Do you feel like finances are a taboo topic that you have to tiptoe around when talking to others? Does it feel like we are all silently pursuing financial freedom? I think part of the reason so many people struggle with finances is that we don’t talk about it, but we should!! When you are in an unstable financial situation it can be so devastating, embarrassing, and seemingly hopeless. Especially when everyone around you seems to not have the same struggles you do. But when we don’t talk about it, nothing gets better. Some of our closest friends and family could be suffering in silence. We are not going to shy away from this conversation. We are going to lean into it because there is too much at stake.
Did you know finances are the 2nd leading cause of divorce? Only behind infidelity, the first leading cause. Another scary statistic, according to Dave Ramsey’s research in October 2018, the average American consumer debt load was $34,055. Consumer debt meaning credit cards, school loans, cars, etc., not your mortgage or investments. Another recent survey, conducted by Charles Schwab, found 59% of American’s are living paycheck to paycheck, 38% of people don’t have an emergency fund at all, and 20% of people don’t have a dime saved for retirement.
Those numbers are pretty eye-opening and I hope they encourage you, if nothing else to know that you aren’t alone. I also hope that these statistics spur you on to take the next best step financially. We shouldn't live in a constant state of scarcity when we were made and created to live abundantly.
The thief comes only to steal and kill and destroy. I (Jesus) came that they may have life and have it abundantly. John 10:10
And to be clear, living abundantly doesn’t mean having millions. Living abundantly with your finances can mean many things. For this point, I’m talking about living below your means and building in some margin so that you aren’t constantly consumed by the financial burden of running your home and living your life. When we are living abundantly we are about to focus on and bless those around us.
If you are in a spot financially where you are consumed with constant worry and stress, awareness is the first step. This is followed by humility to stop doing whatever put you in that position. Next comes the need for wisdom to know where to find the information to get you back on the right path. And lastly the grit to take the steps to get back on track even if that means making some sacrifices.
One of the hardest things about finances is that they are ever-changing. Your income and expenses change, as do the different seasons in your life. Our spending will look a lot different before kids than it will after having kids. Same as before marriage and after getting married. Maybe something medical came up or there was a job loss or even a raise. My goal is to simply help you identify where you are and help reorient you to the direction you are trying to go.
Let’s dive into the 6 different levels you could find yourself within your financial freedom journey. (Full Disclosure: These levels are not originated by me - lots of people use these terms - or similar ones - to describe different levels of financial freedom):
I’m going to describe each level, and as I’m describing them I want you to think about which level you most identify with right now in your current season of life.
Level 1: Struggling
At this level you are in tons of consumer debt and you don’t see a way out. You have no choices and it’s hard or almost impossible to imagine financial freedom right now. You are coming up short every month, maybe not even meeting basic needs, and finding yourself or your family needing to rely on outside support such as food banks, or government and local community outreach programs at times.
Level 2: Surviving
At this level you are living paycheck to paycheck. You are just making it and while you aren’t going into debt, you aren’t adding anything to savings. You don’t have an emergency fund and are not putting anything away for retirement or a college fund for your children. When people ask everyone to bring a $10 secret santa gift for work, you instantly get stressed out because you need that $10 for gas this week. This is a hard stage because you are in a constant hustle.
Level 3: Stable
At this level of your financial freedom journey you have enough cash flow to cover expenses and have a reliable income. You are able to breathe here. You have some choices for extra things like a random coffee or a monthly date night, but you don’t really have any long term/short term goals. It is possible that you may have a small emergency fund and some months you are able to put some money away, but other months things come up and there isn’t a ton left over.
Level 4: Security
At this level you have plenty to pay bills. You are starting to have some more choices. You're consistently putting away money, maybe even an automatic withdrawal from your paycheck. You've started to have some clear short term goals. Many people feel that this is where the sweet spot is, especially if they arrive here after the grind of the previous levels. This is where the majority of people live. Typically you have some lower payments on cars and credit cards and whatever else, but since you can pay them it’s not an immediate stressor. You have enough to get by and enough for a simple vacation with your family and you don’t wake up stressing about money.
Level 5: Surplus
At this level you consistently have more than enough. You and others would consider yourself pretty wealthy. The option to be generous without it really infringing on your ability to live the life you want to live is open to you. You can afford some luxury in your life and in your experiences at this stage, and can even share this affluence with those that are in your inner circle.
If you are at this level of your financial freedom journey I would challenge you to make sure you are stewarding the excess you have well. When you no longer need to pay a ton of attention to where your finances are going because you have such a surplus, it’s easy to start mismanaging your money or treating these blessings carelessly. You may not drop down a level at this point for making some poor decisions, but are you respecting the penny and really stewarding this wealth in a way that glorifies God? I would challenge you at this level to really ask yourself if you are telling your money where to go, or are you living in a mindset of ‘I can do whatever I want and have whatever I want’. Remember friends, it’s good to practice self-denial at times, especially when you hit this stage.
Level 6: Significance
At this level of your financial freedom journey you have such a large amount of surplus that you can start contributing to others and you can really start to make an impact in the world with your finances. At this point another $5, $5000 or $5000000 dollars doesn’t really matter much, because you have more money than you could possibly need. Now you can turn your focus outward and start laying down some money in ways that can make an impact that could last generations.
After they arrived at Capernaum and settled in a house, Jesus asked his disciples, “What were you discussing out on the road?” But they didn’t answer, because they had been arguing about which of them was the greatest. He sat down, called the twelve disciples over to him, and said, “Whoever wants to be first must take last place and be the servant of everyone else. Mark 9:33-35
Take it from the most significant man that’s ever lived. Significance is about servitude.
We ALL want to be striving to reach a higher level of our financial freedom journey than where we currently are, but the question is HOW. I’m going to share a few resources that will be beneficial for each different level, so no matter where you are in your journey, you are able to take the necessary steps to move to a higher level.
For those who are Struggling:
- Start listening to the episodes on Finances from my podcast, Legacy Through Motherhood. It’s free and the perfect place to begin your financial freedom journey. I share my family's story, as well as various other topics related to finances.
- Invest in a mentor. Someone who you trust and you could be open with that has some knowledge on finances to help pull you out of the hole you are in. There is power in accountability and in someone with fresh eyes taking a look at what is happening.
For those who are Surviving:
- Get my Smart Budget tracker. This $9 tool gives you a clean space to track your monthly bills, loans, savings, etc. It is also a huge timesaver in that, all the totals are all calculated automatically!
- Read Dave Ramsey’s book Total Money Makeover. It’s $12 if you want to purchase it or you can rent it for free at the library. This really uncovers his step-by-step process and helps get you into a budget that works for you and your family.
For those who are Stable:
- Enroll in my signature money mindset course, Entrusted: With her Finances. This is a comprehensive program for identifying and working through your mindset with money. Your money mindset is so important and can completely change your financial situation and your financial freedom journey!
- Read Rich Dad, Poor Dad by Robert Kiyosaki. This book is about how his real father (‘poor dad’) and the father of his best friend (‘rich dad’) both shaped his thoughts about money and investing.
For those who are at the Security level:
- Read The Millionaire Next Door by Thomas J Stanley and William D Danko. This book talks about the surprising secrets of millionaires today and how they live day to day. This book debunks myths that millionaires are all walking around in $5,000 suits and driving Porsches. It really shows the simple way most millionaires actually live built around modesty, discipline, and generosity.
- Read Smart Money, Smart Kids by Rachel Cruze. This book is by far the best book I’ve read when it comes to teaching your kids about money. It's filled with practical ideas that are so simple to implement for all ages.
For those who are at the Surplus level:
- Read Thou Shall Prosper by Jewish Rabbi Daniel Lapin. This book is all about the 10 commandments of building wealth. His main point is that building wealth is biblical and how if you really are creating something of value to people, people are paying for it all while keeping your integrity, then more power to you.
- Read Everyday Millionaires by Chris Hogan. This book is based on the largest study EVER conducted on 10,000 U.S. millionaires. You’ll learn that building wealth has almost NOTHING to do with your income or your background. It debunks myths such as “rich people have high-paying jobs,” when the truth is that many millionaires surveyed NEVER made six figures in a year.
For those who are at the level of Significance:
- If you are at this point, let's face it, you got there because you have lived in these resources and likely many others, and have put the learnings into practice in your life. You should probably be telling ME what resources I should check out! But either way, for this level I would suggest Dave Ramsey’s book The Legacy Journey. This is similar to Financial Peace but it’s more focused on investing, estate planning, and building generational wealth.
So there we have it, the 6 levels in your financial freedom journey and what resources you can use to level up! If you are struggling with finances, I hope this gave you some encouragement. If you are doing well with finances, I hope this encouraged you to keep stewarding your money well. I also hope it opened your eyes to those around you who may not be quite where you are and gave you some ideas on how you could support them.
I’d also love to share two more of my personal resources with you! My 90 Day Budget program, and my Smart Budget tracker. You can learn more about each resource by clicking the links above. Both of these are great options for anyone looking to level up in their financial freedom journey. Did I mention the Smart Budget tracker is only $9? This is a simple tool that gives you a clean space to track your monthly bills, loans, savings, etc. and the totals are all calculated automatically!
The podcast version of this blog, where I share about my family’s own financial freedom journey, as well as a few other things that have helped us along the way, can be found here.