There are four stages of financial independence. They can be represented by the acronym, LIFE. But you start from E and work your way up to L. Let me break things down for you.
E is for expenses. You start a job or business and your focus is making enough money to meet your daily expenses. Your priority is to either reduce those expenses or to make more than you need to survive. However, you will never escape poverty until you have money left over after all expenses, to save and invest. That’s stage 1 of financial independence.
F is for favourites. It’s a synonym for preferences. At this stage, your basic needs are already met. You’re now making enough from your hustle and investments to exercise options. You can choose to travel or to buy a car or to send your kids to better schools. You have disposable income to spend as you like. You can even choose the job you want because you have enough savings to tide you over if you make the wrong choice. That’s stage 2.
I is for independence. Here, your investments are significant. The returns you make from them are enough to live on. If you stop working or you maintain your current schedule without additional effort, you can live well. At this point, you no longer live to work. Rather, you work to live. You do so at your own time and pace because there is no fear of poverty. You have enough assets to last a lifetime. That’s stage 3 of financial independence.
L is for legacy. At this juncture, your preoccupation isn’t making money. It’s how best to structure, protect, document and spend it. Your discussions revolve around Trusts, Wills, Charity, Philanthropy, Influence and so on. You now employ professionals to take care of your interests and to help you to achieve your goals. That’s stage 4.
Now here’s the thing. You can achieve all four stages of financial independence in 5, 10, 20 or 40 years. The choice is yours, but you will need help along the way. If you would like to learn how to navigate the stages of wealth, please take my investment course. You may also email to book my personalised 90-minute coaching class where I develop a custom investment plan for you.
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You can achieve financial independence in decades or in a few years. The choice is yours, but you will need help along the way. Click To Tweet