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  • Writer's pictureElizabeth Schwartz

Hacking the Millennial Money Hierarchy: A Guide to Financial Freedom

Hey there, savvy money maker! Ready to take control of your finances and embark on a journey towards financial freedom? Buckle up, because we're about to dive into the world of personal finance and the "Hierarchy of Needs" money style :) From budgeting hacks to investment tips, we've got you covered every step of the way.

Do you remember learning about Maslow's Hierarchy of Needs in school? If not, the below chart will refresh your memory. However, today we will dive deeper into the money spin off of this concept. This article helped me learn more on the subject.

The Personal Finance Hierarchy Of Money Needs

  1. Basic Financial Security: Cracking the Code - Financial Literacy 101 First things first: let's talk about financial literacy. Think of it as your secret weapon in the battle for financial freedom. Knowing how to budget, save, and invest effectively is key to mastering your money game. Now that you're armed with financial knowledge, it's time to build your money castle brick by brick. Start by securing a steady income and building up that emergency fund (because life loves throwing curveballs).

  • Income: Ensure a stable source of income to cover basic necessities such as food, shelter, and clothing - aka survival lol

  • Emergency Fund: Establish an emergency fund to cover unexpected expenses like medical bills, car repairs, or job loss. This fund typically covers three to six months' worth of living expenses.

  • Debt Management: Address high-interest debts (such as credit card debt) and work towards paying them off to reduce financial strain and interest payments.

  1. Financial Stability: Building Your Money Castle Essentially making sure your sh*t is in order :)

  • Budgeting: Develop and stick to a budget that allocates income towards essential expenses, savings, and debt repayment. One of the easiest methods is the 50-30-20 method that is discussed here.

  • Insurance Coverage: Obtain adequate insurance coverage, including health, life, disability, and property insurance, to protect against significant financial losses.

  • Retirement Savings: Start contributing to retirement accounts such as 401(k)s, IRAs, or pension plans to build a nest egg for the future.

  1. LEVEL UP - Financial Growth: Ready to take your finances to the next level? It's time to dip your toes into the exciting world of investing. Whether you're interested in the stock market or eyeing that dream apartment to rent out on Airbnb, investing is your ticket to long-term financial growth. Just remember: patience is your best friend. Investing really is a game of psychology and TIME, something I often discuss in my monthly masterclasses.

  • Investing: Begin investing in assets such as stocks, bonds, real estate, or mutual funds to grow wealth over the long term.

  • Education and Skill Development: Invest in acquiring new skills or furthering education to increase earning potential and career opportunities.

  • Asset Diversification: Diversify investments to reduce risk and optimize returns by spreading assets across different asset classes and industries.

  1. Financial Independence: Say goodbye to pesky debt and hello to financial peace of mind. With a solid foundation in place, you'll be ready to tackle whatever life throws your way.

  • Debt Elimination: Aim to become debt-free, including paying off mortgages and other loans, to reduce financial obligations and increase cash flow.

  • Passive Income Streams: Build passive income streams such as rental income, dividends, or royalties to supplement earned income and achieve financial independence.

  • Wealth Preservation: Focus on wealth preservation strategies to protect accumulated assets and maintain financial security in retirement.

  • Join the FIRE Squad: Financial Independence, Retire Early Picture this: lounging on a beach with a margarita in hand, knowing that you've achieved financial independence and retired early. Sound like a dream? Well, it's totally achievable with the FIRE movement. By embracing frugality, smart investing, and a little bit of hustle, you can kiss the 9-to-5 grind goodbye and live life on your own terms.

  1. Legacy and Philanthropy: Once you're up and running, stable, and see that your life is set up for success, then you can go ahead and start planning how to pass this knowledge and your money to your family members. Like they say on an airplane, take care of your own oxygen mask first before you can help others. The same with finances. Help yourself so you can better educate and help those around you. Continue giving back where you can, especially towards charitable causes that mean something to you! There's nothing more rewarding than giving back <3

  • Estate Planning: Develop an estate plan to manage assets and ensure they are distributed according to your wishes upon death.

  • Charitable Giving: Consider giving back to society through philanthropic endeavors or charitable donations to support causes that align with personal values.

Once you have all this up and running, you're essentially a money master! You've just unlocked the secrets to financial freedom and independence. Your life of adventure awaits! With a little bit of know-how and a whole lot of hustle, you can conquer your financial goals and live the life of your dreams, completely on your terms! So go ahead, embrace the journey, and remember: the best time to start was yesterday, the second best time is now.

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