Financial independence is having enough money or cashflow to pay for all of your living expenses for the rest of your life, without having to work or to depend on others. Cashflow is referred to as passive income. It simply shows up in your bank account each month.
There are actually seven stages that you might travel through your journey of financial independence.
Most of us start off in the dependent stage. Unfortunately for some, this doesn’t necessarily end at adulthood. Some people never move beyond this stage.
Then there’s the solvent stage. Here you have enough coming in each month and you’re able to pay your bills; but there’s not much going on, beyond that.
Third is the stability stage. You’re paying off debt, keeping your expenses in-check and you’re saving some money, as well. You might even have an emergency fund started.
The fourth step is security. Here you might begin the process of investing. During this part of the journey you’re working toward financial freedom.
The fifth stage is independence. The money and cash-flow you’ve put into place is now covering the cost of your lifestyle.
Yet, the wealth journey doesn’t simply end here.
After independence, is Freedom. Here, you’re able to go beyond the basics of life. You’re enjoying more of the comforts of life and perhaps are relishing in a few luxuries, as well. You might retire from your job and fill your life with hobbies and travel.
Lastly is abundance. Often the focus at this stage is on stewardship, giving and making a difference in the lives of others. It’s no longer only about you.
So no matter where you are on your own journey, we can show you where you are today and the different paths available to guide you along the way.
(Compliance notes and source material for Fortune Financial Services only, not for publication on our website: https://www.spaceship.com.au/learn/the-seven-stages-of-financial-freedom/
