Levels of Financial Freedom
My aim is to get to the top level by the time I am 42 years old maximum – here are some steps you can take to work your way up 7 Steps to financial freedom
Level 0 — Financial Dependency
- Debt payments and living expenses are greater than income
Level 1 — Financial Solvency
- Can meet all your payments by yourself without outside help
Level 2 — Financial Stability
- Have an emergency fund with 3–6 months worth of monthly expenses
Level 3 — Debt Freedom
- Free of bad debts or all debts
Level 4 — Coasting Financial Independence
- Enough money to choose jobs with lower pay with less stress or more fun, “Freedom from employer”, putting enough away already for retirement etc
Level 5 — Financial Security
- Cashflow from investments can pay for minimal living costs but not luxury lifestyle
Level 6 — Financial Flexibility
- Ability to live off investment cashflow but need to be flexible in bear markets -12.5x annual expenses (half of the 4% rule)
Level 7 — Financial Independence
- x25 annual expenses in the stocks and shares account (4% rule)
Level 8 — Financial Freedom
- Cashflow is greater than financial independence plus able to travel or live anywhere
Level 9 — Financial Abundance
More than what you will ever need maybe 3x or more than your financial freedom amount, which allows for severe bear markets.
