Go to the regular world and cross the bridge. There will be Yetis. Keep going in and out the level several times defeating the Yetis to level up.

To do this you must have at least one Chi-spell, Double Jump, and the ability to glide. You also need to be able to go to the "Forgotten Worlds." When you go to the Forgotten Worlds, use the levitating pad (purple) to get to the upper part of the houses. When you get up there, walk to the left until you see an unlit torch. When you breath fire on it, it will open the drain next to it. You can use it enter into a cave. When you get in there you must phase through the dimension portal pad into the Dark World. When you enter, there will be two of the "bird" type shadow creatures on ledges, and three of the dark warriors with swords and shields. Defeat all of them and collect their money. The bird type creatures each give you 200 experience points. Each of the shadow warriors give you 240 experience points. After defeating them, go back out of the cave and into the Real World. Break open the wooden jar next to the purple levitating pad. It gives you a mushroom, a butterfly, and a lot of gems. You can repeat this as many times as desired for easy experience and money.