I feel lost as I reflect on the degree of financial freedom I want to achieve towards the next 5 years.
Should my passive income cover all my needs, wants and/or luxury in order to declare financial freedom or independence?
Hence, I decided to review, recap and share on the varying levels of Financial Independence Retirement Early (FIRE) based on my own understanding and definitions.
Generally, there are 7 stages in our financial life cycle.
- Financial Dependence
When we are born, schooling and yet to work, in our childhood and adolescence days, we rely on parents for allowances. We are financially dependent on our family when we have no income in younger days.
- Financial Solvency
Once we start work and start to have income, we are able to pay our bills and spend on things we need and want.