Stage 1: Total Dependence
Basically, in this stage you rely on others for money. Specifically, most young children or people living paycheck to paycheck are here. As a result, you get support from family or benefits and cannot cover all your expenses alone.
Stage 2: Financial Solvency
Next, you reach solvency when your income covers basic living costs. Also, you live within your means and can save a little, so you no longer need bailouts to get through the month.
Stage 3: Financial Stability
Then, stability comes when you consistently spend less than you earn. For example, you pay off debt and build savings, giving you peace of mind that small bumps (like a car repair) won’t break your budget.
Stage 4: Financial Security (Breathing Room)
Meanwhile, stage four gives you real breathing room. Consequently, your emergency fund is solid and investments are growing. In other words, you have enough passive income to cover basic living costs, so you can handle life’s surprises without stress.
Stage 5: Financial Independence (Early FIRE)
After that, in stage five your passive income covers your lifestyle. Essentially, you don’t need to work if you choose not to. For example, rental income or dividends pay for your everyday needs, achieving the classic FIRE goal of financial independence.
Stage 6: Financial Freedom (Expanded Lifestyle)
In fact, your wealth covers bigger dreams like world travel, home upgrades or starting new ventures. For example, you could decide to work part-time simply because you enjoy it, not because you have to pay bills.
Stage 7: Financial Abundance
Finally, the top stage is true abundance — you have far more assets than you could spendaffordanything.com. Consequently, money stops affecting your decisions, so you can live your ideal lifestyle without worrying about costs. Also, Tony Robbins says this stage is about giving back — using wealth to help others or leave a legacy. In short, you have ultimate freedom and can support family, charity or any dream project.
In fact, each stage builds on the last. Therefore, no matter where you are now, the key is to move forward step by step. For example, start by tracking your spending and creating a budget. Additionally, pay down debt and save a small emergency cushion. As a result, these actions will lift you from dependence up to solvency and beyondwemoney.com.au. Then you can focus on investing to reach stability and security. Eventually, these steps take you from basic independence all the way to lasting abundance. Overall, for young earners, each step up this ladder makes reaching money goals feel more manageable and less overwhelming.
