The Six Stages of Financial Freedom

November 11, 2021

Today let’s talk about the six stages of financial freedom. The Six Stages of Financial Freedom


We all aspire to reach financial freedom at some point. According to Wikipedia, Financial Freedom is a state in which an individual or household has sufficient wealth to live on without having to depend on income from some form of employment.


It means your asset is passive. Even as you sleep you are earning money to sustain whatever lifestyle you want. Money is now a mere tool you use. Not something you constantly worry about.


One of my favorite international personal finance bloggers is J.D. Roth of Get Rich Slowly. He creates the best posts on saving money, investing, and more that are easy to read. 


There’s his post on the six stages of financial freedom that I thought is worthy to share and ponder upon.


According to this Get Rich Slowly article, there are six stages of financial freedom:


Stage 0. Dependence


As the name suggests, this stage is all about you being dependent on others. At some point we all begin in this stage. It’s either you depend on your parents or others for your day-to-day living. Another situation is when you are in the middle of a financial mess like debt or living way above your means


This stage is the complete opposite of financial freedom. You don’t have any sort of freedom on where your finances will or should go. 


Stage 1. Solvency


This is a level wherein you are able to provide for yourself. You are able to live on your own and pay for your essentials like food, transportation, and even utility bills. 


In this stage you also begin to figure out where you want to be more like a learning phase for you and your finances. You begin to experience getting a paycheck and make decisions for your finances. 


This can be a stage where you begin to budget, track your expenses, and all the other foundational money moves. On the contrary, at this stage you may also be vulnerable to getting consumer debts


Stage 2. Stability


When you are able to consistently meet your needs, manage your debts, and live below or within your means, then you enter the stability stage.


This is where saving money becomes easier for you. First, enough savings for emergency situations. Then, you are able to save more money for different goals. This is also a stage where you have confidence to build your portfolio income. Your cycle of success becomes earn, save, invest, and repeat. 


Stage 3. Agency


This stage is characterized by being debt-free, having enough savings and investment portfolio, and having the ability to work on your current 9 to 5 job, switch job/career path, or even stop working for a while. 


What’s great with this stage is that your assets are growing and so is your net worth. In this stage you are able to design your life more. There’s way more freedom than the first stages. 


Stage 4. Security


Once your investments begin to produce enough income to cover your expenses, you enter the next stage – security. 


As Roth puts it, if you are in this stage even if you never worked another day in your life, you have enough to cover for your basic living expenses like housing, food, clothing, and others. However, this stage doesn’t mean you have enough freedom to spend on luxuries or make sudden life upgrades without fear or guilt. 


Stage 5. Independence


A lot will call this stage the ultimate goal. This is where your investment income is sufficient to fund your current standard of living. It covers the basics as in stage 4 but with breathing room for comfort as well. The freedom you are experiencing when you are in this stage can last forever.


Stage 6. Abundance


The final stage of financial freedom is called abundance. At this stage, you have passive income coming from different sources. This passive income is more than enough for you to do whatever you want. 


You also have complete financial freedom to make sudden life upgrades like indulge in luxuries, explore different places whenever and wherever you want, and start a new business or investment if you want. 


When you’re in abundance, you are able to share more or bless more people without worry. 

Six Stages of Financial Freedom according to Get Rich Slowly

What Stage of Financial Freedom Do I Belong To?


Following the explanation of Roth for each stage, I can say that I am still at the Stage 3 – Agency


Currently, my assets are growing and so is my net worth.  I do save and invest my money consistently, I do not have any liabilities, and I do have the ability to decide whether to continue my current job or not. 


I’ve already set up an investment portfolio for myself and my future and maintain a side hustle that earns me passive income. 


But, if I won’t be as strict as Roth’s explanation, I do feel I am now at Stage 5 – Independence. 


No, my current investment income is not yet sufficient to support my current standard of living. 


I just learned to humble myself and surrender everything to God through Jesus Christ. I had an encounter with the Holy Spirit and it definitely changed the way I see success, progress and life in general.


At this very moment I am no longer ruled by money and the world.


I don’t worry anymore about tomorrow and whether all my desires, my plans and my ambitions will be met.




My contentment belongs to God. Whatever richness I may have with being a good steward of the time, talent and money He gave me is secondary already.


And this is the true freedom I will forever be grateful for. I can genuinely give to others without feeling sad, empty, or expecting anything in return. 


Final Notes from SavingsPinay


Remember, once you are able to earn your own income, you start your journey to the next six stages. The first three Stages 1 to 3 are the “surviving” stages and maybe the hardest and longest stages you will go through. 


I hope learning these six stages of financial freedom motivates you to move forward. Whichever stage you may currently fall into, your journey is just starting! There’s more in store for you.


Do not fret. Do not start to compare your stage or your journey with others. Trust that God is in control. Your time will come.


By Stage 4, everything begins to get easier. The reason for this is because you’ve set such a good financial foundation in the first place. Everything becomes a result of the good money moves you did in the past.


What stage do you currently belong to?

Clariza Glino

Izza of SavingsPinay helps Filipinos bridge the financial literacy gap one content at a time by providing insights and tips on budgeting, saving, investing, side hustle and growing your net worth. Aside from this blog she also writes at, a beauty and lifestyle blog for frugal Pinays and manages,, a wedding and event business since 2011. For inquiries, topic suggestions or future collaborations email her at

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