Where are you on the Prosperity Ladder?
Managing your personal finances can feel like a daunting task filled with complexities and way too much information to fully absorb. You can be shown fancy spreadsheets which show you are on track to save enough money for retirement. Unfortunately, there are so many assumptions (e.g. tax rates, rates of return, inflation) included there is little to no chance they will be valid so far in the future.
That’s why the “Prosperity Ladder” is a simple yet highly beneficial tool as you begin planning your financial future and strategies.
Here are the four categories:
Poverty
When you’re in Poverty, you are dependent on someone else to take care of you. As children, we depend on our parents. Poverty is where we begin and where we want to leave as we grow physically and financially. For many seniors, it’s the government who is providing social security. Unfortunately, a third of all seniors over 65 rely solely on social security for income.
Subsistence
When you’re in Subsistence is the stage where you possess enough money to cover your current standard of living. This is the typical living “paycheck to paycheck” situation. As soon as the money comes in, it is spent to cover the necessities of life.
Subsistence can be a fragile state. If something unexpected happens (e.g. car breaks down), a slide back into poverty is just around the corner. Because of this paycheck to paycheck existence, borrowing is often the only way to maintain a subsistence lifestyle. The unfortunate reality is many Americans never get past this level in their financial lives regardless of how much income they are earning.
Comfort
The next level is Comfort. For security reasons, most of us strive to at least reach this level on the Prosperity Ladder. At this level, you believe your financial circumstances will be manageable if everything stays the same, OR if everything changes.
What if something changes in your life (e.g. get sick, loss of employment)? Do you have the financial resources like cash or other income producing assets to still be okay? How about benefits?
You’ve reached the level of Comfort when you are confident you can manage financially whether things stay the same or change.
Prosperity
The last level is Prosperity. Only a small percentage of people obtain this level. At this level, your financial goals expand beyond needs and obligations. Because you have an abundance of it, money is now viewed as a tool to accomplish want you want personally and professionally. For some it may be something philanthropic, while for others it can be a pursuit of a hobby or the chance to fulfill a dream.
It’s important to note that Prosperity is not defined by how much money you have, but how much freedom you have with your money. Some people may not have a large income, but they have few financial restrictions and are using their assets to do what they want.
Where do you want to be on the Prosperity Ladder?
If you want to learn the key principles to help you move up the Prosperity Ladder, check out this short video.
https://premiertrustadvisors.com/the-7-principles-of-prosperity/
