Some financial goals can seem unattainable for those looking to retire early or
become financially free at a young age, it may seem like an impossible goal
to achieve, which is why I wanted to break down the six levels of financial freedom
in today's video so that you can focus on one level at a time.
One goal at a time.
And that way your financial freedom
doesn't seem so overwhelming or unattainable.
We'll talk about each level or each stage of financial freedom and the steps to get
to the next stage to eventually become financially free.
I am Tiffany Thomas with Wealthy
Tiffany Dotcom, and I achieved financial freedom at age thirty eight.
So if you are looking to achieve financial
freedom at a young age as well, I am here to help you out.
Hit that like button and hit the subscribe button and we're going to dive right in.
I've seen quite a few different iterations of different levels of financial freedom,
but the one that I like the most is from Get Rich Slowly Dotcom.
It's JD Roth's blog and you can check that out if you want to.
But I've chosen to follow the six levels that he has chosen for financial freedom.
So I'm going to follow his layout of each
stage and just add things and that I think apply to each stage.
All right.
Even before we begin with stage number one, you start out at stage zero and this
one is called dependency, and it means exactly what it says.
You are dependent on someone else.
And we've all been at this stage at one
point in our lives, at least one point, if not more.
But when we were all born, we were all dependent on our parents
to take care of us not only financially, but in a lot of other ways as well.
And later on in life, we hope to move out of this dependency stage.
But some people may still be in this dependence stage.
If you're spending more money than you actually earn or that you have coming
in or if your debt payments outweigh your income.
So to move out of this dependency stage,
we need to create income for ourselves and stop spending more than we are earning.
All right. Let's move to stage number one.
And the first three stages are actually survival phases or stages.
And then the next three, the last three are going to be our thriving stages.
So stage number one is solvency.
And this just means that you have
the ability to meet your financial commitments.
So those debt payments that you have, you're able to meet those payments.
You make those payments each month.
And any expenses that you have, you're able to pay for those expenses.
You reach this stage when you are no longer
dependent on someone else for your financial obligations and when you are no
longer accumulating debt, accumulating bad debt.
Because I have mortgages, I invest in real estate.
So if it's something like that, that's a different scenario.
But you're no longer accumulating bad debt to this credit card debt or accumulating
other debt that isn't making you money in the process.
Some people reach this in their teen years and some people never reach this phase.
One way, I would suggest to either move into stage number one or continue forward
to the other stages is to start tracking your money.
Be aware of where you are,
spending all of your money and how much money you have coming in.
One way that I personally like to do that is by using a free app.
It's called personal capital.
You can hook all of your financial institutions to it.
So all of your credit cards that you might have, and your checking, your savings
account, if you do have a mortgage, you can hook that to it.
Any retirement accounts that you have.
So you can see all of your financial accounts in just one place.
It is really, really nice and it makes
it really easy to track all of your finances because you can check this app.
You can just open it up and it will refresh within a minute or so.
And you can check this every day and make
sure to see that your bills are being paid on time.
And maybe you forgot about a subscription fee and you can see that come out
and think, oh, I need to cancel that subscription.
So it's just a really nice, easy way to track all of your finances.
And if you are interested in using personal capital, I'll leave my referral
link below and you can get a free twenty dollars to Amazon when you hook one
of your retirement accounts to personal capital.
All right. Once you have enough income coming
in to cover your expenses, even though you still may have debts,
let's move to stage number two, which is stability.
And you reach the stage when you have paid off all of your consumer debt.
So you are no longer getting out of control with your spending and swiping
your credit card and not realizing how much money you are spending.
And you aren't strapped for cash all of the time.
You've realized the importance of managing your money well and you start to establish
an emergency fund, that amount that you have sitting
in a savings account in case of any emergency that comes up.
You also continue to have income coming in and you may have some debt like
a mortgage, for example, but not the bad debt, the high interest
debts like credit card debt.
You are stable with the amount that you are spending and saving,
and one way to help you get to this phase is to be more intentional with what you're
spending your money on and what you are saving your money for.
And you aren't just swiping that credit card and spending on whatever,
but you're really taking a moment and thinking, OK, is this a priority for me?
Do I really need to be spending my money on these certain items or can I let these
certain items go and pay off my debt so that I can continue to move up
on the levels of financial freedom once you have that stability in your life?
Let's move to stage number three, which is agency.
This stage is a free agency.
So you have the ability to live where you want to or to work where you want to.
You aren't thinking I just need to work
anywhere possible and collect any type of income because I'm so strapped for cash.
That's no longer the phase we are in.
You're thinking, all right,
I would like to work in this type of field or for this company.
And you have that agency to choose
that in this stage you would have all of your debts paid off.
So no more credit card payments that we are making, including that interest.
We're just paying off that balance in full each month if we continue to use credit
cards, but all of our student loans are paid off.
And even your mortgage, unless, of course, you don't want to pay off that mortgage
and you're putting that money towards some other type of investment,
then that would work as well, because you have the freedom to choose.
This is your agency phase.
Also in this phase, you have your emergency fund set up
and you have savings that if you wanted to quit your job for a short period
of time, you would have the ability to do that.
And some people will call this screw you money.
There's another term for it, which I'm not going to say,
but it essentially just means you can say to your boss, screw you, I'm out of here.
Although we wouldn't want to do that.
We would want to do that professionally
and not cut any ties that may be beneficial to us later.
You never know.
But you would have the option to say, you know what, I no longer want to work here.
I'm going to quit. And then you would have time and you
wouldn't feel strapped for cash to look for another job.
This is an awesome face to be in because you really feel like you do have choices,
you have options, and you're not just stuck at that job that you really hate.
The last three stages are the thriving stages.
So we're no longer in that surviving mode,
but we are switching our mindset to think, OK, how can my money help me build
my wealth instead of just keep me secure and stable?
How can it help me have that life that I
truly desire instead of just being a safety net for me?
Let's move to stage number four.
And this one is security.
In this phase, you feel secure with your money.
You've started to invest your money.
So it's working for you now instead of you always working for the money.
This stage is really exciting because you
now have enough passive income or investment income to cover your basic
needs, which really does help you to feel secure.
And you could stay in the stage if you wanted to.
It would just be that your passive income would cover all of your basic necessities,
a place to live food, to eat a reliable transportation.
So if you did want to keep things that are really, really simple,
you could stay in this stage of security and you would never have to work another
day of your life if you just wanted the very basics, the very essentials.
But let's say you do want to have some fun.
Maybe you want to travel the world
a little bit or just go out to eat with some friends occasionally.
Or maybe you want to buy that really expensive dress that you've been eyeing.
It's nice to have some of those extras once in a while.
In this phase, you've learned to invest your money to create passive income.
One way that I personally like to do this is to invest in real estate properties.
I invest in buy and hold properties.
And that just means that I have properties that are in good condition.
I've put renters in them and they are paying me monthly rent.
So I'm collecting passive income each month.
And granted, it's not fully passive because I do manage my own properties.
I could get a property manager if I wanted
to, but I don't mind spending my time doing that.
So that is one way you could create passive income for yourself.
And I have done some videos about this, so I will leave a link above and below
and you can check that out after this video's over.
But if you do not have any interest in real estate, then another simple way
to create passive income is in the stock market.
You can invest very simply.
You can just choose an index fund to invest your money in.
And if you want to know my favorite, I did create a video about this,
so I will leave a link for that above and below and you can check that out later.
But investing in the stock market is
a really simple and hands off approach to creating passive income.
You can also start your own business if
you want to, creating perhaps online courses or something that you wouldn't
have to continue to trade your time for money.
So that is another option, but in
this stage, you figured something out
that you want to do to create that passive income and you have created it so you
could live off of that if you just wanted the basics.
Let's talk about stage number five.
And this is independence.
So completely the opposite from stage zero, which was dependence.
And this is the goal for most people.
This is the stage that I am at right now.
And if you're curious to know how I got
to the stage, you can check out this video right here.
But this one means that you can live off
of your passive income or your investment income, and it would cover not only your
basic needs, but your lifestyle that you're living right now.
So it would make it comfortable for you
and this would be for the rest of your life.
And if you are wondering how in the world do I figure out how much I need to have
invested in order to live off of that for the rest of my life?
I did a video for you.
I will leave a link above and below.
You can check that out later on.
But this is an amazing phase to be in because you can spend your time on what
you really want to be spending your time on.
And that could be still going to a nine to five if you really love your job.
Or it could be building up your own business, which I'm doing,
or it could be traveling the world once we can travel more places again.
But in this phase,
you have enough you have enough for all of your basic needs and then some.
So in stage five, you have been really dedicated
to investing your money and making it work for you.
This is what has made the biggest difference in my life is really focusing
not just on saving my money, but investing it.
And it can be done very, very simply, depending on which path you want to take.
But that's really got to be your focus with your money.
Invest as much as possible as soon as
possible, and that will get you to the stage even quicker.
The last stage is stage number six
and this one is abundance, the final stage of financial freedom.
So you have really made it.
If you have made it to stage number six, you've got your essentials covered,
plus your comfortable lifestyle and then more all from your passive income,
those investments that you've made along the way
indefinitely. This means your money will never run out as long as you are alive.
So you could leave it to your heirs if you
wanted to or donate it to a good cause, something that you really believe in.
And not only that,
while you are still alive, you can make those donations to charities
that you really want to support, or you could pay off your parents mortgage
or you could take your whole family on a cruise,
when we can start cruising again. You could take that month long vacation
with your spouse that you've been wanting to do to Paris.
You have the time to create your dream
business if you want to, or write your memoirs or your signature
book, which is actually what I'm working on right now.
So stay tuned for that.
The possibilities are endless in stage
number six, because you do have that abundance.
You're no longer worried about where you
are going to get money to pay for your bills.
You are no longer worried about making your mortgage payments.
You're no longer worried about having your
parents taken care of in case they run out of money.
You can do more good in the world.
It's entirely up to you when you are in stage six.
The stage of abundance, the possibilities are endless.
So those are the six stages or six levels of financial freedom.
And I'm curious to know which one are you
in right now and what are you doing to work toward the next phase?
So put in the comments which stage you are
in so that we can help each other work toward the next stage.
And if you found this video helpful,
please hit that like button and share it with someone else who would like to hear
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Thanks so much for watching.
I'll see you in the next video.