Financial Literacy
Motivation
The goal of these pages is to get you to financial independence.
Financial independence gives you choices
- What job to have
- Whether you even want a job
- What you want to spend your time on
- Who you want to spend your time with
- Where to spend your time
- Better health care
- Better life
- Everything is better if you have financial independence
Note that the pursuit of money is the root of all evil.
- Do not be evil.
- Be financially independent and lead a good life.
- Treasure family and friends.
- Acquire money to live well.
Disclaimers
- This is not financial advice - it is support, education and/or entertainment.
- Your situation will be different that others.
- Take the guidance in this document and choose what and how to apply it to your own journey.
- This document is NOT responsible for your financial journey.
- This document is the starting point; not the ending point.
- You, and only you, are responsible for your financial journey.
- This document discusses tax rates, etc.
- This will change over time and so these pages will age and need to be refreshed periodically so you should always check the most recent rates.
- Some of the content is very much Canadian centric.
All original content in this document is copyrighted (unless otherwise stated) and may not be reproduced without written permission.
There is no warranty implied in this document. You own your own financial journey.
Levels of Financial Independence
Financial independence is not a binary thing. It has levels as you increase your wealth.
| Name | Description | |
|---|---|---|
| 00 | Financial Dependency | Debt and living expenses greater than your income |
| 01 | Financial Solvency | Current on debt payments Meet financial commitments without outside help |
| 02 | Financial Stability | Built three-to-six-month emergency fund |
| 03 | Debt Freedom | Could be no debt or just no mortgage or no credit card |
| 04 | Coasting Financial Independence | Also known as - Freedom from Employer - Barista Financial Independence - Agency Could step down from a higher paying job to a lower paying job that you enjoy more Have enough invested that will grow to a level that is good enough for retirement at a pre-determined age, even if no more is added to the investment So can coast through to retirement |
| 05 | Financial Security | Cash flow from investments can provide your basic survival expenses Food, water, shelter, clothing, insurance Just survival |
| 06 | Financial Flexibility | Live off current cash flow assuming that you have a flexible spending plan to account for market fluctuations Roughly half of full financial independence |
| 07 | Financial Independence | 4% rule - https://en.wikipedia.org/wiki/Trinity_study You have saved 25x your annual expenses 100,000 * 25 = 2,500,000 2,500,000 * 4% = 100,000 |
| 08 | Financial Freedom | Can add in more life goals than previous level Add in some dreams |
| 09 | Financial Abundance | Cash flow from investment is more than you will even need 3x financial freedom number |
Reference: https://www.youtube.com/watch?v=kDSHHiFMJ_I
Stages
There are three high level stages of wealth.
| Name | Description | |
|---|---|---|
| 01 | Wealth Accumulation | How to accumulate wealth. |
| 02 | Wealth Preservation | How to preserve your wealth during retirement. |
| 03 | Wealth Transfer | How to transfer your wealth to your beneficiaries. |