Health and Wealth

Levels of financial freedom
In order to achieve financial freedom, there are 3 phases.

Phase 1 : Financial security

The first phase is to move from the situation of uncertainty of not making ends meet to the situation of financial security. We can consider that someone enjoys financial security when they have enough funds to cover their basic expenses (electricity, water, mortgage or rent, food…). When you get to this point, you still won’t be able to quit your job because you have more expenses to deal with that aren’t covered by your savings and fixed income.

Phase 2 :Financial independence :

In this second phase you have obtained a greater amount of stable income and your savings have grown to the point that you can now cover all your basic and extraordinary needs, without the need for a salary. You will not only have money to pay for the house, electricity, food, etc. but you can go out one day to dinner, go on vacation, buy a car or an appliance.

Phase 3: Financial Freedom

The last step is what everyone aspires to. It consists of having so much money saved that, no matter how bad things are, you could live covering your fixed and extraordinary expenses without having to work.

At what phase are you now?