The 7 Stages of Financial Freedom. Turning Dependence into Financial Abundance.

WeMoney
Ever wondered how to level up from being total financially dependent as a child, to having a sense of financial security or even abundance? Dan & Blaize climb the 7 rungs on the ladder to Financial Freedom. What stage are you at?

The following is a transcript taken from episode 30 of the We Talk Cents podcast. The transcript is created by AI software so it might not be perfect - please forgive any imperfections or grammatical errors.

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Blaize Pengilly  00:09

Personal Finance budgeting cash flow and investing don't have to be scary words. The We Talk Cents podcast is here to help you learn more about money and take control of your personal finances.

 

Blaize Pengilly  00:26

We Talk Cents podcast is not a financial advisor. This podcast is made for entertainment and educational purposes only. All information shared is of a general nature and does not take into account your personal situation. You should consider whether the information is appropriate for your needs and where appropriate seek professional advice from a financial advisor. For more information,

 

Dan Jovevski  00:46

please check out wemoney.com au slash disclaimer. Everyone it's Dan here from We Talk Cents and your choice to use Episode 30 of the podcast. I'm joined by Blaize

 

Blaize Pengilly  00:59

Hello, Dan, I can't believe we are at Episode 30 jazz hands

 

Dan Jovevski  01:05

I can't believe it too Blaize. You know, when we first started talking about a podcast we thought to ourselves, is it feasible? Can we do it? How do we record the first episode? What people don't know is that the very first episode that we recorded at We Talk Cents was actually wasn't called We Talk Cents it was called muddy bites.

 

Blaize Pengilly  01:21

Oh my gosh,

 

Dan Jovevski  01:22

Do you remember that? Feels like so long ago

 

Blaize Pengilly  01:24

Wow I forgot we even had a name change

 

Dan Jovevski  01:26

But we were recording a professional podcast studio. And we thought we'd know what we're getting ourselves into. But we've learned along the way. And hopefully, you've still tuned in and listened along the journey and helped support us as we've gone through. And we've appreciated all your feedback. But it's pretty amazing. Guys, what do you think made Episode 30 episodes of anything or doing something 30 times it's pretty, it's pretty cool.

 

Blaize Pengilly  01:47

It's been pretty, pretty cool to see something that was an idea for us as part of the WeMoney team to produce a podcast that you know helps people learn about their finances. And you know what the best part has been is that the amount that I have learned through this podcast is just by coming in meeting you every week, Dan and learning about a different topic. I've sorted out my super, I've got an emergency fund, I've started siphoning my money into like I did a budget because we did all those budget episodes back at the start, I have learned so much. And in 30 episodes, which is about 30 weeks, give or take a few because we had a we've had a little bit of time off in between over the holidays, my financial life has completely changed. So really this, it almost feels like you're holding my hand taking me through and helping me sort out my finances because every week I learned something new. And it's really beneficial. So yeah, I've been loving it. And I hope for those of you listening, I hope you're enjoying learning in and enjoying the journey to

 

Dan Jovevski  02:51

It's absolutely incredible. And I felt a little bit taken aback by that comment. And so I'm glad that you got something out of it. And I I love hearing from listeners. I've had a few bump ins in the street here in Perth, where they just pick up the conversation of off the back of the topic lucky we're literally talking to them inside the ear. So it's amazing. What do we got today Blaize?

 

Blaize Pengilly  03:11

Today we're going to look at Well, I'm going to ask you a lot of questions about the seven stages of financial freedom. This is a totally new concept. To me, I sort of had this idea in my mind that you go from being a poor child, baby thrust into the world completely relying on your family for all of your money needs to one day being able to support yourself. But as I learned from you this week, there's a little bit more to it than that there's quite, there's some set, there's actually quite a few stages you can go through to figure out where you are sitting on the path of being completely financially reliant on someone to being financially free. So yeah, I'm going to ask you about those. And I'm excited to learn about the steps in the stages and how how we get there. But before we get into that, as always money news, Dan, what's been in the news this week,

 

Dan Jovevski  03:58

There is no shortage of people that five or last couple of episodes talking about our crypto interest. And seems like popper mask is a complete one ad on the community. And ever since his appearance on Saturday that live where he took a bit of a stab at Dogecoin I think Dogecoin fell by 30% the following day. And now I think something that is really interesting is that Ilan has basically removed the ability for people to buy Tesla's with Bitcoin, due to a number of reasons but one of these core explanations if you can read it was very, very brief tweets. And also his commentary around this is the environmental impact that Bitcoin has on the mining process of how bitcoins obtained and I think this is a really interesting turning point and really a flashpoint I think in crypto. That seen the prices fall by 20 to 30%. And we're almost at the point right now of where Bitcoin is going to potentially get to 50 percent of its peak price, which is quite a dramatic fall. Given all the rage and mania that's happening crypto over the last year or so, what do you think plays I know that you recently got into crypto what's your what's your What's your thoughts?

 

Blaize Pengilly  05:15

Yes, as I told you last week Did I just bought my first cryptocurrency and I bought some of the old coins and I bought, you know, just for fun, I thought, you know, buy a little bit of Doge and a little bit of Bitcoin because right away just I just wanted to have some for the sake of having some, and yet my portfolio has dropped significantly since I first purchase last week, but that's okay. I understand that the market is volatile. And I'm buying for the long term so I'm holding I'm not gonna panicking short term sell up, you know, I'm learning I'm maintain my emotions. And but I thought this was a really interesting flip by a Elon Musk, because we actually one of our colleagues, Michelle hosted a clubhouse with a bunch of influences. You know, we had Joel cam Daya. From the history of money, Justin bhadori, touch invest. We had a whole bunch of influences on this clubhouse. And someone mentioned this in the clubhouse a few months ago. And it's funny because it's become true. Elon Musk, buying more Tesla, buying Bitcoin and saying that they will accept Bitcoin. And they were saying how it's a bit contradictory because Tesla's supposed to be you know, running on whatever it like, there's this Tesla's supposed to be the future, right? helping the environment having low environment, mental impact. But then, by accepting and I guess, promoting the use of Bitcoin, which is such a power soccer is is really a bit critical. Really, it's really contradictory. So that was mentioned in the clubhouse, maybe two, three months ago, and seeing that news title come out this week saying that Elon Musk has done a backflip and said they're not going going to accept Bitcoin as payment anymore. I thought was a very interesting move by him. So yeah, I guess and seeing the markets change, I guess. It's It's hard to predict what will happen. And yet once again, we see the power of one man's words or one man's actions on Bitcoin and cryptocurrency So yeah, I was pretty shocked to see to see that happen.

 

Dan Jovevski  07:15

Totally. Never a dull day in crypto. What else have we got Blaize

 

Blaize Pengilly  07:19

Well, I've got some personal news. Dan, I like to keep you updated. I feel like we should do a "Blaize's homework" section. And I know I'm springing you on this now that we're recording. But every week, I'm sort of doing something that I've learnt. So should we do it?

 

Dan Jovevski  07:36

Please love to hear what what you've been up to?

 

Blaize Pengilly  07:39

Yes. Okay. So by homework this week, you know, I love cash rewards. If you don't know what cash rewards are shot back is. They're these shopping apps that you can use to buy do online shopping, and you earn a percentage back of your purchase price. So I started using me as a couple months ago, and it takes a couple months for you to get your cash back. Two days ago, I was able to cash out $45 from one of these apps, which was 45. That's awesome, right? I haven't made that many purchases. So I cashed out my $45. And do you know what I did? Then

 

Dan Jovevski  08:11

tell me tell me Blaize.

 

Blaize Pengilly  08:13

I put it straight into my micro investing account with spaceship into the other. I figure it's money already spent. Its money that I've gotten back. It's bonus money. So I'm going to avoid lifestyle creep, which is where you can spend more money because you start having more streams of income. I'm going to avoid that altogether. I'm going to put it straight in invest it. And hopefully future blaze will be living big. What could have been five great milkshakes could be 50 great books, eggs in the future with the power of compound interest. Fingers crossed. That's what I'm hoping for. So yeah, that's, that's what I did this week, dad. And I've got to say I'm pretty chuffed pretty proud of myself. Well,

 

Dan Jovevski  08:52

I can't say that I'm super, super duper proud of you. And I want to confess something as well, because I had a, I had a thought about you this week. And it's got to do with cash rewards as well. And I firstly want to say what you've just done is absolutely amazing. I think this is this is something that once you get into that initial habit of doing something awesome and feeling good afterwards is great. But like this applies, I couldn't help but think about you. Because this week I received a push notification from our friends over at cash rewards. And it was for 30% off that AWS and I just thought of you straight away. I thought you're gonna get this because I know that how, how much you've been using these cashback apps, and it's so awesome. I mean, it's just really the things that you buy all the time and you're getting rewarded and you're getting cash back. It's super cool. And the fact that you've gone out there and put it into savings. That was awesome. So well. gratulations plays that well done. You've got to cheer for the applause of people listening to the pod.

 

Blaize Pengilly  09:52

Yes, thank you, Dan. And you know what, that just warms my heart. You got to cut you got to be AWS certification. The thought of me made my cocktail cabinet are very grateful and thankful that you recognize us for that. Alright then can I quiz you now?

 

Dan Jovevski  10:09

Let's do it.

 

Blaize Pengilly  10:17

I was at my physio the other day. And you know me a lovely young, so we were chatting about money, and the physios about my age. And we were brace sharing how in the past we'd both been living payday to payday. And living payday to Payday is something that I have done since I got my very, very first job down at Baker's the light when I was 14 years old. And until I was 26/27. Last year, working in the media, it was something that I was doing. And I only stopped living payday to payday when something drastic happened. And she was sharing the same thing. She said that for her it was she got a partner, and her partner highlighted Whoa, you're living payday to payday like this is not sustainable working change here. But for me, it was COVID. And she said something that stuck with me, that had been said to her in the past by one of her parents, she said to me that a job is J. ob, it's just over broke. I was like, Oh, you are very correct, because that's exactly how I was living payday to payday up until, you know, March. What's the month, month after March, April, April back in 2020. And I guess, you know, for those of you listening, you probably don't know a lot about us. But for me, my personal story is that during COVID, I lost four jobs. So I work in the media, I work in typically reality television, which is all freelance contracts, which is all well and good. Until one day scomo decides to shut down the country, and there's no filming allowed. So there goes for jobs, which is the next couple of months of income. And I was faced with the reality of having to move states. Because I had no backup plan, I had to move back home because I had no savings. I had no emergency fund. I didn't have any plan, I had no income except for the income that was coming in from these jobs that I've just lost. So it was really stressful. And I know I'm not unique in that situation. But for me, that was a massive wake up call. And it got me thinking if I'm just over broke, how can I get further ahead and have security? What do I need to do? How can I change my life from right now relying on a wage a weekly wage coming in for me to be able to live and pay my bills and eat? How can I get from just over broke to get ahead and not be completely shaken and face a massive move when something in my life doesn't when something unexpected happens? So I did a lot of digging around online. And I heard about the seven stages of financial freedom. And I've never heard of this concept before. This is something that's completely new to me. And I didn't know, I was a bit shocked to find all these articles and blogs about it really. But Dan, I thought it would be a great time to ask you about the seven stages of financial freedom and figure out how and where we both sit on the scale. So Dan, can I do that? Can I pick your brains on the seven stages of financial freedom today?

 

Dan Jovevski  13:32

Without question you don't even have to ask to, to go through this. But before we get into that, I just want to say what an amazing personal story that you've shared and having no new for over seven years Blaize and I actually knew about your Baker's delight story. We used to work there because I recall when I first met you that seven years ago used to talk about that experience. But it's pretty, it's pretty amazing how seeing your personal transformation in terms of your own standing, and but also, you know, sobering reality for you know, a lot of people that end up going through this process. And, you know, my journey is exactly the same as yours living paycheck to paycheck in my early 20s. And not really having a waffle about the future and thinking about what lies ahead. But your story is really powerful blows because not only did you come across some unexpected circumstances is that your resiliency on coming out of that, and uncovering a way to get through it, I think is really inspirational for for me hearing that, but I'm sure as well as our listeners hearing that story saying they could probably personally resonate with given that we've all gone through some transformation in our lives recently due to COVID. So thank you for sharing that.

 

Blaize Pengilly  14:43

Oh, thanks, Dan. It's just like I mentioned in the intro, really COVID I would have payday to payday. I lost my jobs because of COVID. And then starting this podcast and working with you has really completely changed my financial life. literacy, I've learnt so much and made really small changes over 30 episodes. And now I'm in a position where I have savings accounts, and I have an emergency fund. And, you know, I'm actually actively investing in doing things. I mean, you know, maybe learning still learning about investing, but I'm doing things for my financial future. And in such a small timeframe, my financial outlook has really changed. So, yeah, it's me, I'm excited to, to keep learning with you. But yet Anyway, enough about me, Dan, stages, the financial freedom, before we get to

 

Dan Jovevski  15:31

We are gonna get to the seven stages.Don't worry about that. TI know you love a good song. Right? I do. And I'm just thinking that as part of our podcast, what I'd love for you to do is to introduce some songs and concepts, because you know, the one that just came to mind, it's an old school, I think it's an 80 song that's by Chicago, and it's called, you're the inspiration if that, that that song clip just came into my mind as you went through your story. So for us, no implies I wouldn't dare I wouldn't dare pollute the ears of our listeners and your ears. I'm afraid that you probably wouldn't even come back to Episode 31. So I'll spare everyone. My my lack of skill, see talent, but seven stages, let's let's do this. So well, you probably heard about the seven stages of financial freedom, it was developed by Tony Robbins, from the book, money master the game, Joshua sheets from the radical personal finance podcast is also cover them in detail. It's the idea that there are seven steps or stages that you go through your journey to financial freedom, please, before we start going through the stages of love to ask you a question, in an ideal world, how would you live? And how much money would you have

 

Blaize Pengilly  16:46

Mate, I would be balling, I would have enough money that I don't have to work that I'm living comfortably like I wouldn't have to change or sacrifice anything in my current life, I would have money coming in without having to work. So you know, whether it's from you know, rental property fees, or investments or whatever, I would be going on holidays, and I would have enough to comfortably give to others. And you know, I would love to be able to take my parents on holidays and, and shout friends holidays. And you know, like, I'd love to have just abundance Really? And yeah, not to not have any money stressed to have a bill come in and go, Oh, you know, that doesn't that doesn't make a dent, it would be nice to have no stress on no worries that without a job. You know, that's how that's that would be my ideal, ideal life. Maybe a yacht, who knows

 

Dan Jovevski  17:40

Sounding great to me Blaize have already sort of picturing you on the on the spoils of your abundance. And you got to remember the house boat up or down this one River. That's what I was picturing. As you were saying that?

 

Blaize Pengilly  17:52

Oh, yes.

 

Dan Jovevski  17:55

Well, because as you've just said, financial abundance, this is the end goal destination for the seven stages of financial freedom, you're debt free, you've got multiple different income streams coming from a lot of different locations, you've got stocks and investments, which you don't work for, and you're living comfortably, and you have the freedom to keep doing the things that you love, and also to try new things. This is really the definition of personal financial success, you've made it and you don't have to stress about money. And I think this is the thing that we often think about as we navigate through our financial lives is achieving this very, very moment. It's not without a lot of hard work and commitment. But a lot of people that end up achieving this at some point into the life, you can see them from a mile away and live comfortably. They do things that life, they have less stress in their life, and they get to do something, which unfortunately, is something that you cannot get back, which is time and time to do whatever you want. in your life. That means something to you. And I think that's what we're all striving for is the ability to have freedom and time to do the things that we really like doing so by Shall we get into the seven stages of financial freedom?

 

Blaize Pengilly  19:02

Yes, if that's the last stage, then I definitely am a couple of stages away from that I can tell you now. Where do we start in.

 

Dan Jovevski  19:14

So stage one, total financial dependence, total financial dependency, if you really want to summarize this, it's really somebody that you know, earns less than what they spend, you know, all that earned nothing at all, in a good analogy for this is being a kid, you're totally dependent on your parents, or your caretakers to look after you. And to help you to the point where you can become self reliant. And so if you're reliant on parents support or any other form of monetary support from any other party, then you are dependent.

 

Blaize Pengilly  19:46

So find total financial dependence for this include. You mentioned kids, but what about people living with disability who received funding from the NDA or the NDA Yes. Or people with acquired brain injuries or people that may be On work or have their own income coming in, would they be included in this category as well?

 

Dan Jovevski  20:05

Yes, they will be included in the category. And it's people that live in some pretty sad outcomes due to no fault of their own or coming across an accident, you do become dependent on people to help them support them through life. And it includes those who are living or settling benefits, funding from any other type of government organization. In summary, basically, it's when your expenses, you know, exceed your income, and you need to have some type of help and assistance to make up with this type of shortfall.

 

Blaize Pengilly  20:40

So total financial dependence, I was thinking a year as a kid, that was definitely me, you know, I was not paying my own way didn't have any money coming in my parents relying on them completely to support me. But then I thought, you know, when I first moved back, when I first moved over to Sydney to pursue my job in the media, I was struggling to make ends meet. And there were multiple times for months and months on end, where it would get to a Sunday night and I'd have to do the old call up, mom. Hey, Mom, can I borrow $100 for groceries so I can survive for the rest of the weekend. God bless her. She very, very kindly lent me money pretty much consistently every week. But I feel like I must have been in that stage of financial dependence where my expenses, I just couldn't I just could not on an intern wage, there's no way I could have covered my outgoings. So yeah, I'm very, very grateful to have had her through that. Yeah. And as an adult, I definitely have experienced that stage zero. What's the next stage then what what's the step up from financial dependency?

 

Dan Jovevski  21:44

Well, the next stage is getting into financial solvency. And at this stage, you're likely to make your financial commitments by paying all your bills and any other outgoings that you have without actually relying on somebody else. So you're meeting every single bill when it comes to and you've got the confidence to make those payments to basically sustain your lifestyle. And really, in essence, your expenses are going to be lower than your income. And so you've got actually left over to do other things like potentially save, for example, 100 ollars per week, and your expenses are 200, you are in stage two, my friend. So this basically means that everything that you need to do to sustain your lifestyle, pay your bills, you're doing very comfortably, and you've got money leftover. Stage Two is typically for people who can afford the basic expenses like accommodation, transport and food without relying on anyone else. And you can also afford your debt payments, if you have any

 

Blaize Pengilly  22:41

Second stage one piece of financial solvency is that is this like being self sufficient, like you're earning enough on your own to cover the bare basics, but perhaps you're not living a super lavish lifestyle?

 

Dan Jovevski  22:54

Correct. Look, even if you are living a super lavish lifestyle, as long as you've got more income that you can pay for your expenses, it just doesn't really matter where you are on the scale, whether you're earning 500 bucks a week, or whether earning $5,000 a week. financial solvency really doesn't discriminate against anybody, in terms of what lifestyle choices you make, but really, it just basically means that you're living within your means in terms of your income versus your expense profile.

 

Blaize Pengilly  23:21

Would this be where you fall into if you're like me, I used to be a former payday to payday kind of person. Would financial solvency be someone that does the payday to payday and is sort of you know, they're covering all their bills, but they are hanging out for the next paycheck, because if the next paycheck coming doesn't come in, you go back to stage zero. Yes, that's correct. So financial solvency you know, really,

 

Dan Jovevski  23:46

if you're just medical, your expenses, based on your income, you are technically financially solvent, right? You can make every single bill when it comes to you. And you can take care of your expenses, you can live your life. Look, you might be saving money, but you certainly are financially solvent. If we're if we're going to stick to the definition.

 

Blaize Pengilly  24:03

Well, that's a bit of a shock to me, because before I knew any better, I would have assumed that financial solvency would be like stage five where you can meet your repayments but that's clearly not the case. So I'm I'm interested to see where we go and what how you sort of level up between stages.

 

Blaize Pengilly  24:27

Just a little interruption here to let you know about the WeMoney app. If all these talk of money and financial freedom and financial stages is making you think Whoa, I need a budget then give the way money app ago. We money it helps you manage your money, categorize your spend, track your net worth and set money goals. It's super helpful for tracking your money and seeing where your money is going. And has been a real game changer for me personally in how I manage my finances. If you download the WeMoney app and use the code word podcast, you'll earn $5 on Sign up when you connect an eligible financial accounts. Anyway, that's it for me back to the pod.

 

Dan Jovevski  25:08

Stage Three, financially stable, really what you're doing right now is you're consistently spending less than what you earn, you've paid off your debt, or maybe accelerating your debt pay off. Your goal in this phase is to save more aggressively, things like an emergency fund. And then for long term growth, like potentially doing things like investing into other assets, like shares, or even property that can help you build, you know, more wealth over time.

 

Blaize Pengilly  25:35

Okay, so you mentioned debt. What if you have a mortgage? Or like for me, I have a hex or HELP loan? If so, I've got this debt does that if I have this kind of debt? Does that mean I'm still financially stable? Or does having debt like that put me back into the stage one kind of category?

 

Dan Jovevski  25:55

Necessarily, it depends on how you categorize things like, you know, mortgage and HELP debt. And, you know, I think like a mortgage is everyone's got one more majority people have got one in terms of when they look to buy a home. Yeah, majority people do get a mortgage to buy a house, you shouldn't necessarily consider yourself being in worse shape than anyone else, you are considered financially stable, because you can save me your bills. But what it basically means is that you're making your mortgage repayments and you've got money left over. So yeah, even if you have debt, you can still be considered financially stable.

 

Blaize Pengilly  26:28

As far as this goes back to Dan, remember, we did the episode on how to get rich debt out of your life faster. You mentioned that there's types of debt, like there's good debt, there's bad debt, and then there's okay debt. And I think we came to the conclusion that having a mortgage or having a health one is sort of good debt, because it is helping you either improve your education or it will bring you wealth in the future a lack of mortgage, it's sort of, you know, building up your assets. So it's not necessarily the worst. And like you said, if you're meeting it, it's not bad. Whereas if you had a lot of consumer debt that you couldn't meet, perhaps you wouldn't still be sticking around and the financially stable stage.

 

Dan Jovevski  27:05

Absolutely, totally correct Blaize that any investment by either education or be that a home is a good type of debt, you know, bad debt would be things like you know, making a consumer purchase that you may not need. And really, you made a discretionary choice to buy something that, you know, it really isn't generating you income or giving any other type of, or longer term benefit. But moving in stage four, also known as breathing room, what you're doing right here is you're leveling up your financial stability, you're now in a more secure position, you've got that emergency fund in place. So if something goes wrong, it's not gonna set you back financially. And this happens to us all, the hot water system breaks, your car breaks down on the freeway, and you're looking at those expenses of ttsl Oh, my goodness, how am I going to fix this current situation, but sh for you know, you've got that down, Pat, you've got money set aside to help you in these situations, like we hear it all the time, our rainy day fund or money for a rainy day. And you can take care of those issues when they come around quite comfortably. And using the power of things like compound interest to your advantage to make money work for you. And really what you're looking to do is invest your money.

 

Blaize Pengilly  28:12

Okay, so financially secure, this sounds pretty good. You know, you've got, you've got money coming in, you've got your emergency fund, which is, if you say emergency funds, we covered back in Episode Five. And this is still I can't, I cannot believe that I went through 27 years of my life not knowing about what an emergency fund is, and how important it is, for a long time, I spent a long time having a savings account. And I'm doing the little two fingers in the air savings air quote account, because I sort of had a second bank account that I lumped occasionally a little bit of pay into, and then I'd regularly take money out of because I didn't have the savings plan, right. And I thought having a savings plan like that a savings account like that was a good backup. It wasn't until I learned about having an emergency fund, which is a separate stack of cash purely for emergencies set aside that I started to have one and you do have that peace of mind. I started growing mine after Episode Five when we discussed it. And now I have that peace of mind that you know, if my car does break down or something does go wrong, I can have that money and I still have separate savings for my other goals, which is awesome. So it doesn't feel like I'm taking away from my goals when I do need to access it. But in my mind, this stage feels like the ultimate goal of where you want to be with your money. No, you're secure. You've got spare cash if you need it. You're doing a little bit of investing. You've got that backup fund. Where can we go from here if like this, in my mind is where you want to be, you know, where can you go from here to continue in the stages

 

Dan Jovevski  29:52

Now getting to stage five and this is what we call financial independence and earning really good returns from your investments and money is working for you, and returns to your dream, your investments are not a sustainable lifestyle. So what this basically means is that the assets that you own things like shares, or property or your business, basically something an asset is working for you and providing you returns over the long term that meets your expenses. And this is really the ephi, or financial independence in the fire movement, and musei fire movement for those who are acquainted with the term. really all it is, it stands for financial independence, retire early. So you've built up a lot of savings, a lot of investments, and those investments are now returning you passive income, so you can live your life and not have to worry about anything, because you've got enough money to sustain your expenses based on that investment income that you earn, as mentioned, rental income stocks, any other income that doesn't need your active attention is part of stage five, or financially independent

 

Blaize Pengilly  31:04

Financial independence, is it this sounds awesome, right you're not having to work, you've got money coming in. But I imagine that the amount that you require, would be completely unique to an individual, like the amount that I would need would be different to the amount that you need down because you have a family and a mortgage, whereas, you know, I don't need that much to survive. So is that true is that is the amount unique to everybody? Or is there sort of a big figure, like if everyone hits a million dollars, and that'll be fine?

 

Dan Jovevski  31:32

Well, a million dollars sounds like a, you know, big number. And maybe it is full on people. But really, it's this is enough living expenses, where they can really take care of all their core common expenses that they have, and they don't really have to worry about anything else. So it can vary people to people, but what we're really doing here is you're meeting your regular expenses through passive income.

 

Blaize Pengilly  31:55

So this is stage five. Now, I naively thought like, this is the pinnacle, right? Like this is where you want to be, you've got rest, you've got money coming in without having to lift a finger. I thought this was what super rich people achieved. And this is it. How is this not where the scale stops? We're only at stage five, where is the next stage financial independence? Sounds amazing.

 

Dan Jovevski  32:18

How do we what's the level up from stage five didn't realize there's two more steps and the next step, financial freedom or stage six is You are killing it. You can afford way more than the basics. This is financial independence on steroids, you can go on holidays, you can try new things, you can go to the hobbies, it's less frugal, and you're free to do whatever you really want to so at this point in time, you're really making sufficient amount of money where you can make choices about what you want to do with your time and really it's almost at the point where you know you don't have to worry about going on a holiday and thinking about how you're going to afford it or how you're going to potentially you know take you know yourself your family members there and worry about if is that's really sort of covered off in this stage six of financial freedom.

 

Blaize Pengilly  33:05

So financial freedom stage six is literally just stage five financial independence, but Bougie?

 

Dan Jovevski  33:13

Absolutely Blaize that's 100% where we are with so six, but there is stage seven. And stage seven is the what you discussed at the very start of the pod, which is financial abundance, I'm quoting here, but this is something that the cool kids would say, Oh Blaize, he would say, You're not the ultimate ball stage. Right? You are balling like, tomorrow ain't no thing. And you've got so much more money that you don't know what to do with it. And at this point in time, really, money is not even. It's not something that you think about anymore. You don't have to make any other decisions about what you do in your life. Money is an object, if you wanted to go to the moon, you can go to the moon. You know, Elon Musk has perfectly done that now with SpaceX. So it allows you to have complete and utter freedom in navigating your life in the way that you want to. And very, very few people get to this point of financial independence and it means different different things for different people. And you don't necessarily have to be in the, you know, Ilan category to be at this point in time. But it basically means that you're really worried about money or finances, in your life. And any decision that you make is not going to be factored by, you know, what's your, what's your bank account.

 

Blaize Pengilly  34:26

So this is stage seven is for like you mentioned, Elon, it's like for the Elon Musk's and the Jeff Bezos of the world, where he is, you know, they're running companies, they are working for money at the moment, but if they could stop at any moment and have their billionaires multi billionaires, so if they stopped at any moment, they would still be completely set with more cash than they could ever possibly spend. That is that abundance is that what you is that is the kind of people with this financial abundance.

 

Dan Jovevski  34:55

That sounds great. It's it's people like that, but you have to be other people. You know? You could be could live a pretty quiet lifestyle is to have financial abundance. You know, at this sort of at this point in life, you know, what you probably hear about a lot is this the P word philanthropy, or people setting up foundations where they're really kind of think to themselves, you know what, I bought a home I've been on a holiday, you know, they might have bought a boat or whatever you really want to do with your money. But yeah, is it this kind of stage we're really thinking about, okay. If I've accumulated all this cash, what can I do with it to potentially give back into the world and a lot of people get to this point in life where they think to themselves, or enough's enough, I've made money. But now I'm thinking about what do I do in terms of leaving a potential legacy? And I think that's where people like Ilan and Jeff Bezos, in a position in their lives where they're thinking to themselves, alright, I'm bad enough myself. But now how can I advance humanity forward and potentially put, you know, humans into space Mars, colonize different planets? You know, 2020 years ago? I don't know about you guys. But that just sound like an absolute pipe frame that wasn't available in our lifetime. But the fact that those people are pursuing cool things like that is awesome. So yeah, that's just one example of financial abundance. It could be different things to different people. But really, at this point, you're not thinking that that he did it with money, you just really focusing on loving, you know, probably the best, best love that you can.

 

Blaize Pengilly  36:18

Heck, yes. If anyone's in stage seven, and listening and looking for someone to donate to I put up. Dan. So looking at these stages, I think if I, for me, personally, where I'm sitting right now, I think I'm sitting at stage three financially secure, which is a massive relief. I've never in my life, had a moment where I'm not quite living payday to payday, you know, I still definitely need the pay coming in. But I've got a backup fund, I've got some savings have started investing, I'm thinking about investing. So that's where I am now, which is awesome. How can regardless of what stage you're in, whether it be stage one, you know, I've been there stage two I've been there. How can you get from one stage to the next? Is there a trick? Is there any difference between the stages? How do you get there?

 

Dan Jovevski  37:11

Well, Blaize, regardless of what stage you're in, you should use a budget to track your expenses. And if you really want to level up the progress from one stage to the next, you can't really use a budget and track your expenses. This is one of the most fundamental things in life. And you know what, every single person, maybe, maybe not the stage seven, and potentially stage six, but certainly stages one to five, you know, people are going to be looking at their budgets incredibly closely, and making sure that they spend less than what they earn, put money aside, start thinking about investing, so they can level up and ultimately get to pass stage five and two stages, sixes and hopefully seven for us mere mortals that are looking to pursue that. So don't be too hard on yourself. think you know it, when you listen to podcasts like this, you kind of think to yourself, well maybe that's unattainable. Really, the goal we're not here is to make it sound like an unattainable. It's provide a little mark a level of inspiration. So you can think about where you currently are at the moment in life. Everybody starts somewhere. You know, some people are more fortunate than others. But if you're interested, zero, look, do not feel bad. We're all there. In fact, Blaize and I were there too, at some stature in our lives. So you've really got to think to yourself, what do I need to address in my current life at the moment to keep progressing to the next stage, and it takes time. It doesn't happen overnight. But have the confidence that if you're armed with the right information, and you know what you need to do to get yourself from the next stage and live the life that you want? That's the main thing. And as long as you keep true to that, then it really doesn't matter about things that come in your life. Are you going to have unexpected expenses? Yes, we all do. It is called Life people. Do not fret, it's going to happen and even if you go back a step, it's okay to there isn't there is no hard and fast rules in life. This is a great framework to start thinking about, you know where you want to live and hopefully gives you the inspiration to start thinking about how you might make some changes to get to that next level. So there we have it Blaize,  the seven stages of financial freedom.

 

Blaize Pengilly  39:13

Thank you so much for tuning in for another episode of We Talk Cents. We'll be back next week for Episode 31. Get in touch via our socials we are @getwemoney.

 

Dan Jovevski  39:23

And don't forget, if you want to learn more about your money, your finances, please consider the WeMoney app.

 

Blaize Pengilly  39:28

Thanks again for tuning in. We will see you next week. Say guys see you later.

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Disclaimer:

The author is not a financial advisor and the information provided is general in nature and was prepared for information purposes only. This article should not be considered to constitute financial advice. Accordingly, reliance should not be placed on this article as the basis for making an investment, financial or other decision. This information does not take into account your investment objectives, particular needs or financial situation.

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