There Are 7 Levels Of Wealth

Chris Clark  Thu, September 19, 2024  Moneywise

‘Financial Freedom’ Author Grant Sabatier Says There Are 7 Levels Of Wealth — What Stage Are You At In 2024?

A shaky economy, job uncertainty and rising everyday costs have Americans craving the financial independence that makes money worries a distant memory.

That might be why so many people are turning to author and personal finance expert Grant Sabatier’s seven-level breakdown to financial freedom.

Sabatier’s list is gaining attention because it ladders the distinct levels of wealth people reach on their path to prosperity. Understanding where you stand on the ladder can inform your next steps toward the final rung: complete money freedom.

So, where are you on the ladder, and how can you keep climbing?

Level 1: Clarity

The journey starts by understanding your financial situation — your income, debts, and savings.

Today’s high grocery prices and everyday costs make basic living expenses a challenge. But it can be empowering to get an understanding of where you are financially speaking and how much you need to make ends meet. That’s how you build a plan.

How to climb: Begin by following every dollar’s comings and goings. Budgeting apps like Mint or YNAB can help you get organized and clarify your debt-to-income ratio so you understand what you owe.

Level 2: Self-Sufficiency

At this level, you no longer rely on anyone for financial support and can cover basic expenses. Reaching this stage means you’re paying the rent or mortgage, utilities and other essentials without accumulating debt.

Living paycheck to paycheck, however, is still considered part of this step. A recent study by MagnifyMoney found that half of Americans are dealing with that reality.

How to climb: It’s important to build an emergency fund with three to six months’ worth of living expenses — a safety net to protect against lost income or unexpected expenses. It’s also important to minimize lifestyle inflation and keep expenses low as your income grows.

Level 3: Breathing Room

At this level, you’ve escaped the paycheck-to-paycheck cycle. Extra money allows discretionary spending. You’re no longer stressed about covering your monthly bills. Knowing your financial house is in order, you have enough to occasionally indulge in eating out, vacations and other non-essentials.

How to climb: Focus on erasing high-interest debt and increasing your savings rate. Prioritizing where your money goes ensures you’ll continue to build wealth while enjoying the results.

TO READ MORE:  https://finance.yahoo.com/news/financial-freedom-author-grant-sabatier-111300131.html