Stages of Wealth Creation

claudiaBlog, Financial Independence Services, MindsetLeave a Comment

Before you get started on trying to make a change or improve your financial situation, it’s a good idea to get real about where you currently stand.

Tons of people talk about wanting to be wealthy. But what exactly does that mean? Is that a certain number in your bank account or is it a certain kind of lifestyle?

The wealth stage that each person wants to reach is variable. It depends on what matters to you and what stage you currently are in. We all have different goals that we are trying to reach and different priorities to focus on.

Below I’ve laid out the foundational steps to wealth creation, so you can identify what stage you are currently in and also pick a stage that you aspire to reach.

Once you know where you are, you can make a plan to get to where you want to go!

The 6 stages of wealth creation.

  1. Survival

You commonly say: “I’m drowning in debt” or ‘I can’t save a cent”

  • Living paycheck to paycheck
  • Steadily accumulating debt
  • You don’t have any savings
  • You always feel like your cash is vanishing
  • You have unpaid credit card balances each month

GOAL: Get control!

  1. Struggle

You commonly say: “I never seem to be able to get ahead”

  • You want to avoid getting further in debt
  • You only pay the minimum payment on your credit cards or loan repayments
  • You are able to save some money each month
  • If an ‘unexpected’ life event happened, your savings would be depleted
  • Irregular bills ‘blow the budget’

GOAL: Save more and establish financial security

  1. Strive

You commonly say: “I know I should be doing more with my money but I’m just not sure of the right thing to do”

  • You are starting to have options
  • You repay your credit card in full every month
  • You are starting to accumulate some wealth
  • You have enough disposable income to make some additional loan payments
  • You are able to consistently save for short term goals

GOAL: Develop a financial plan, Invest more and more purposefully, save for longer term goals.

  1. Confidence

You say: “I want choice so I don’t need to work my whole life”

  • You are financially on track
  • Repaying all debts fast
  • You have a savings plan for all your important lifestyle goals
  • On track to retire by age 65 on your terms
  • Have adequate personal insurance
  • Understand mainstream investment types

GOAL: Leverage. You start looking for guidance with financial planning, like how to pay less taxes so you can continually grow your wealth

  1. Competence

You mindset is “a competent investor”

  • You have a masterful understanding of mainstream investments
  • You are using financial leverage wisely
  • You are on track to be able to retire early

GOAL: Applying ways to leverage your financial knowledge to accumulate wealth faster.

  1. Freedom

Your mindset is “a creator”

  • You have achieved your financial goals and met your own definition of wealth
  • You are financially independent
  • You can cover all your lifestyle expenses from passive income

GOAL: Distributing your wealth and assets.

What stage are you in? And where would you like to be?

 

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