The wealth of a person depends on the money to fund your needs in your lifetime. And wealth generation is a life-long process. It is something that is built over time. It is planned for, periodically adjusted and executed with a firm hand. It needs clarity of thought and vision. To achieve this you need to be financially literate.
How can you be “financially literate“? Well you do not have to be a graduate of a college degree in finance to be financially literate. All you have to know and understand is what you want for yourself and how you will match your financial resources to meet your future wants. Wealth is nothing more than having the money to fund your particular needs at any given time. Being wealthy simply means having the financial resources to support your chosen lifestyle. And anyone can plan to have and achieve enough wealth consistent with his or her chosen lifestyle.
All of us go through four fundamental financial life stages, namely:
- Start-Up Stage
- Build-Up Stage
- Fine Tuning or Asset Allocation Stage
- Retirement Stage
Start-up Stage
This is when your only source of income is your salary or earnings provided by your active participation in terms of time and talent.
This means that your only source is your active income. This is the stage when and where you do not have anything but active income to pay for all your needs and expenses.
Build-up Stage
This is when you now have some income coming from savings and investments, which contribute about at least 20% of your total income.
Meaning, this passive income is sufficient to fund at least 20% of your needs and expenses.
Fine Tuning or Asset Allocation Stage
This is when at least a good portion (30 to 60 percent) of your income is being provided by your savings and investments.
Meaning, you can generate a passive income that can fund at least 50% of your personal needs and expenses.
Retirement Stage
This is when the income from your savings and investments is your only source to support your living expenses.
It also means that you can afford to stop earning active income and rely purely on your passive income to support your needs, expenses and wants.
Our financial goal and tools to achieve those goals are unique for every life stage. The tools that we use must be able to match with the goals of our current life stage.
These tools are available to all of us . Given time and the knowledge of these financial tools, we can assure that we can reach the wealth you’ve been dreaming of.
Analyze and decide what “Life-Stage” you are in. Then plan your wealth generation based on your “Life Stage”.
It’s not bad to be financially literate. Even the Bible tells us to be wise with the use of money because it can help you in your daily life on earth.
For wisdom is a defense, and MONEY is a DEFENSE: but the excellency of knowledge is, that wisdom giveth life to them that have it. — Ecclesiastes 7:12
But do not love money too much because it will definitely kill you. The Bible also says:
For the LOVE OF MONEY is a ROOT of ALL KINDS OF EVIL: which some reaching after have been led astray from the faith, and have pierced — 1 Timothy 6:10
Be wise. Be financially literate. Start your journey to financial freedom now.
You can also read the following Green Stickman™‘s related articles:
- The Power of Compound Interest and Rule of 72
- Guides in Setting a Financial Goal
- Obstacles in Getting Rich
- What is Financial Independence?
- Allies to Financial Freedom
Financial Freedom e-Books that may help you:
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