The 5 stages of financial independence

I have talked in the past about coping with financial freedom.  Once we reach the mountaintop, we undergo a number of emotional changes.  It is, however, a mistake to believe that the transformation only begins once we have attained our goal.  In my humble opinion, there are five stages of financial independence.  These stages begin with conception and meager bank accounts, and end with financial freedom and hopefully an enlightened philosophy.

The mechanics of financial independence only play a small role.

The difficulty tends to lie in the headspace.

Stage 1: discontent

This is the moment of origin.  It is the point where we finally have had enough.  Usually, the scale is tipped by a bad day at work or the realization that the mountain of debt is about to come toppling down on us.  We all have different stories, but there are some major commonalities.

Something in our lives makes us realize that we are at the bottom of the pit.  There is only one way to travel.


So we scratch and claw to get a better footing.  And we begin the journey.

Before we can begin the journey of the hero, we must recognize that there is a long road ahead of us.

This is discontent.  This is the first of the five stages of financial independence.

Stage 2: enlightenment

The internet is a wonderful thing.  Usually, stage 2 begins with some deep dive or another.  Maybe it was a post from Mr. Money Mustache.  Or an old copy of Your Money or Your Life.  Whatever the impetus is, it pushes us to seek knowledge.

The rabbit hole is vast, but it is not deep.  After a few hours of searching, the basic concepts of financial independence take root.  They germinate and grow instantaneously.  The despair of discontent is replaced by the hope of building.  This is stage 2 of the five stages of financial independence.

It is the first taste of knowledge acquisition.

It is the light of hope in the pit of darkness.

Stage 3: building

This may be the best stage of all.  During the building stage, we are striving toward a greater goal.  There is beauty in striving.  We are at risk for falling prey to the money mind meld and losing track of our ultimate goals, but that’s okay.

Because it feels so good.

Savings rates are tightened.  The stock market is mastered.  Tax-deferred accounts are bolstered.  A financial plan is put in place and the end, although years off, becomes concrete.

Stage 3 of the five stages of financial independence teaches us that the destination is achievable.  The path is simple although not always easy.

Stage 4: disillusionment

And then somehow it all stops feeling so good.  This may happen after financial independence finally comes into sight, or even after attaining financial freedom.

Now what?

Depression sets in when we realize that this big audacious goal is nothing more than a street sign.  A goal post but not a true goal.  It signifies the end of our financial journey, but the beginning of something more deep and profound.

Now that we are not bound by the indentured servitude of the W2 wage, what is our purpose?

Although it seems like a basic question, the mirage of money has spent years blocking our vision from our deeper sense of purpose, identity, and connection with the world.

The swaddle of money has been ripped off.  We are a naked babe glistening in the morning sun.  Now we have to decide with what meaning and identity we are going to clothe ourselves with.

Stage 5: financial peace

Stage 5.  The final stage of the five stages of financial independence.  This is the actual goal.  To define who we are unchained from economic concerns.  What is our life about?  And what forms of work bring meaning to us?

Because we will all do some kind of work from the moment we are born to the moment we die.  We just may or may not get paid for it.

This is the stage where our relationship with money finally becomes healthy.  It is not a goal nor an accomplishment.  It is a means to an end.  A means to fulfilling our unique purpose whatever it is.

It becomes peaceful.  Worries about enough fly gently in the wind away from us.  Money apathy sets in.

And we are finally free.

“DocG” is a physician who blogs at DiverseFI.

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