There are so many ways to measure your finances: credit score, income, checking account balance, net worth, how nice of an apartment you have, are you a home owner, etc. The list is endless.

Yet none of these highlight whether or not you're building real wealth. Many can actually mislead you into financial traps.

The WorkForTime Levels of Wealth are about your Financial Momentum. Not about where you are today, but the direction you're trending.

Now we know that life isn't just about money. In fact, getting overly obsessed about money is more likely to make you unhappy.

Your task is to build a lifestyle you love while maintaining positive Wealth Momentum. That way you can enjoy today without sacrificing tomorrow.

If you can increase your momentum, and monitor it like you do your credit score, your financial future will be safer, stronger, and more flexible with every passing day.

When you spend more than you earn.

At this unsustainable level, each month your expenses are greater than your income.

In order to pay your bills you need to dip into savings, or worse put them on a credit card. You can't invest in building any wealth because you don't have enough to even cover your costs. And if you're hit with any surprise expenses the situation only becomes more difficult.

This is not to say you're broke. You could be making a solid wage, but blowing it all on a lifestyle you can't afford. However, in time you will eventually run out.

Consistently spending more than you earn will eventually land you at rock bottom.

Next Steps

• Reduce your Expenses (fast!)
• Increase your Income
• Avoid Bad Debt

Living paycheck-to-paycheck.

When your expenses equal your income, you're just Floating. Most people who are at this level don't make enough money. They've cut costs out of necessity but they can only cover their basic needs. This is a tough and stressful position to be in.

More problematic, is that people who living paycheck-to-paycheck are rarely prepared to handle surprise expenses. A lost job, car trouble, or a big unplanned purchase can really put them in the hole. If they're forced to use credit cards to cover these expenses they can quickly fall back into the Sinking level.

Investing and building wealth at this stage is unlikely. Without excess income, there is no way to build for the future. They're just floating by...

Next Steps

• Reduce your Expenses
• Increase your Income
• Learn about Financial Defense
• Avoid Bad Debt

Getting by but not building wealth.

At this level you technically earn more than your monthly expenses. However, as your checking account grows you start to feel rich. Rich enough to say "I can afford that expensive trip" or "I can treat myself to some online shopping". As long as the bank account looks good, you feel comfortable spending.

The key characteristic of this level is that you do not invest on a regular basis. Instead, you "save it", only to spend it a little bit later.

While you're not worried about being able to pay your bills, and you're prepared for surprise expenses, your cashflow is effectively neutral - just not paycheck-to-paycheck.

To reach the next level, the goal is not to become ruthlessly frugal. The goal is start investing a portion of your excess cash to build your financial future. If you don't you will forever be a prisoner of your job.

Next Steps

• Learn to Invest
• Optimize your Spending (without being frugal)
• Determine your Financial Values
• Create your First Retirement Plan
• Setup your Automated Financial System
• Pay off Debts

Consistently investing in your future.

At this level you are contributing regularly to your investment funds. You've already gotten your expenses under control, and you're financially prepared for any surprises that may arise.

The most important part of this level is consistency. Many people in The Rat Race will make an occasional investment. However, human nature leads us to forget or only invest when it's convenient.

We overcome this with automated contributions to our investment accounts. Set it and forget it.

When our money is automatically invested, we aren't tempted to spend it. We quickly forget about that money, yet with each passing month we are more prepared, more confident, and more financially sound.

With time we have flexibility for bigger purchases, early retirement, and really making money work for us. Financial freedom is on the horizon.

Next Steps

• Building Your Investment Portfolio
• Maximizing Your Contributions
• Growing Your Income
• Managing Risk and Diversification

Living the rich life with eternal wealth.

You've made it. The monthly returns from your investments are greater than your expenses. This may not sound impressive, but it is life-changing!

First, this means your job is now optional. You can continue to work to become even wealthier, or focus on living your best job-free life.

Second, your investments cover your expenses and then some. Any excess returns get poured right back in to your investments. This means, every month you can afford a slightly higher quality of life. Living a truly rich and fabulous lifestyle is just a matter of time...

...as long as you properly manage your investments. If you're careless and start spending too much you can fall back into the lower levels. This is the classic tale of the millionaire who went broke.

Next Steps

• Managing Your Wealth
• Taking on Riskier Investments
• Designing Your Ideal Lifestyle

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