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That could be defeating a dragon or rescuing royalty.
Along the way youll, of course, encounter challenges.
But how many levels of wealth are there and what do they comprise?
Financial influencer Vincent Chan broke it all down in a recentpost on his YouTube channel.
He not only identified the seven levels of wealth, but also exploredhow to transcend them.
Level 1: Clarity
The first level of wealth, according to Chan, is clarity.
This is when you haveenough time wealthto support you for 30 days or less, Chan said.
At this stage, youre constantly in survival mode, meaning that youre probably living paycheck to paycheck.
you’re free to do this by aggressively cutting your expenses.
Level 2: Self-Sufficiency
The second level of wealth is self-sufficiency.
This is when you have enough wealth to support yourself for around two to three months.
Chan was at level two in college.
Level 3: Breathing Room
This is the level where you finally start to feel some relief.
Its called breathing room.
At this level of wealth, you have three to six months of freedom time, Chan said.
you might go out to eat without needing to triple-check your bank account.
Or you might treat yourself to something without worrying about rent.
Its really tempting to stay in your comfort zone, Chan said.
How can you move on to the next stage?
He recommended increasing your income to get past this level.
Level 4: Stability
Things are getting better!
At level four, you have stability, which is a pretty good thing to have.
If you want to get to stage five, you gotta prioritize spending assets before liabilities.
Youll want to think about making savvy investments.
Think stocks and bonds, not luxury cars.
Level 5: Flexibility
Heres where we really start to see some movement.
You start to get a taste of what financial freedom feels like, Chan said.
Youre finally moving from financial security into financial opportunity.
To ascend level five, you gotta focus ontax reduction strategyand savvy investing.
Embrace tax advantaged accounts such as 401(k) plans, Roths and HSAs.
Invest what you save.
At this stage, your money is literally working harder than you have to, Chan said.
Level six is an awesome place to be.
you’re able to choose to work instead of having to work.
To get to the next level, you oughta use debt to your advantage.
But for people at this level of wealth, they can use debt to their advantage.
That may sound confusing.
But consider howmultimillionaires and billionairesoperate.
At this stage, your options are nearly limitless, Chan said.
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