The four stages of your financial life

Written by
Peter Dunn

You must progress. But when it comes to money, progression is often mistaken for blind accumulation. Accumulation of things, money, and experiences are often the aim. While I choose not to argue today for the value of accumulating money, accumulation can't be your financial guide. It can't be as simple as "you are progressing if you are accumulating money, and you're not progressing if you aren't accumulating money." There's much more to it. There are stages, four stages.

Your aim is to complete the tasks and markers within one classification, and then move on to the next. This will allow you to focus on the right things. This will allow you to progress consistently. And not to get all dramatic up in here, but progressing through these four stages will change your financial life.


During this first stage of your financial life, you are simply trying to survive. But how do you determine when you are done with this stage? As soon as you can check off the following tasks, then you will have made your way through this essential stage:

  • Credit card debt free
  • One month worth of household expenses saved
  • Term life insurance purchased for ten times your income
  • Household budget maintained on a regular basis

No matter what the circumstances are, if you haven't completed the tasks listed above, then you are still struggling financially. You either spend too much money, don't make enough, or don't have the financial acumen to understand what to do. It doesn't matter what stage you think you are in, if you fail to have any of the above things accomplished, then you are fighting for your financial survival. End of story. Complete the tasks, so that you may move on with your life.


While I do believe that if you aren't progressing forward then you are actually regressing backward, it is possible to be in a good financial place without being in a great financial place. Which brings us to drivin'. You are driving forward to your financial goals. There's still a bit of a risk that you might fall back into survivin', but making your way through drivin' into arrivin' can permanently solidify your financial success. Check off these accomplishments, and you can reserve your seat in the arrivin' category.

  • Retirement account contributions being made "up to the match
  • Three months worth of household expenses saved
  • Student loan debt free
  • Will or trust documentation completed

Don't get in a hurry to exit this stage. This stage is all about collecting yourself. You are out of financial danger, and you are forming a plan to put financial trouble behind you forever. Rome wasn't built in a day, and neither were financial successes. Take your time, form a plan, and make your way through the stages systematically.


Definitions of financial success will always vary, but when you are in the arrivin' classification, then you are more or less a financial success. You can't make your way into this classification by simply being smart or having a high income. You must be intentional.

  • Maximum retirement account contributions
  • Saving at least 20% of your take-home pay (in addition to retirement fund contributions)
  • No car payment

In my opinion, you have arrived when you have taken care of business. I don't care about the type of car you have, the amount of money you make, or how big your TV is. I only care about you doing the most good with whatever you are working with. By this measure, a household income of $50,000 has the same chance of success as a $200,000 household. Denying this, is a problem. Someone else's income has nothing to do with you. Don't worry about the money you aren't making. Do amazing things with the money that you do earn.


There is something beyond financial success. When you've made all the right financial moves, then there will come a time when giving your money away makes the most sense. If you don't get here, you don't get here. You can swim around in arrivin' your entire adult life with a great deal of wealth without ever getting to thrivin'. Thrivin' is wealth combined with the right mindset. Disagree that you should give away money? Cool. That's fine with me. Then you are in the arrivin' stage permanently. I don't believe that you can truly understand money until you can see (and then act on) the good it can do for others in need. Do these things if you want to complete the financial stages.

  • Charitable giving plan in place
  • Home paid-off
  • Retirement plan in place, fully funded, and ready to payout when necessary
  • No need for earned income. Passive income pays the bills.

Will you ever get to thrivin'? I hope so. But very few people do. You may satisfy the markers within arrivin', but satisfying all the markers of thrivin' is rare. I hope you get there. Hell, I hope I get there. It's not because I want to have so much money that I can afford to give it away. My desire to get there has more to do with not depending on the power of money to only serve myself.

You may be thinking "How long will it take to make it through the different stages?" Excellent question. It takes however long it takes. It may take you 10 years to get out of survivin'. But if you don't set the goal to get out of it, then you will NEVER GET OUT OF IT. You may be in drivin' for 20 years. But the more you focus on completing the markers, the sooner you will make it out. Life happens, and sometimes these happenings will affect your financial life negatively. That's okay. Just stay calm, and carry on.

This post can serve as a guide for your sound financial decisions. Need help? Just ask. I'm here to serve you throughout 2012. The more questions you ask, the better advice you are going to get. You've got this. Do it.

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