Protect yourself and your loved ones from life's uncertainties with AIA's life insurance and takaful plans.
14 March 2020
The measurement of wealth comes subjectively for everyone but what everyone can agree on is that each stage of wealth building comes with its own set of celebrations and challenges.
But how do you know which level of wealth you are at now? What will it take for you to move to the next level? Let’s take a look and start your journey towards financial independence.
We all start here. This is the stage where your lifestyle depends on others for financial support. The time it takes to break free from this stage varies from person to person. You're in this stage if you rely on financial support from your parents and where you spend more than you earn and your debt payments exceed your income.
At this stage, you can meet your financial commitments without outside help. You’re able to keep your expenses down with your income exceeding your expenses and you are no longer accumulating debt. Some people reach this stage in their teens, some much later in life and some never reach it.
A person proceeds to achieve financial stability when they manage to accumulate emergency funds and continue to earn a personal profit. You may still possess some “good debt” like college loans or a mortgage but you've eliminated other obligations and built a buffer of savings to protect you from unfortunate events. This is also the time you can start looking into various products to help protect and grow your wealth like A-EnrichGold, a short-pay savings plan that offers guaranteed cash payments and potential investment gains, allowing you to maximise the return on your money.
At this stage, you have enough money to not just survive but to also start thriving. You've eliminated almost all your debt like student loans or a home mortgage, and you have saved enough so that you can quit your job at a moment's notice for a short while (minimum three to six months). Money is no longer a safety net, but a tool to help you build wealth – giving you room to explore using your money for investment purposes.
Congratulations because you’ve broken out of survival mode. At this stage, your investment income can cover your basic needs. This is a very attractive stage because it gives a person options and enables the person to make a riskier career move without worrying too much about the repercussions like taking a break from work, or pivoting to semi-employment. Even if you never worked another day in your life, you have enough to afford simple housing, basic food, essential clothing, and insurance. At this point you also want to set up something to help ensure that your loved ones are protected and well-off should something unfortunate happen. Plans like A-Life WealthCare provide you with high coverage amount and your family with a financial safety net when you are no longer around.
For most, financial independence is the ultimate goal. At this stage, your investment income is sufficient to pay for your necessary expenses AND the other miscellaneous ones, too, for the rest of your life.
This is the final stage of your wealth journey. You have more than enough money to live a comfortable life. Your passive income is large enough that you can use it to invest in more businesses, buy more houses, donate to a charity, or even start one.
For a lot of people, wealth is a binary thing where you are either rich or not rich, but this is untrue. Wealth should be perceived as a spectrum that is subjective to everyone. Everyone can slowly improve on his or her financial position. When you work your way up successfully, it gives you more power and confidence and with more confidence, you can have greater success in tackling life.
The above articles are intended for informational purposes only. AIA accepts no responsibility for loss, which may arise from reliance on information contained in the articles.