The 6 Financial Levels
This is an article that talks about the 6 financial levels – debts, break even, Financial Security, Financial Comfortable, Financial Freedom and Rich. Each level has its own meaning and some important financial decisions that you must make to achieve it. So just read through the article and find out which level you are in. After that make your decision and move your financial level forward.
We all had born differently. We have different background, experience, ability and etc. This theory also applies in personal finance too.
We have different mindset, experience and ideas to manage our money and this make us have a totally different personal finance status. Maybe you have more money than others. Maybe she is weak in money management and having a financial disaster. Or maybe he is good in investing and builds a lot of passive income until he never work for others and etc.
Before you make any financial decision or set any goal, you must know your current financial level. This is because each level has its own priority tasks to be accomplished and also requirement to move on to the next level. By knowing where you are now, you can compile a better financial plan for your future. This is why I wrote this article to tell you what are the 6 financial levels.
Let us discuss what the 6 financial levels are:
Level 1: You are in Debt
This is a dangerous, yet famous financial level that most people fell in. If you are in this level, your personal finance is in trouble. You are having negative balance in your monthly financial statement. If we are using the metaphor of school system, you are failing in the money test with negative marks. You are in risk and you are in the hot water.
Recommended Goal: Pay off your debt as fast as possible.
Please pay attention on: Your spending habits and money management skill. There must be something wrong with the way you handle your money. So pay attention on it.
What you can do right now: Take out all your latest bill statements, sit down and read through them. Keep asking yourself, what kind of expenses listed there that you can avoid and not necessary for your living. Currently what you must do is understand your spending habits and change accordingly. You must concentrate on getting out of debts. Nothing is more important than that in this stage.
Level 2: Break Even
You are considered the lucky one if you are in this level of personal finance. In this level, you don’t own any big debt but you don’t achieve any financial success too. I said that you are lucky because you have the basic money management that keeps you out of debt though you still need to improve on this and gain more wealth.
Recommended Goal: Prepare yourself to move on to the financial security level where you have the true security for your finance
Please pay attention on: Your Money management skill. There must be some room to be improved so you can achieve something instead of break even in your personal finance.
What you can do right now: Again take out all your latest bill statements, sit down and read through them. After that start a budget and concentrate on saving and save up a 6 months emergency fund as fast as possible. You must concentrate on making yourself in a secure position no matter what happen in life.
Level 3: Financial Security
Congratulation if you are in this level now. In this level, you are living financially secure. You have your saving, emergency fund, a good money management habits or a steady income that will prevent you from falling into any financial disaster if there are something happen in life. However, you cannot stop here because this is not enough for your future. You must learn how to release your potential and gain a better financial level – financial comfortable.
Recommended Goal: Learn whatever you can about starting a business and investing. If possible, you can start a part time business in this stage.
Please pay attention on: Again, your money management. No matter what happen, please protect your emergency fund and don’t take risk on this money. This will put you in the financial security level. Besides that, you must also start to pay attention on investing and business education.
What you can do right now: Now change your budget and add a column called education. Now you must allow a certain amount of money to pay for the important education materials such as books, attend seminars or pay for a mentor to guide you. When you think you are ready, you can start investing or start a business that will help you to upgrade to the next level – financial comfortable.
Level 4: Financial Comfortable
Financial comfortable - a life that many people dream about. You are out of debt and in a position of financial security, so you don’t have any financial worries. Besides that, financial comfortable also means that you have excessive cash where you can buy something valuable, better quality or even own more than others. This is a stage that all of us must hit, at least, in our life. In addition, this is the foundation of financial freedom where you have excessive cash to buy more assets.
Recommended Goal: Try your best to keep yourself in this stage or move on to achieve financial freedom
Please pay attention on: You desire to buy. Yes, now you have more money, but you still need to delay your gratification if you want to move on to financial freedom. You must invest your money before you spend it. Invest it now and spend it later, this is the best formula to be rich. Besides that you must concentrate on passive income which will let you retire earlier and choose not to work anymore.
What you can do right now: Now you are ready to invest and buy more assets. So go out and shop! Not go for shopping but shop for assets, just like what those rich people do every day. Use your knowledge that you invest in the previous stage to buy more assets and convert your income to passive income.
Level 5: Financial Freedom
Well Done and Congratulation if you are financial free now. This is a life that most people dream about. In this stage, your passive income is more than your expenses and you can really stop working and do whatever you want to everyday.
Recommended Goal: Take a long holiday!
Please pay attention on: In fact, you don’t really have to pay attention on anything. You are financial free and this has proven that you are good in money management, investment and business.
What you can do right now: Take some rest and get ready to make a second big decision for your life. You are financial free and you have plenty of time than others, so you really can do more than others. One of the question that you must consider is, do you want to move on and become rich?
Level 6: Rich
You are cool if you are in this stage right now. For me, in order to become rich, you must have a strong desire and reason so that you will work harder and move from financial freedom to rich. Without this, you will never hit the level of rich. I don’t have much to say for this stage. Being rich means you are expert and professional on money. So you can decide what you want to do and invent your ways to gain the wealth.
I have listed down 6 financial levels in this article. Yes, it is easier to type the level out compare to achieve it in practical. Well, this is what we usually call life and money is directly related to our life. So know your current financial level, understand what you want and take action. This is what we can do right now.
Good Luck!
Double Your Speed to Success By Finding a Mentor
This is an article that talks about my personal experience in finding and getting a mentor for my journey to financial freedom. If you want to double your speed of success, avoid the unnecessary mistakes and do the correct things to achieve the right results faster, then you must read this article as I will provide tips choosing and finding the right mentor for yourself.
When we are born, we know nothing. All the knowledge, know-how and information that we have right now is learnt through a process called learning.
Let me ask you a question: How we learn?
We learn from someone. We learn from our parents, teachers, book authors or others. We gain our knowledge from others and there is no other way to do so. Generally, the person that we learn from is someone we usually called Mentor.
Mentor is very important to us especially if we have a goal to achieve. For example, if you want to achieve financial freedom like me, you got to have a few mentors who can help you in business, investing, money management or even personal development. It is the best if you can find at least 1 mentor for each field that will bring you to success.
How your mentor can help you?
Following are something that you should know about a mentor and how he/she can help you to succeed faster:
- Your mentor had experienced what you are going to do. Your mentor is someone who had done what you are going to do. Therefore mentors can share their experience with you so that you can boost the speed of achieving your goal. I have a mentor in my business. He always says that the main purpose of getting a mentor is you can absorb their experience. This will make you avoid those unwanted trial and error and hence do whatever it needs to be success directly. This can save up your time and achieve whatever you want faster.
- Your Mentor are willing help you. Your mentor is someone who can lend you their ears and time to listen what problems you are having now. After that, they will spend their time and help you to solve the problem. I remember that in my earlier years in business, I was lack of experience and I generated a lot of problems. Each time my mentor will spend his time, sit down and explain the ways to solve the problem. I really learned a lot through this process and this make me feel that it is good to have a mentor standing right beside you. But of course, this is also a time you can learn from your mistakes.
- Your mentor is not really a friend for you. Friend and mentor are different. A friend can always laugh and be nice to you. But a mentor is not. In order to help you, sometime they will be strict and force you to do something. Once they know that you have to accomplish something to succeed, they will not compromise with you and force you to do so. In this process, you might feel angry, sad and hurt, but after that you will know how good is your mentor to be strict and help you. How I know this? My mentor used to do this on me.
- Your mentor shows you the facts and not opinions. Let me give an example of a fact and an opinion. If someone tell you that Mary is a good girl to marry. This is just an opinion of someone. But in order to find the fact, you have to really stay with Mary and see whether she is really a good girl. So a mentor can really point out the main elements that will help you to success. They are experienced and they can provide some facts for you instead of some opinions that are not really accurate.
- Your mentor always stays with you when you are down. I can tell you that there will be moments you are down and sad on your journey. Most people will give up at this emotion stage. This is a crucial moment and you need someone to discuss and talk to. You need someone to stay beside you and encourage you. Your mentor will be the right person to do so. This is another benefit of mentors as they can motivate and encourage you to move on.
My Personal 5 Tips to Find a Mentor
Now you should know how important it is to find a mentor for your journey. So here are some experiences that I learned last time in the process of getting a mentor for myself.
- Know what you want. First you must know what you really want. Once you clear with this, then search around and look for those who have done what you want to do.
- Your mentor not really your friend. Please don’t limit your searching over your family and friends. Your mentor can be other people. For example, my mentor is my computer teacher who was teaching me computer when I was 13.
- Don’t be hesitating and ask. Once I set my goal and know who can really help me on this, I just asked my mentor whether he can help me and guide me to achieve what I want to.
- Be ready to take some challenges. As you know my goal is financial freedom and I want to learn how to run a business. My mentor knows about this and in order to prove my desire, he passed a challenge to me. So be ready that you mentor might give you some challenges to test you.
- Offer something. There is no free lunch in this world. So offer something to your mentor in exchange for their knowledge and experience. In my case, I offer “working for free” to my mentor. I will work for free in his company and in return, he will teach me and guide me to run a business and achieve financial freedom. Besides that, working for free is a way to prove my desire on my goal too. I think mentors only help those who have desire to success, aren’t they?
Above are just my own tips that I get from my experience. Nowadays, because of the Internet, I found that it is getting easier to search for a mentor. I saw people find their own mentor and communicating through the internet. For example, I found my Blogging Mentor, Yaro Starak, through Internet too. So what you have to do is setting a goal and ask around in the internet. I believe there plenty of people, especially in forum, are ready to be your mentor.
Break These 7 Emotion States and Gain Control over Your Money
This is an article that discusses the 7 different emotion states that will affect the way you manage your money and hence achieve the different results. So just change your emotion on money today and achieve whatever you want to tomorrow.
In personal finance, it is not about how much knowledge or certificate that you have. If you are a multiple degree holder, this doesn’t mean that you can manage your money very well. It is not 100% guaranteed that you will be financial free, wealthy and rich if you are a straight A student.
Money is an abstract thing and so is the personal finance. This is because, in most cases, money will directly affect our Emotion.
For example, if you are degree holder, I can say that your IQ is above the average but not for your EQ. Your emotion or EQ is not about how much you learn, instead it is about how good you are in self-control. So even a degree holder, he/she might not be able to manage their money very well or even fall into the trap of debt simply because they cannot control their emotion on money. I have read and heard a lot of stories that some professionals fall into the deep debt and never be able to come up again. I also heard the stories about how a school-leaver can manage the money so well until he/she has a wealthy retirement.
Type of Emotion that We have On Our Money
So before we talk about any strategies, know-how and tips on how to manage your money, we should sit down and ask ourselves, what kind of emotion that we have linked to our money. We must clear with this before we can take any further actions.
Below are some of the emotion states that I know some people have linked on their money:
Worry & Desperate – This is the most common emotion that we can see from those who are deeply in debt. They are worry and frighten each time they receive their bills. This emotion is so big until they don’t even open their bank statement to see and read the figures inside it. They live desperately and hopelessly. I have to tell you that you have to be careful if you have these 2 emotions. They are very destructive that can destroy everything in your life!
“I have to” - For some people, they know their problems and they also know the solutions. But they still cannot take action properly and permanently. The reason is because they think that they have to do so. I can tell you that if you tell yourself you have to do something, you will never succeed in it. This is because your heart and your mind are not willing to do so. You are not motivated and you don’t have any desire for your financial future.
Fear – This is another destructive emotion. You feel fear because you are not secure and this will block you from taking any actions. Maybe you fear of losing money and stop you from investing your money and play everything safely. Or maybe you fear of not enough money and this will make you live struggling, frugally and below your means. Or even fear of too much money that blocking you from being wealthy and rich.
Blame – There are many blamers when comes to money. They will blame their parents for not leaving any inheritance for them. They will blame their boss for not raising their pays. Some of them even blame others for not handling their investment properly and make them losing money. They just blame others for all the financial problems and never sit down and learn what are the mistakes that they have made. If they never realize and learn all their mistakes, the same financial lessons will keep coming.
Deny – I can tell you that I have a lot of friends around me are denier or escapist when comes to money. The most common words they will use are “lazy”, “I don’t care” or “figure is boring”. They simply give themselves some reasons that they can forget about their money management. This is a very dangerous group that can easily fall into the financial disaster. Their future and retirement are in risk but we cannot do anything to help them as they are blocking their mind to accept the facts of money.
Happiness – Yes, I saw some people are living happily with their money. However, I also can see the problems that this happiness has brought to them – losing control. Let me give you a good example. When you are traveling or on vacation, you are happy right? Yes, travelling and vacation is the most happiness thing in this world. However, in most cases, because of this happiness, people tend to forget about their budget and out of control over their money. They just simply buy whatever they can see. This is why I usually see that people can buy a lot of useless goods from their vacations.
Unmotivated – My neighbors are coming from this group of people – feeling unmotivated about their money. In their mind, they just keep thinking that if they want to be rich and wealthy, the most important thing is how much they can make. However, in reality, their incomes are low and this makes them unmotivated. One of the most common actions that they take is looking for opportunities or invests their money in lotto games. They simply want to get rich quickly. I can tell you that they will fail as they don’t have any solid plan and financial knowledge to support them to be rich and wealthy.
Shame – This is the first most powerful emotion that blocking people from controlling their money. They just simply shame on their money, on their debts and on themselves. They think that being poor, in debt and out of money is shame. This will block them from asking proper helps from others and make them just denied their failure in money management. According to financial expert, Suze Ozman, the first thing that they must do is accept and announce their financial problem to others and this only is the way to help get themselves realize their financial problems.
Greedy – Personally, I hate this group of people. They simply do whatever they can to get more money. In some cases, their actions are unethical, criminal and disgustingly. They will never have a long term wealth for in their life.
Get Control Over Your Emotion and Your Money
Face the real financial problem that you have. It is not about how much money you make that make you rich and wealthy. In fact, it is about how you manage your money and grow it. So start from today, let us break the emotion barrier together. Let us start controlling our money and move forward to the true abundance and wealth!
