When it comes to your, what financial level are you at?

Whenever we discuss the issue of wealth and poverty, then it is always noted that it two economic conditions. But such startling fact is only a partial view of the issue at that. Financial phases are present, and each phase relates to a specific tier of the population in terms of asset accumulation. In this article, these levels are going to be explained to evaluate, where we are and what needs to be done next.

Many people today want to achieve the level of financial freedom but it is critical to understand that financial freedom is not the ultimate stage in our development. This spectrum of the financial levels provides a wider outlook at the continuing journey of wealth.

The Existence of Levels of Financial Solutions and Their Relevance

There are different approaches that seek to capture the essence of the type of economy that exists today. Among these, some are relatively less complicated as compared to others are relatively more complicated. The one which seems most helpful to me divides our position in terms of our finances into five levels, and clears up our situation and what needs to be done to achieve the certain financial status. These levels are:

• Financial Survival
• Financial Stability
• Financial Security
• Financial Freedom
• Financial Abundance

Learning where you stand and developing an understanding of your current financial status is very vital, especially in establishing goals, achievements, and formulation of strategies to the next level.

Level 1: Financial Survival

This is a foundational level where people are trapped in modern-day slavery; where they are not only debt-ridden but also practically following the Materialistic Culture of the West by earning less than what they spend. The two characters heavily depend on many types of toxic debt to finance their way of living. Therefore, they spend most of their time planning the month and have no forward planning on issues such as managing for the next month.

People in this category mostly rely solely on their paycheck and are financially illiterate needed to cater for emergencies. This expansion by the use of debts leads to the creation of a lot of pressure and this in essence affects the emotional and mental health of human beings.

To move out of financial survival, consider these steps:

• Track Your Expenses: Record all the monthly income and expenditure with a lot of clarity. This awareness is the preliminary stage of managing and eradicating debts.
• Reduce Spending and Pay Off Debt: Spend less on unimportant things and be very keen on clearance of debts. This might call for lifestyle changes, however, it is the only way to achieve long-term satisfaction and free from anxiety or worry.
• Save Consistently: That is why it is necessary to develop an emergency fund that will help you to avoid additional debts in case of emergency. Savings are also helpful in the future, especially when it comes to having money to reinvest.
• Increase Your Income: In this self-help activity, consider how you could increase your earnings. Every little bit counts in getting out of the level of mere subsistence.

Level 2: Financial Stability

To the average, or, rather, the bare, need for financial stability is the idea that should be strived for. Still, you mostly depend on the active income from your job but have constructed a comfortable cushion. You have saved for an emergency fund for at least 3-6 months of your salary; and more so, possibly you have life and health insurance for your family.

This level enhances neutrality in as much as a person is relieved from the anxiety of having to meet with other unplanned expenses.

To advance from financial stability to the next level, you should:

• Maintain Expense Control: Ensure that you keep on balancing the expenditure in order to keep from falling back to the financial survival status.
• Acquire Assets: Start purchasing assets that bring in cash even without you having to work for it like shares, real estate, or owning a small business. However tiny an investment is, it can accumulate over time and make one secure financially.

Level 3: Financial Security

Categorically, financial security is part of the great wall through which financial liberty seems within reach. The citizens at this level apparently appreciate the need to invest if there is to be any forward movement as far as their riches are concerned. They own several productive and self-generating investments from properties, shares, or other internet-based businesses. But still, they may need their job to provide at least a part of the income because their assets cannot cover all the expenses needed for living.

To reach the next level, you should:

• Invest in Education: It is recommended that you keep on updating your financial knowledge. Investing in more assets can equally serve as a useful form of improving the portfolio.
• Diversify Investments: In order to reduce the possible risks of investment you should diversify your investments across various fields. It also helps to reduce specific assets’ risk since another asset type may offset the poor performance of another one.

Level 4: Financial Freedom

Financial independence is defined as where you get income from your investments that enable you to live comfortably without needing to work. This level is therefore about safeguarding probably the most important commodity which is your time. It allows concentrating on personal goals and dreams, family members and friends, and contributing to enhancing the quality of life of other people.

To maintain or elevate your financial freedom, you should:

• Protect Your Assets: Foster and protect the things that help you live your life and have your financial freedom. Be alert and timely about the changes within the economic context and threats.
• Create New Assets: Ensure that you keep on expanding and diversifying the assets that you own. This can sustain the wealth in the long run thereby enabling you to lead a comfortable life with an assured future.

Level 5: Financial Abundance

Economic prosperity is the ultimate dream of every human being, personnel and consumer. It is at this level that the assets the individual owns produce five times the income required to be comfortable in life. This remaining amount can be used for large-scale charity, risky speculation, and changing the world to a considerable extent.

To sustain financial abundance:

• Continuous Learning: Keep in touch with great markets and ideas for investment. Education is useful in categorizing events in order to be able to notice and act on opportunities.
• Efficient Asset Management: Learn how to manage some of your assets in a way that they become a source of passive incomes forever and ever. This in my opinion, takes a lot of devotion and planning but the outcomes are highly rewarding.

Conclusion

These financial levels enable one to know his or her position with regard to the financial ladder and what needs to be done to move to the next level. Ask yourself these three questions:

• What financial band am I in exactly?
• What level do I need to be at?
• What strategies will I put in place to ensure I attain it?

Let me remind you that you are the director of your financial voyage. The choices being made here define the future and that of your family. Seize the wealth wheel and steer it, work like a horse to chart its set plan and aim to make the desired progress.