{"id":31629,"date":"2020-04-20T15:35:31","date_gmt":"2020-04-20T12:35:31","guid":{"rendered":"https:\/\/www.bondora.com\/blog\/?p=31629"},"modified":"2020-04-20T15:35:31","modified_gmt":"2020-04-20T12:35:31","slug":"levels-of-financial-independence","status":"publish","type":"post","link":"https:\/\/goandgrow.eu\/en\/blog\/levels-of-financial-independence\/","title":{"rendered":"Working your way up the 6 levels of financial independence"},"content":{"rendered":"\n
\"Working<\/figure><\/div>\n\n\n\n

Imagine not ever having to worry about money\nagain. It\u2019s something that everyone wants, but few people ever achieve. Yet,\nthe term financial independence probably has a different meaning depending on\nwhere you are in your life right now. To some, it might just be not having to\nworry about paying your bills, while to others it could mean the ability to\nquit your job today and retire. <\/p>\n\n\n\n

There are several levels of financial\nindependence, all with their own freedoms from worry and stress. The higher up\nthe financial independence ladder you go, the harder you will have to work.\nBut, work hard enough, and you might achieve that ultimate level of financial\nfreedom, and never have to stress about your finances again.<\/p>\n\n\n\n

Before you start, ask yourself…<\/h2>\n\n\n\n

What is your current job? What is your earning\npotential on your current career path? At what age do you want to retire? How\nmany children do you have or plan on having? What are your financial goals?\nWhat would a financially independent life look like to you?<\/p>\n\n\n\n

By keeping these things in mind, you can\nbetter project your financial future and how to achieve different levels of\nfinancial independence. It\u2019s important to ask yourself these questions to\nfigure out what you want from your financial wellbeing before you get started\non your journey. Doing so will give you the insight on where you are right now,\nhow to set realistic targets and expectations, and what it would look like to\nattain your ultimate goal.<\/p>\n\n\n\n

Knowing the different levels of financial\nindependence will help you set goals and see positive growth on the way to a\nbetter financial future. So, let\u2019s take a look at the 6 levels of financial\nindependence and what they represent. <\/p>\n\n\n\n

1) Paying your bills on time<\/h3>\n\n\n\n
\"Paying<\/figure><\/div>\n\n\n\n

The first level of financial independence\nmight sound easy to some and extremely difficult to others. At this level, you\ncan pay all of your bills on time and cover your monthly expenses with no\ndelays. For many, like half of all Americans who live paycheck-to-paycheck<\/a>, paying bills on\ntime is not an easy feat. If your job doesn\u2019t pay well, it might require sticking to a budget<\/a> to get all of your bills\nand expenses paid in a timely manner.<\/p>\n\n\n\n

Budgeting shouldn\u2019t just include monthly\nexpenses like rent and food, but any debts you have such as student or car\nloans that need to be paid regularly. By calculating your total monthly bills,\nyou will have a better idea if you can already achieve this goal, or if you\nhave to work harder to maintain good financial standing. <\/p>\n\n\n\n

2) Emergency fund<\/h3>\n\n\n\n

This second level gives you some financial\npeace-of-mind, as you begin to create an emergency fund to cover unexpected\nlife expenses. While you might want to start investing your money right away, an emergency fund is essential<\/a> for preparing\nfor the unpredictable, whether it is a change of jobs, new child, or even an\nunexpected global pandemic like COVID-19.<\/p>\n\n\n\n

This level will begin to give you a little\npeace of mind in your financial life, as you can start to relax slightly that\nan unexpected expense won\u2019t cause you and your family to go into financial\ndisarray. <\/p>\n\n\n\n

3) No day-to-day financial stress<\/h3>\n\n\n\n

Halfway up the financial independence ladder\nand you have attained a position of little to no financial stress on a\nday-to-day level. You can also afford some extra expenses in your life, whether\nit be a family vacation, replacing your old car, or helping support an elderly\nparent. It\u2019s not that you can forget about finances forever, but at this level\nyou can comfortably pay your bills, put away money in savings, and offload much\nof the previous financial stress you used to incur on a regular basis.<\/p>\n\n\n\n

For those that would rather tuck more money\naway than go on a vacation, you might consider beginning to slowly invest your\nsavings. With the extra money leftover after establishing an emergency fund and\npaying your bills, the rest of your earnings can be used to grow your wealth\neven further, and propel you into the next level of financial independence\nfaster than you expected. <\/p>\n\n\n\n

4) Starting to save for\nretirement<\/h3>\n\n\n\n

As you move further up the ladder you begin to\nconsider not just your current financial status, but your future financial\nwellbeing at the same time. With your expenses covered and stress minimized,\nyou can start to plan and save for your retirement. At this stage, you will\nhave built up an investment portfolio that will be a good starting point for\nretirement. You may even start to consider ways to gain passive income that\nwill continue to grow with you over time using the power of compound interest.<\/p>\n\n\n\n

For those that don\u2019t know how to start\ninvesting, Bondora Go & Grow is a great, automated way to invest in\npeer-to-peer loans and receive extra income. You can even use the Go\n& Grow Forecast tool<\/a> to see how your investment now can grow\nover time to help you save for retirement and plan for a better future.<\/p>\n\n\n\n

5) Enough income to retire well<\/h3>\n\n\n\n
\"Enough<\/figure>\n\n\n\n

Those that can afford to retire early<\/a> and live a comfortable lifestyle know that your primary source of income is only a small part of this level of financial independence. At this level, you are letting your money do the work for you, and generating enough passive income that your investments might even earn more than your day job. At this level, you can also afford to not just retire, but to do so comfortably as you take trips around the world and spoil your grandchildren. <\/p>\n\n\n\n

As previously mentioned, the best way to\ngenerate passive income is taking advantage of compound interest, and\ngenerating even greater wealth on top of your already existing wealth. Take,\nfor instance, Bondora Go & Grow<\/a>, which provides investors with\ncompound interest on their investment. In just a few clicks, you could be\nearning a return of 6.75%* p. a. in passive income. <\/p>\n\n\n\n

6) Complete financial freedom<\/h3>\n\n\n\n

Congrats! You\u2019ve come to the holy grail of\nfinancial independence: a state of financial wellbeing where there are complete\nfreedom and lack of worry. At this level, you don\u2019t ever have to worry about\nmoney again. You can afford to live a comfortable lifestyle, prepare for\nretirement, and take care of your family with ease. You might have other\nworries in your life, but at this stage, money isn\u2019t one of them.<\/p>\n\n\n\n

It goes without saying that this level of\nfinancial independence is the hardest to achieve, and is one which not many\npeople achieve in their lifetime. That being said, getting to this level of\nindependence means true financial\nfreedom<\/strong>. <\/p>\n\n\n\n

Plan and achieve<\/h2>\n\n\n\n

Working your way up the ladder of financial\nsuccess isn\u2019t easy, but it also isn\u2019t impossible either. Think about how badly\nyou want financial freedom and the things you are willing to sacrifice to\nachieve your financial goals. As you begin to see your financial worries\nlifted, it will motivate you to work even harder to put yourself in a position\nto achieve the ultimate financial independence.<\/p>\n\n\n\n

One of the best ways to achieve your financial\ngoals is to create an investment plan<\/a>, which you can use\nto visualize your financial success. With an investment plan, you can actually\nsee how to get from one level of financial independence to the next as your\nwealth grows, and take the actions to make these goals a reality. <\/p>\n\n\n\n

Financial independence is a personal pursuit.\nFigure out for yourself what being financial free would mean to you, and see\nyourself working your way up the financial independence ladder. But don\u2019t feel\nlike you have to achieve the highest level of financial independence in order\nto be happy. For you, all it might take is moving one level up in financial\nindependence to feel more at ease and free. As you climb higher, you might\nstart to experience money in a whole new way.<\/p>\n\n\n\n

*As with any investment, your capital is at risk. Investments made through Bondora are not guaranteed; therefore any assets allocated to the Go & Grow account are not guaranteed by any state fund or otherwise secured and it may not be possible to liquidate assets or withdraw money immediately. The yield is up to 6.75% p.a., but please note that the yield achieved in past periods does not guarantee the rate of return in the future. Before deciding to invest, please review our risk statement<\/a> or consult with a financial advisor if necessary.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Imagine not ever having to worry about money again. It\u2019s something that everyone wants, but few people ever achieve. Yet, the term financial independence probably has a different meaning depending on where you are in your life right now. To some, it might just be not having to worry about paying your bills, while to […]<\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[119],"tags":[],"class_list":["post-31629","post","type-post","status-publish","format-standard","hentry","category-financial-well-being"],"acf":[],"featured_image":null,"categories_names":["Financial Well-being"],"category_name":"Financial Well-being","_links":{"self":[{"href":"https:\/\/goandgrow.eu\/en\/wp-json\/wp\/v2\/posts\/31629","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goandgrow.eu\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goandgrow.eu\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goandgrow.eu\/en\/wp-json\/wp\/v2\/users\/11"}],"replies":[{"embeddable":true,"href":"https:\/\/goandgrow.eu\/en\/wp-json\/wp\/v2\/comments?post=31629"}],"version-history":[{"count":0,"href":"https:\/\/goandgrow.eu\/en\/wp-json\/wp\/v2\/posts\/31629\/revisions"}],"wp:attachment":[{"href":"https:\/\/goandgrow.eu\/en\/wp-json\/wp\/v2\/media?parent=31629"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goandgrow.eu\/en\/wp-json\/wp\/v2\/categories?post=31629"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goandgrow.eu\/en\/wp-json\/wp\/v2\/tags?post=31629"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}