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Writer's pictureMark Wygant

Financial Wealth Ladder: The 6 Levels of Personal Financial Wealth

Building personal wealth is a journey that takes time, effort, and financial discipline. Just as climbing a ladder requires deliberate steps, ascending the financial wealth ladder involves progressing through different levels. In this article, we will explore the six levels of personal wealth, from Dependency to Financial Affluence. By understanding each level and the steps to progress, you can keep an accurate assessment of where you are on your journey and navigate your way to greater financial success.

Financial Wealth growth over time.

Level 1 - Dependency: Reliant on others for financial support.


At Level 1, Dependency, individuals are reliant on external sources for financial support. For example, when we are a child we are dependent on our family or caretakers to support us financially to ensure we have food, shelter and so on. As we age and become an adult we may still depend on others, such as family or the state, to provide for our basic needs. Here's what it can look and feel like at this level as an adult:

Lady in financial pain covering her face.

  • Constant worry about money and meeting day-to-day expenses.

  • Lack of financial stability and uncertainty about the future.

  • Feeling trapped.

  • No assets.

Tips to progress to the next level (Level 2 - Self Sufficient):

  • Create a budget and track your expenses to gain control over your finances.

  • Focus on increasing your income through additional work or seeking higher-paying opportunities.

  • Don't get in anymore debt.

  • Learn high value skills.

  • Develop financial literacy by reading books, watching YouTube finance channels, attending seminars, or taking online courses.

Level 2 - Self Sufficient: Covering basic expenses without reliance.


Level 2 represents the stage of being self-sufficient, where individuals can cover their basic expenses without relying on others. Individuals might hang out at this level and bounce back and forth up or down a level for a while until they find more stability. Usually low income and a good amount of debt holds people here sometimes their entire lives. Here's what it may look and feel like at this level:

  • Break-even. Income barely covers expenses & debt.

  • Desire to break free from paycheck-to-paycheck cycle.

  • Debt could be a real problem here.

  • One unexpected expense sets you back sometimes months

  • Limited savings and investments, but not enough for long-term financial security.

Tips to progress to the next level (Level 3 - Anchored):

  • Prioritize saving and create a strategy to build your savings account.

  • Start building an emergency fund to provide a safety net during financial emergencies.

  • Reduce unnecessary expenses and focus on living within your means.

  • Explore opportunities to increase your income through side hustles or career advancement.

  • Educate yourself about investment options and consider starting a retirement account.

Level 3 - Anchored: Establishing Financial Stability and Progress Towards Goals


Being financially anchored represents a higher level of financial stability and the ability to weather unexpected expenses. It is the foundation that can be built upon to achieve higher levels of financial success. Here's what it may look and feel like at this level:

Young couple establishing financial stability.

  • Solid Foundation w/ emergency fund (3-6 months of expenses) and savings.

  • Feeling in control.

  • Investable Income.

  • Some discretionary spending.

  • Making progress towards long-term financial goals, such as homeownership or retirement.

Tips to progress to the next level (Level 4 - Financial Security/Freedom):

  • Focus on debt reduction and work towards becoming debt-free.

  • Invest in assets that generate passive income and can appreciate, such as real estate or dividend stocks.

  • Continuously expand your knowledge about personal finance and investment strategies.

  • Seek professional advice from financial planners or advisors to optimize your financial plan. This should include your health, insurance and tax plans.

  • Continue increasing income earning potential.

Level 4 - Financial Security (Maybe Freedom): Achieving Peace of Mind


At this level an individual has a reasonable amount of financial security and/ or freedom. These individuals have built a solid financial foundation and can sustain their desired lifestyle fairly comfortably. One or two emergencies will not derail their path, and money may or may not still be one of the main factors in decision making. Here's what it may look and feel like at this level:

  • Fully funded emergency fund (6 - 18 months).

  • Robust investments (Investments are being fully funded and on track for Financial Independence).

  • No consumer debt.

  • Money may not be the main driver in decision making anymore.

  • Increased discretionary spending.

  • Feeling confident in managing financial challenges as they occur and having peace of mind.

  • Having more flexibility in making career choices and pursuing passions.

Tips to progress to the next level (Level 5 - Financial Independence):

  • Reevaluate your financial goals. “How aggressively do you want to seek Financial Independence?”

  • Continue growing your investments and consider diversifying your investments here.

  • Continue to increase income and reinvest investment profits.

  • Don’t have too much lifestyle creep.

  • Regularly review and adjust your financial plan.

  • Focus on optimizing your tax strategies and minimize liabilities.

  • Know your “Financial Independence” number.

Level 5 - Financial Independence: Living Life on Your Terms


Achieving Financial Independence represents the pinnacle of financial success. Individuals at this level have accumulated enough wealth to sustain their desired lifestyle without relying on traditional employment and can fully rely on their assets to live a quality life for the rest of their own individual lives. Here's what it may look and feel like at this level:

Man overlooking mountains after achieving financial independence.

  • Having substantial assets in an investment portfolio that generates passive income to cover ALL expenses.

  • Feeling a sense of accomplishment and security in knowing that work is optional.

  • Freedom to choose how to spend time and pursue passions.

  • Discretionary spending for MOST wants.

Tips to progress to the next level (Level 6 - Financial Affluence):

  • Continue growing your investment portfolio and diversify across different asset classes.

  • Take smaller risks with larger sums of money to protect what you have already built, and to allow TIME to continue building it.

  • Consider maintaining a high active income.

  • Consider philanthropic endeavors to make a positive impact on the world to improve happiness.

  • Reevaluate your financial goals often. You may be to a point where enough is enough.

Level 6 - Financial Affluence: Abundance and Leaving a Legacy


Financial Affluence represents the highest level of financial wealth, where individuals have surpassed financial independence and entered a realm of abundance. This is typically only achieved through owning a business, making very large and successful investments, inventing something or inheriting it. It is rare that this level of financial success is achieved through working for someone else. At this level you do not worry about paying bills or whether or not you have enough for your lifetime. Here's what it may look and feel like at this level:


Home with pool showing what Financial Abundance and Affluence looks like.

  • Abundance of wealth...Generational wealth that would be hard for one or two generations to squander

  • Luxury/ Extravagant spending

  • Proverbial F-U Money

  • Having accumulated significant wealth beyond personal needs.

  • Shifting focus from personal financial goals to making a difference in the world.

  • Contemplating the legacy you wish to leave behind and the impact you can make.

Tips to make the most of financial affluence:

  • Engage in philanthropy and contribute to causes and organizations you are passionate about.

  • Mentor and support others on their journey to financial success.

  • Continuously evaluate your values and how you can align your wealth with your purpose.

  • Seek professional advice from wealth management and tax experts.

  • Spend and enjoy your financial success.

Final Thoughts on Climbing the Personal Financial Wealth Ladder


The Financial Wealth Ladder comprises six distinct levels, each with its own characteristics and milestones. Whether you are currently at Level 1 or have already reached Level 5, understanding these stages can provide guidance on your path to greater financial success. Remember that progress takes time, discipline, and a commitment to continuous learning. By setting clear goals, managing your finances wisely, and seizing opportunities, you can ascend the financial wealth ladder and create a prosperous future for yourself and those around you. Financial Freedom and Independence are attainable and worthwhile outcomes to pursue!


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