By Francisco J Colayco

I have often been asked – “How do you achieve financial independence, slowly, “step by step”/ “age by age”?  Is there a checklist of goals per age – like in your 20s, you should at least have saved up this much, and then maybe also have a car?  And in your 30s, you should have a place of your own, be putting your kids through school and then in your 40s thinking about retirement?”

Financial independence is in stages.  Each stage is not dependent on your age but what you have achieved in terms of financial growth.  In my book “Wealth Within Your Reach”, I talk about the four fundamental financial life stages, namely –

Start-up Stage

This is when your only source of income is your salary or earnings provided by your active participation in terms of time and talent.

Build-up Stage

This is when you now have some income coming from savings and investments, which contribute about at least 20% of your total income.

Asset Allocation Stage

This is when your savings and investments provide a good portion, around 30-60%, of your income.

Retirement Stage

This is when the income from your savings and investments is your only source to support your living expenses.

Your financial goals and the tools to achieve those goals are unique to your current life stage.  You must be able to match the tools to use with the goals of that life stage.  These life stages are not dependent on your age.  Some young people are already in their Asset Allocation Stage and unfortunately, some old people are still in their Start-up Stage.

These tools are available to all of us.  Given time and the knowledge of these financial tools, correctly using the same, our accumulation of true and meaningful wealth is assured.   The key in all of this is your definition of your financial goals with specific timelines.  We always say that growing your wealth must be purpose-driven.  Your purpose in accumulating specific amounts in assets at your desired time or date in the future, will determine the level of risk and the alternative investment instruments that would be appropriate for you.  In essence, know how much you want, when you want it and why.

One article like this can get you started but it took me two books and five small support books to explain the rules and steps to help you get to your financial independence.  These are “easy reading” books. It is not because I am selling my books, but it has been proven by the millions who have read it that it will change your financial life for the better.  If you will definitely decide that you want to be financially literate when it comes to your personal money, you should be determined to study particularly “Wealth within your Reach and “Making Your Money Work” and be disciplined to follow its advice.

There are statements that should set your attitude towards your personal wealth.  Remember –

You are wealthy when you do not have to actively or physically work for money to maintain your chosen lifestyle. 

“The richest is not the person who has the most, but the person who needs the least.”

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