Barbara Stanny describes the four stages of wealth: survival, stability, wealth and prosperity. Based on thousands of hours as a client and advisor in the money coaching process, here is my understanding of each step.
Survival
You know you're in survival mode when you're hoarding unopened mail, counting down the days and hours until the next paycheck, and running out of money sooner than expected every month or pay period. You are filled with anxiety, negative thinking, and crippling financial insecurity. You really are living paycheck to paycheck and the cycle of worrying about money never seems to end.
People in survival mode:
Carry balances on their credit cards
Use disproportionate amounts of energy to move money around
Feel regret and remorse over past financial decisions
Feel powerless and give up catching up
Debt repayments
Obsessed yet avoiding their money
Facing threats of collections and disconnection of services
Stability
You know you're experiencing financial stability when you're current on your taxes, have a steady income, and pay your bills in full and on time every month. You live in a home that suits your bank account and your lifestyle. You can keep your savings and cover periodic non-monthly expenses (car repairs, vacations, Christmas, etc.) without putting it on the credit card or panicking.
Although people in this phase usually have a good handle on their personal finances, there can still be occasional dips in financial and emotional security. People in this stage try to save money only to put it back quickly and continue using credit cards that will pay for last month's expenses this month. A surprising number of people in their twenties to forties have not yet achieved sustainable control over their finances.
Basic milestones for financial stability:
In-depth insight into monthly and annual expenses and income
Six months of living expenses allocated to safety net savings
Regular contributions to pension
Suitable insurance: health, home, car, life and long-term care
Wealth
The dictionary defines wealth as an abundance of valuable possessions or money. The archaic definition is well-being or prosperity. Rich people demonstrate security and exercise their right and deserve to choose. These men and women have transcended daily and monthly worries about their bank account balances and are now giving back to themselves, their families and the community. Not that being rich gives you permission to stop worrying; rather, it requires you to take responsibility for what you do with your money. It is precisely at this stage that there is abundance, that is, enough to donate time, money, energy and resources to make the world a better place. All basic financial needs are met and more joy, self-care and adventure are on the calendar.
Act like a rich person:
Hire a certified financial planner
Recurring revenue strategy: bonuses, commissions, gifts, tax refunds and refunds
Work with an investment advisor
Has a will, a living will and a medical power of attorney
Hand over your taxes to a strategist or a well-liked and successful CPA
Understand your parents' will
Get information about the details of your entire estate, including inheritance
Make sure everyone in your family, across generations, has the same views on family money, has personal financial accounting skills, and is aware of seniors' end-of-life wishes
Abundance
Rich people benefit from their wealth. They use their money to grow more money. The danger zone here is exaggerated. One of my wealthy clients, a single man, had 26 magazine subscriptions and didn't have time to read one a week.
Common pitfalls of rich people:
An unhealthy or unconscious relationship with money due to outsourcing, exaggeration and overwhelm
Too many things, too many houses and a loss of contact with simple, natural, connected and meaningful experiences
Rights that disrupt their personal and professional relationships
Severe loneliness
Rich people have access to services, savings, investments, tax and business loopholes, and direct accumulation of wealth that other people do not have. They have an extraordinary opportunity and responsibility to channel this energy flow for good. Have you ever dated someone who uses a black AmEx? It's pretty amazing what you can do with this exclusive credit card. Spontaneous trip to Turks and Caicos, anyone? In all seriousness, let us recognize the Bill and Linda Gates Foundation, Oprah Winfrey's schools and hospitals around the world, and countless other nonprofits founded by wealthy people with a mission to serve.
It is of course possible to have behavior, experiences and feelings from multiple phases at the same time. Conflict and stress about money arise when the outside does not match the inside. Sometimes people have “the stuff” but are still emotionally irritated by money, while others have little to nothing and have enough joy, gratitude, and faith to add years to their lives. As a money coach, I work with people at all stages of their wealth, with the sole purpose of personalization. When your personal vision for financial and emotional security is fulfilled, or at least your actions are in line with your intentions and goals, lasting peace of mind about money becomes possible.
