| I break it down into 5 levels of wealth/freedom: Class 1: you can afford your current lifestyle without concern for daily expenses, and could withstand 1 or more major emergencies (job loss, car destroyed, $30,000 bill) without reducing your lifestyle. Class 2: your assets are sufficient that with a reduction in lifestyle you never have to work again. Class 3: your assets are sufficient that with no reduction in lifestyle you never have to work again. Class 4: no amount of incremental wealth will increase the amount you’d spend on a primary home, and you never have to work. Class 5: no amount of incremental wealth will affect your spending on vacation homes, yachts, or planes and you never have to work. There are obviously levels of subsistence below these. But these are, to my mind, the levels of wealth/freedom. Below these I wouldn’t call someone financially secure or say have “financial freedom.” I think when creating these tiers it’s important to acknowledge that lifestyle is a variable and some people’s preferences make it easier to achieve different levels. If you have caviar tastes, you need more money to make it into class 1. If you are extremely frugal and well paid, it doesn’t take much actual money to make it into class 5. Lifestyle vs freedom is a choice and there’s a trade off - do you use extra money to buy lifestyle or to buy freedom? |