It's fair to say that building wealth is nothing short of a progressive journey
before you achieve exclusive financial freedom you'll have to go through
different stages of creating real wealth all of which are threaded together
knowing where you stand will make it easier for you to come up with a
strategic financial plan this is why in this video i will be
sharing with you the seven stages of true wealth
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life changing content stage number one zero to spare the first stage of true
wealth is called zero despair and this is the starting point
of every wealth creation journey at this stage an individual is a hundred percent
dependent on one stream of income usually a nine to five job likely
someone in the stage is coming straight out of college and just secured their
first stable job after a seemingly endless search as a
result this is where individuals begin to cut
ties with their parents and start living on their own
although crucial this transition from a dependent student to a financially
independent adult isn't usually easy suddenly you were
responsible for paying your own rent electricity bills among other expenses
all of which were initially covered by your parents
to add on that this is the stage where one is probably saddled with college
debt and other forms of consumer debt like credit card bills
consequently a big fraction of your monthly salary will be going towards
getting these debts out of the way and covering your living expenses
as a result your income is strained at the stage making it impossible to save
or invest since you can only boast of zero to no
savings the thought of quitting your job to
launch a business or investment would be laughable in this phase but as gloomy as
this stage sounds it is the foundation of every wealth building journey
this stage shapes your spending habits and contributes significantly
to sharpening your perception of money and wealth
if you remain focused on your long-term financial goals this is the stage where
you master the art of delaying gratification
and living within your means if you're currently in this stage don't worry
living paycheck to paycheck is a reality for most people as long as you make
concerted efforts to increase your income and save
diligently then this stage will come to an end paving the way for the next one
stage number two the 20 dollar bill rule with time you'll master good money
management habits which will usher you to the next stage also known as the
twenty dollar bill rule the second stage of real wealth is where
your smaller purchases and bills become a non-issue
unlike in stage one where you're pinching your pennies in stage two
flashing at a twenty dollar bill won't make you cringe
turns out this is a point where you completely stop worrying about bills
that cost less than 20 and similarly small purchases that would
initially give you sleepless nights although budgeting is still a crucial
part of your financial life things begin to loosen up in stage two
here you probably settled into adulthood and
living solo hence all you have to worry about now are the recurring expenses
as a result small purchases won't bear much significance to your bank account
such expenses include eating out occasionally going to the movies or
paying for an internet subscription this is where living on your own starts
to gain pace and you realize things are not as bad as you thought they were
regardless it's not all fun and games in this stage even as a pinch of a small
as wayne's you start making plans for bigger purchases
plans of buying your first car or taking out a mortgage or somewhat inside of the
stage the only thing holding you back is that
you have a few deaths to think about hence your freedom is still limited one
trick of surviving stage two is strict budgeting take advantage of
the slightest chance of reducing your spending and channel the saved money
towards your loans stage number three the thousand dollar
rule the third stage of true wealth takes
place when you're able to save a thousand dollars
in this stage you are making a reasonable income and are keeping your
expenses to a manageable level which allows you to have money left over
when the month ends this is the point where most people
achieve financial stability as their debts are minimal and they can
start to grow their wealth using their disposable income
career-wise stage three is where your prospects will shrine brightest
with the satisfying job at hand most people are usually ready to start
thinking about investing or early retirement
take note that your financial journey's biological clock starts ticking at the
stage hence you'll need to double your efforts
this is where you're most likely to secure a promotion
or a salary raise as a result a tax advantaged retirement fund will begin to
look more enticing you're probably considering different investment
vehicles and as you do so don't forget to prepare
for financial emergencies even with a steady job an emergency fund
is a significant highlight of stage three
typically setting aside six months worth of living expenses
is a sure-fire way of cushioning your income portfolio
from unforeseen financial thunderstorms with a ballooning emergency fund to back
you up you will find investing easier at this
stage so don't miss out also be ready to face some tough
financial choices at this stage from where and how to invest your money
to crucial career decisions the stage will test your susceptibility
to creating and sustaining wealth before you choose an investment strategy
consider your individual goals and the time horizon you're working with
if your goal is to achieve financial independence fast go for cash producing
assets such as real estate making a wrong move at the stage will
only set a bad precedent for your overall net worth so take it very
seriously also stage 3 is where your financial
goals will become more defined this is where you create a blueprint for
your wealth journey and if you do it right you'll easily escape common
financial mistakes so be smart about the money decisions
you make at this stage stage four earning how you please
the next stage of real wealth is earning how you please ideally this stage is
characterized by sufficient investment income to support your lifestyle
even in the absence of a steady job the only reason why people choose to retain
their jobs is because of the need for investment diversification
having seen your initial investments bear good fruits you'll be compelled to
test new waters in the investment world your salary will give you a significant
boost to do that unlike in the three stages previously
mentioned quitting your job won't be a cringe-inducing scenario in this stage
if you had to set up a business chances are high that it's drawing bountiful
profits at this stage and now you're thinking of expanding it
in the case of appreciating assets is probably
multiply twofold by the time you're watching this video
the drawn capital gains are nothing short of impressive
debt is not a sticking point at this time and your net worth is steadily
ticking towards the right end of the spectrum
you could choose to down your work tools and it won't serve you a severe blow to
your earning potential however this isn't the best time to quit
your job yet stage four is a pretty comfortable stage to be at
and this is because your destination is now nearer than your starting point
just because you were making enough money to quit your job for a bit doesn't
mean you should go ahead and do it downing your work tools is a huge
undertaking that warrants intensive planning from your end
the good thing is that at stage four you are headed in the right direction
so keep saving stage five unlock time in stage five an individual is
fully enjoying the financial rewards of passive income
by this time working for someone else is entirely off the table
and most people resort to being their own bosses if you love your freedom then
this is the stage where you'll have plenty of it besides fully
controlling your schedule remote working is a possibility worth
exploring at this stage unlike the previous stages the level of
financial independence is highest at this point
this is because at this level a person can effortlessly afford the lifestyle
they've been driving about without any hassle
additionally your net worth can take care of two years of living expenses
without needing you to lift a finger technically you can take a
two-year vacation to your favorite holiday destination without worrying
about making money and still have a blast at this stage
individuals tend to wind back the tape and assess how far they've come
if they feel like they've checked most things off their list they'll pat
themselves on the back and rearrange their priorities
although not a stage of a lifetime financial freedom stage 5
is very close to you waving the work culture goodbye for a life
stage 6 abandoning the budget also referred to as the stage of financial
independence stage 6 is where you can actually amass enough wealth to last you
a lifetime your wealth generating machines are
attracting a cash inflow that surpasses your annual expenses by a
considerable margin and you don't even need to budget you've
saved enough money to afford anything you want without having to plan for it
most people dream about this stage well if you ask me the joy of affording both
basic and luxuries without sweating is a
beautiful place to be financially your family doesn't have to worry about
a single thing because your money is enough to provide them with
everything they need to add on to that this is the stage where you've saved up
enough money for your dream retirement no wonder this is the stage where
individuals go big with their risks and opportunities if
you've been dreaming about traveling abroad for a year this is the time
maybe you hold a desire to own a lavish beach house or ditch your career to
pursue your interior design hobby whatever it is the stage offers you the
independence of taking big risks without being skeptical about hurting
your net worth since material stuff like cars and houses will be out of the way
this is the stage where individuals begin to seek fulfilling life
experiences to some this can translate into spending
quality time with friends and family without worrying about how much money
they have in the bank according to wealth experts you can
achieve this kind of financial independence by following two routes
the first route is investing heavily in cash producing assets such as real
estate and waiting for it to appreciate the
second route is saving up to a million dollars and
living off the interest that will accrue over time
whichever method suits you best just go for it
stage 7 total freedom the final stage of true wealth is the stage of attaining
exclusive financial freedom if you've ever wondered what it feels
like to have zero worries about money then this is it this is a stage where
your wealth generating machines are earning way more money than you will
ever need once you get here your only worry will
be how to steward your wealth we are talking the kind of wealth that stems
from founding big companies like amazon tesla and microsoft
even if their founders decided to go on a full-fledged spending spree
buying private jets and fancy sports cars it would be impossible to deplete
their wealth getting here means you are living your best
life do you remember how i mentioned the importance of delaying gratification in
stage 1 now this is where it all pays off your
sacrifices ultimately pay off at this level leaving you with just one thing to
achieve building a legacy at this stage most
individuals start pursuing meaningful pursuits like philanthropy
or even writing a book about their lives it's only a small fraction of the
world's population that makes it to this stage however
this doesn't make it impossible with the right financial plan you can also
outlive your wealth and leave behind a fortune for your dependence if you're
like bill gates warren buffett you can also donate
a big chunk of your riches to charity there you have it these seven stages
of true wealth thanks for watching if you want to go from the life you have to
the life you deserve then hit the subscribe button now