The 7 Levels Of Financial Freedom (And Level 0)

Financial freedom is the personal finance buzz term everyone overuses. 

But what does it actually mean? 

Turns out, there are multiple levels you can reach and its important to understand where you are so you understand what you are working towards.

Each level has a basic formula for you to understand what it means when it comes to the numbers.

Level 0 - Dependency

Is 0 considered a level? Lot of controversy around this one but we have to include it!

debt/living expenses = income + monetary assistance

Translation: You are either a kid living at home or broke and living on the generosity of others/welfare. You're situation is totally dire and you aren't capable of taking care of yourself.

Level 1 - Solvency

debt/living expenses = income

You have calculated your net worth, cash flow and expenses while defining long-term financial goals and you can pay your bills. Congrats, you can stay moved out of your parent's house.

Level 2 - Stability

living expenses = income + Emergency fund

You can pay your bills and have a little left over every month to save up your emergency fund. Woohoo! Progress!

Level 3 - Debt Freedom

free of bad debt + start investing

Your only debt is your mortgage and you have 6 months of expenses saved! You have room to breathe and life is a little bit more comfortable.

Level 4 - Security

investment cash = survival expense

You have inv estments growing enough to cover some expenses if need be and money saved up to make some moves. You aren't feeling the stress of money like you used to. Healthy financial habit formation is starting to kick in.

Level 5 - Flexibility

cash = 2 years monthly expenses

Your investments in stocks, savings and checking equ al 2 years of expenses and you have no fear of losing your job! Things feel amazing and you are starting to chase dreams professionally and personally without fear of running out of money.

Level 6 - Independence

investment cash = living costs

Your cash-flowing investments like stocks, real estate and disbursements are paying for your living expenses. You have reached a level of wealth that can be automated to sustain your lifestyle.

Level 7 - Abundance

Investment cash > Anything you want

 Your investments are generating more money than  you spend annually. Now is the time to be ultra generous and live well. You've reached the top!

These levels of wealth are great milestones for you to be able to understand what you need to accomplish to level up your financial freedom.

Journeys are more exciting when you have destinations to go to along the way to keep you motivated.

So now that you've looked at the list, where are you and where do you want to be in 3 years?

If you are Level 0-3 and want to negotiate debt and automate your expenses, check out my Foundation course. In 2 hours, you can have your entire finances complete revolutionized and the amount of debt you owe reduced!