Determining Your Financial Life Phase

Finding out how you are financially can be achieved by determining what Financial Life Phase you are currently at. This should be determined after you have achieved a clear picture of how well you are handling your income and your expenses. Here are four of these phases that reflect the financial stability of a person:

1. Start-up Phase – This means all your income is generated from active income. Your source of income is your salary or commission, allowance, income from buy and sell, https://www.finsyn.com/ or simply income generated by dedicating your time and skill actively.

At this phase, your only source of income is active income to take care of your needs, as well as expenses.

2. Build-up Phase – During this period, your assets and investments generate passive income of about 20% of your total income. With this, it is enough to fund 20% of your needs and expenses.

3. Asset Allocation Phase – During this period, passive income is 30% to 60% of total income and you will be able to fund at least 50% of your personal needs and expenses from this passive income.

4. Retirement Phase – This Phase represents success in achieving financial success. In this phase, your passive income can support all your daily needs, expenses, as well as wants.

Knowing your current financial life phase, you must make a comprehensive plan on how to advance to the other higher phases as shown above.

You should constantly remind yourself that your goal of having one hundred percent financial freedom once you reach your Retirement Phase should go through these various steps.

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