a retirement planning tool.

Yields and Flows

How can expenses get even lower when efficiency is already maximized? By playing a different game altogether. This might mean breaking the rules and not automatically accepting what everyone else perceives to be necessary. One concrete example of this is vandwelling as a solution for shelter, which requires a certain type of mastery over self. At a minimum it means being willing and able to use alternative forms of capital to meet needs and wants. Non-financial forms of capital become just as relevant as money is to the previous levels, and one becomes proficient in managing the flows. This mindset is beyond budgets, as they capture only one dimension of spending.

Systems Theory

Systems thinkers are able to see themselves and their environment as a set of interconnected systems and not a bunch of disconnected parts. The systems thinker applies this knowledge to derive needs and wants from the environment through stable, self-sustaining systems of his own design. Realizing that waste from one process could be input to another, the systems thinker closes these loops to his advantage. An effective systems thinker lives so efficiently that money is like tap water in abundance.

Chop Wood, Carry Water

This mindset is all about living according to nature. Sees money as a force that distorts the natural interactions between people and the environment and seeks to transcend it. Systems are perfected by minimizing undesirable work and using resources as part of a complete and naturally flowing cycle. Focus is on making money irrelevant to the systems by eliminating waste and closing the loops. Money is irrelevant except to the extent that it is needed for "head taxes", which are unavoidable costs of being a good citizen, such as property taxes and health insurance.

Suggested Reading

Level Paradigm Resources
1 Scarcity Dave Ramsey, The Total Money Makeover

Jesse Mecham, You Need a Budget

2 Accumulate Ramit Sethi, I Will Teach You to be Rich

Suze Orman, The Money Book for the Young, Fabulous and Broke

3 Exponential Growth David Bach, The Automatic Millionaire
4 Embracing Efficiency Thomas Stanley and William Danko, The Millionaire Next Door

Amy Dacyczyn, The Complete Tightwad Gazette

Charles Long, How to Survive Without a Salary

5 Optimization Jeff Yeager, The Ultimate Cheapskate's Road Map to True Riches

Robert Clyatt, Work Less, Live More: The Way to Semi-Retirement

6 Yields and Flows Vicki Robin and Joe Dominguez, Your Money or Your Life
7 Systems Theory Jacob Lund Fisker, Early Retirement Extreme

Gareth Morgan, Images of Organization

8 Chop Wood, Carry Water