The 2025 Financial Literacy and Preparation Survey conducted by the Harris Poll for the National Credit Advisory Foundation found that 53% of people feel they have encountered financial setbacks, no matter what they do.
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According to money expert Ramit Sethi, it’s not uncommon to get stuck in financial situations, but once you realize your place and know where to focus, you can start to get out of it.
In the YouTube video, Sethi details these seven levels of wealth and provides clear steps on how to take it to a new level. Consider your financial situation and see where you fall.
If you have difficulty paying your daily bills, are scared of handling unexpected expenses, and don’t know what you’re doing, you’re at a minimum. You also lack stability and peace.
Sethi recommends a careful look at your financial situation from your financial situation, including calculating your total income and determining all debts and expenses. You also need to determine your housing costs and find out your monthly savings and investment contributions, Sethi encourages making them even if you can only use a small amount.
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Next, you should rethink and get rid of any money beliefs that might put you in survival mode. After that, we are committed to making more money to make more profits.
When you reach this level, you may still be a little financially tight, unsure of your financial plan, but you are not trying to survive or run out of cash on your bill. Sisi also mentioned that there are still debt and saving difficulties as possible.
His advice for this stage includes developing a “conscious spending plan” and automating your savings and monthly payments, which he says is essential to leaving this stage. He also recommends hiding 5% of your after-tax income in your investment and savings account, a small amount that can eventually add a lot of wealth.
Next, focus on raising interest rates on any high-interest debt. The interest saved can be used to invest and save. Finally, Sisi says you need to know the main "money dial", which he describes as the main thing you want to spend money without an in-gui.
Safety means you have a certain level of peace and confidence in your financial future. Some signs include understanding your spending and income, no or manageable debt, regular investment contributions, and contingency funds.
Sethi recommends continuing to put money into your emergency fund until you have a typical fee of three to six months. He also recommends double your investment rate to 10% of your after-tax income and identifying your crossover point, which is the money you make from your investments more than just monthly expenses.
"It may take you 15 or 20 years, but when you know the goal, it shows you how fast you are heading towards it," Sethi explained.
This is the first stage that Sisi said, and people can reach. You are here when you see consistent investment growth, have wealth goals for key dates and have a strategic mindset.
Sethi recommends increasing your investment by 1% per year to keep your growth. So if you start at 10%, then you’ve got 15% in five years. He also mentioned trying an investment calculator to see how your wealth will grow over time.
Also, check your money dial again to make sure you are intentional and consider how your funding beliefs are different now.
Once financially free, you can finally take risks and do what you want, just like a business idea that doesn’t work at all, travels the world or pursues your dreams. This is also the time when you can look at how many years you make financial decisions.
Sisi says, consider what kind of life you want from the freedom you have. This way, you can make the right decision to achieve your goals. He also recommends choosing the amount of money you can spend on things without worrying about it. As wealth grows, you can be flexible with that number.
“The key is to consciously shift your mindset from scarcity to freedom,” Sisi explained.
This is a major milestone where you want to make money, enjoy investment growth and use your wealth in a way that makes your life satisfying. It’s also the time you work with financial professionals and donate to others, Sisi said.
Since you have money and flexibility, Sethi recommends choosing areas in your budget where you can spend any questions. He also recommends focusing more on helping others, which doesn’t always involve money. An article from the University of Alabama Birmingham states that being generous can even reward you with improved health.
You reach the highest level when you are financially independent and shift your focus to using your own wealth to benefit others and do big things.
Sethi recommends thinking about the legacy you want. For example, maybe you decide to regularly use funds to charities that help your community. Other moves proposed by Sethi are formally planning your property, passing on knowledge and being with like-minded people.
“This is where money becomes a highly impact tool for building something that really makes sense,” he added.
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This article originally appeared on gobankingrates.com: Ramit Sethi says there are 7 wealth - where did you fall?