I remembered reading Adam Khoo's book - Secrets of Self Made Millionaires - and, in his book, he classified four levels of wealth. Prior to that, wealth was just wealth, and i did not differentiate the wealth that i would like to attain.
In summary, the four levels of wealth are:
Level 1: Financial Stability. You have achieved Financial Stability when you have accumulated enough liquid assets (i.e. disposable cash) to cover your current expenses for a minimum of six months.
Level 2: Financial Security. You have achieved Financial Security when you have accumulated an amount of investment that generates enough passive income to cover your most basic expenses.
Level 3: Financial Freedom. The difference between Financial Freedom and Security is that the accumulated investment generates enough passive income to sustain your current lifestyle.
Level 4: Financial Abundance. The ultimate level that allows you to sustain your desired lifestyle.
I highly recommend people to read the book. The book is more than the four levels of wealth. I am working towards Financial Security and one day hope to achieve Financial Freedom.
I have set my goals. What about you?
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