7

Financial Levels

4

Keys of Financial Well-being

1

Financial Maxim

FINANCIAL experts have defined seven levels of financial freedom we can go through in life. Jaunteur categorizes those seven levels into three financial wealth phases: foundation, flexibility, and freedom.

FOUNDATION

• Level 1 Clarity

• Level 2 Self-sufficiency

• Level 3 Breathing Room

At the height of this phase, you’ve gained clarity of your financial situation; have an MFP (monthly financial plan) in place; have an emergency savings (1 - 3 months expenses); have a debt elimination plan in place, if needed; and have started saving for your future.

FLEXIBILITY

• Level 4 Stability

• Level 5 Flexibility

At the height of this phase, you have zero bad debt, if any; your financial tools & resources are in place ensuring you have a hefty emergency savings (1 - 2 yrs expenses); are generating income from more than one source.

FREEDOM

• Level 6 Independence

• Level 7 Abundant Wealth

At the height of this phase, money is not a concern; you’re able to live quite comfortably off a small percentage of investment income; your time is your own and you’re able to focus solely on the things that matter most to you in life.

THE key to moving successfully through each level, which should be done in your own lane at your own pace, is maintaining financial well-being through financial wealth. The US Consumer Financial Protection Bureau (CFPB) has defined four elements of financial well-being:

• Control over your day-to-day, month-to-month finances. This is the largest part of “control the outcome of your income.” It’s knowing how much income you have coming in, and allocating every penny, knowing where it’s going—it’s outcome. You’re living within your means, paying all of your bills on time, are managing any debt, and your day-to-day needs are met.

• Capacity to absorb a financial shock. The tools and resources in your financial wealth toolkit allow you to cover unexpected emergencies and expenses and maintain security. These could be an emergency fund or savings, a credit card, a person, investments.

• On track to meet your goals. Saving for travel, car, home, new business, new furniture or wardrobe, or a debt elimination plan. You have plans in place and are tracking progress toward completion of future goals.

• Financial freedom to make choices to enjoy life. Dinner with friends, weekend getaway, upgraded flight, investing in upskilling—making decisions that lend to your well-being. You have the freedom of choice.

FINANCIAL well-being and financial wealth can be experienced, regardless of income, by following one financial maxim.

Control the outcome of your income.

By controlling the outcome of your income with your MFP, you have the clarity you need to make the decisions required to get you where you want to be financially.

 What are your thoughts on financial well-being and financial wealth? How were financial habits handled and taught in your family, if at all? How are you managing your financial wealth now?

For self-guided support, check out this financial wealth journaling prompt, and start creating your own financial wealth toolkit.

The information shared on this site is for informational and educational purposes only, and does not replace the recommendations and guidance from professionals. If you think you need professional guidance, please explore your options sooner rather than later. If employed, you may want to check with your employer for any financial benefits offered, including their EAP (employee assistance program) which may offer support in finding financial tools & resources. Your local bank or credit union may have tools & resources as well. When seeking professionals please do your due diligence to ensure they are properly and currently accredited and/or licensed practitioners in your specific state or region.

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