《The 6 Levels of Wealth》

Level 1 — Dependent

We all start our lives as financially dependent. Reliant on someone else to provide for us. Sadly, many of us have various times in our lives where due to unforeseen circumstances we find ourselves here. This can be dependent on ‘The State’ or on our family. When this occurs in adult life, money isn’t just on your mind, it’s seemingly the only thing on your mind.

Perhaps there are a debts that are building up and this is something that seems impossible to escape. If someone was to say what dominates your thoughts the most? Money worries would be pretty high on that list purely because of circumstances. Things like ‘financial independence’ are so far from realistic that they’re not worth thinking about. The focus is on trying to keep your head above water or maintaining some state of normality in what feels like a chaotic situation.

Level 2 — Solvent

This is where you have enough to pay your bills. You’re not financially comfortable by any stretch but you have enough money to make ends meet. Holidays aren’t on the table very often and unforeseen bills have the ability to really drag back your financial position for months. You have limited emergency funds and savings which always seem to be reducing back down to zero. Credit card balances go down…. then somehow seem to climb again.

The concept of not getting paid for a month fills you with dread. This means you’re reluctant to take many risks with your job and your future. There is always a nagging feeling compared to your better off friends that they take opportunities you wish you had. Although you just don’t feel you can afford to take the risk. Saving for retirement is something that is always ‘for another day’ and the focus has to be on the here and now.

The concept of being fully financially independent feels a distant and untouchable goal. Or, something that will only be achieved when your State Pension is payable and only then if you live a frugal lifestyle.

Level 3 — Stable

You have 3–6 months in emergency funds and cash savings. You could bear the brunt of most reasonable unexpected expenses and you have enough money to lead a good quality of life. Holidays aren’t particularly extravagant but you manage to get away normally at least once or twice a year. Your main focus financially is really within the next 6 months to a year. Anything beyond that seems difficult to plan for as there just isn’t the means to do this. You have managed to start putting some money aside to invest for your future but it’s only a small amount each month. You do have some assets that your building, perhaps you’ve been able to get onto the property ladder. The majority of the focus has to be on the here and now.

Level 4 — Secure

Your financial position is now looking a lot stronger. You have 6 months to a year in emergency savings in cash and now quite a solid amount invested for the future. You feel confident that if you did have some trouble at work or there was a one-off expense, you’d be able to handle this. Your stronger financial position has changed your outlook on life slightly. You’re now looking forward at your career and your life and not just thinking about putting food on the table. Such as how you can find a meaningful career and if your current position fulfill you? Simply put, you have started to open up the luxury of choice and the concept of taking a risk doesn’t seem entirely unfeasible.

You don’t have a high degree of anxiety around money on a day to day basis but you still have concerns about the future and if you have ‘enough’ to really do the things you want to do. Although you are without a doubt doing a lot better than some financially, it’s also a long way from where you’d like to be. There are certainly an endless list of people who you look enviously at wishing you had their means.

You still have concerns about money just as everyone else does. It doesn’t keep you up at night but there still are big question marks about the future. Whether you can afford to give your family the type of life you want to? Whether you can afford to improve your work life balance?

Level 5 — Independent

You’ve done it! It’s taken some time and not been easy but you have what has been called ‘FUCK- YOU money’.  Work is now optional for you as you have enough money to live off your assets alone. 

Congratulations!

Beyond an initial break though, strangely you don’t really want to stop working altogether. Your concept of ‘work’ has just changed. This is incredibly powerful as while you still have the struggles and mundanity of everyday life. You are choosing what you want to do. Your time is an asset which has now become the focus of your everyday life. Life isn’t by any stretched ‘solved’ though. The habits you had to achieve this independence have taken a long time to ingrain into you and that person feels quite unfulfilled by spending all their days on the golf course. Something is missing but you just can’t put your finger on it…

Level 6 — Abundant

You have more than you could ever spend now. Your focus shifts now from you to your legacy. Not just after you’ve gone but you start asking yourself the questions:

• What difference can you make?
• What was your impact on the world?
  

You have managed to achieve abundance by getting very good at a certain set of skills that the world needs and you feel that now is your time to pass on those skills. You do however have some questions on your mind, did I use my time correctly? Could I have made better decisions?

Who reading this has achieved a financial goal to realize that once you are there, it didn’t actually make you feel as good as expected? In fact, it was very quickly replaced with ‘the very next’ goal. This hedonic treadmill is part of the human condition and it’s hardwired into us, so we have to keep a healthy level of appreciation about this when setting our goals.

Will getting to the higher stages make you happy? Well the truth of this is, it depends. Money freedom will almost certainly improve your happiness compared to money worries. However money is a tool, not a goal in itself and pursuit of money by itself can be hollow and unfulfilling.

There may be a way you can try to structure your life so that you can be happy now while still having a lifetime of financial security. The wealth, health, and happiness strategy.