5 Financial Independence Levels

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By Miguel Dos Anjos 

Financial independence means having enough money to live without having to work. Achieving financial independence requires acquiring, and developing assets that will generate income (cash flow) big enough to cover all of one’s expenses.

                The cash flow generated by these assets is known as passive income, and some of these assets can be:

- interest collected from high interest savings accounts,

- dividends collected from stocks,

- royalties from the sales of owned books, music, etc,

- rental properties, and units,

- a business you own, but does not require you to run, etc.

                For other passive income sources, and a specific guide on how to implement these ideas and strategies check my previous book “Making Money While Sleeping: 10passive income ideas + a bonus”.

5 Financial Independence Levels 
                 Financial independence can also be divided into 5 levels:
1-      not having to count on your next week’s paycheck; 
reaching this level requires having paid all your debt, and having a small emergency fund saved.

2-      Enough to quit your job; 
at this point your emergency fund is big enough to cover 3 to 6 months of your expenses. Even though you cannot permanently quit your job yet, it gives you a chance to try, or start a new job, or a better job, or be prepared for a medical emergency, or any other emergency.

3-      Enough to cover all basic expenses; 
at this level you have enough money to retire permanently, and your assets are enough to cover all basic expenses, such as food and taxes, no luxury items, or cars, or unnecessary  expenses.

4-      Enough to retire in abundance; 
here a dream retirement is achieved to live happily and well.  

5-      More than you can spend; 
this is the ultimate retirement, where a few can ever enjoy. People like Jeff Bezos, Warren Buffett, or Bill Gates for example could retire, and start spending, and buying planes, jets, and yachts, or anything they want, and would still struggle to burn their money pile entirely.

Remember these levels of retirement, figure out where you are currently located, and where you wish to get to. Having a mind realization can be a great tool to help stay focused, and on track into achieving that dream, abundant retirement.

More Options = More Open Doors 
Even if you do not wish to retire, maybe you like, and enjoy your job, and feel that working is what gives you happiness, and purpose in life. That is completely acceptable, and true for some people. Still, a goal, a plan and commitment will give you options for the future, and for sure you can still keep on working for ever, but maybe one day, as the years pile up you may decide, longer vacations, and an abundant retirement does sound appealing; that option will be there for you, because you planned and prepared. Having more options is a good thing.

This blog next week's, and following posts will cover the behaviors used by the people already at the top, so you can also enjoy a happy, and guaranteed retirement. None of the strategies we will cover will require living in a tent in the mountain, or forest, neither foraging for food.


Which of the 5 levels of Financial Independence are you currently aiming at? Let us know in the comments down below. Add your email to our subscription email list to get the next post. Thanks for passing by.

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