5 Levels of Financial Health and Independence

  • We cover a way to assess our financial health in various stages
  • Goal is to achieve a high level of financial health & wealth
  • The main 5 levels are 1. Negative Net Worth (Sinking Longboat), 2. Treading Water, 3. Viking Health, 4. Viking Prosperity, 5. Viking King/Queen
  • Know your stage so you can take action to go to the next level
“Chains of habit are too light to be felt until they are too heavy to be broken…” Papa Buffett

What’s your story?

If you ever played a role playing game like Dungeons & Dragons (D&D), read Choose Your Own Adventure or even watched a fantasy film like Lord of The Rings, each hero’s or heroine’s story is unique to them. Same thing holds true on your path to financial independence or FIRE! There are so many amazing unique paths and stories to offer guidance and inspiration. One thing I like about role playing games is that you get to create your own story. The same really holds true for our lives and finances in many ways. Sure, there are things outside our control and some things we only influence. But we also have opportunities to make choices along the way, like a Choose Your Own Adventure book. In other words, we all have a unique financial and life journey and we are the star of our saga. But how can we map this journey out to increase our chance at success? How do we know what level we are currently on? And finally what are some characteristics of each stage of wealth and financial independence?

About 3 out of 100 people in the US will become millionaires, will we be among this group?

1. Sinking Longboat (Negative Net Financial Worth)

Most of us start in this zone, the negative net worth zone. Approximately 20 million people in the US have a negative net financial worth. We talk a lot about calculating your financial net worth as a way to assess overall financial health. This is typically our college/apprentice years followed by a few years that follow. Most of us spend quite a bit on an upfront investment to gain an education and get established within a career field or vocation. Most people are in debt. But what we want to do at this stage is get ourselves into a break even position. This takes a combination of paying down debt and at the same time building positions in assets/savings. The key would be a regular debt payment plan (most likely for school loans or car loans), etc. It is critical in this stage to reduce expenses as much as possible. This means deferring luxury purchases, sharing homes and apartments to cut down on living expenses, etc. Another key action in this stage is to automatically invest or save in some manner. This is when I started setting up my Robot Wealth Building Army!
“The first $100k is a b&$*h!” Mungie Pants

2. Treading Water (0 to slightly positive net worth)

Sometimes this level is referred to as scarcity. A person has achieved some level of steady income at a healthy level. At this stage one can easily service debt, pay living expenses and enjoy a little extra each month. According to some economic analysis this stage is hit around making $90k/year, adjusted for local cost of living. It is important at this stage to recognize that the issue here is accumulation of assets and pay down of debt. There is nothing wrong with the $90k/year income, but in this stage the person does not have a lot of assets compounding and building more wealth.

3. Viking Health

Here is where in my opinion things start to get fun! There is no exact income per year that equates to a “healthy” financial picture, but I believe we can describe what this looks like. To me, this is when a person is pretty well established in their regular career or job, is regularly contributing to a retirement account with a balance of stock and bond funds, has built a small emergency stash. This person is paying things on time and building credit so that said credit can be leveraged in the future. One more key aspect of this stage is to be continuously learning about investing and financial knowledge. This is a key education stage, just as critical as formal education in your earlier years. This is a big reason we started The Money Vikings and are engaged with communities such as Gator-Traders, etc.

4. Viking Prosperity

This is the stage that compounding and wealth building start to build great momentum. Covering bills is easily attainable here. At this stage a person may even be able to lean FIRE, in other words retire early if they are willing to live a frugal lifestyle and continue to collect passive income. Passive income machines are working well at this stage. Perhaps there are thousands a year coming in from dividends, real estate investments, side hustles, other business ventures. Many diversified types of assets are owned and managed skillfully.

5. Viking King or Queen (High Wealth)

At this level a person or family have abundant income streams and passive income is flowing. Debt is either non-existent or very well managed. In other words, these folks are not paying excessive amounts of interest on borrowed money. They own their primary residence. They have ownership stakes in various investments and businesses.

Past, Present and Future

Much of what is described in terms of stages of wealth can also be boiled down to stages of life. We can also think about these concepts in terms of areas of life that we can influence through our direct actions. My grandmother always used to say that a persons past, present and future are important. We must make peace with our past and understand how it has shaped who we are today. The present is a gift and where life is lived and action can be taken. And it is important to dream about the future and respect our future selves. Sounds like a difficult thing to do all this, but the below map has helped me make sense of these concepts:  

The map illustrates 3 important circles of thought and action:

  • Higher values
  • Present needs
  • Future needs
  • Balance the 3 and achieve “True Wealth”

Higher values (circle of influence #1)

The top circle represents our “higher values”, the why we are pursuing financial independence and life in general. In this circle I think about:
  • Why do we spend money on different things?
  • How can we use our consciousness to use money as a tool for higher purposes?
  • Prioritize categories of spending: is it more important for you to have a fancy car or fancy house? Or neither? Is it more important for you to have more of your time back? Do you highly value high quality food? Entertainment? travel, giving back, etc.?

Present needs (circle of influence #2)

The left circle represents all those present needs. This is the money required for the fundamentals of life. The goal here would be to pair this down to the essentials that help you achieve your goals, sustain your health and allow you to live the life of your choosing. A person’s money journey can be divided into 5 stages, each with it’s challenges and joys. We identify the “monsters” along the way and present a concept called “your money map.”

The future (circle of influence #3)

Anyone who is investing in a 401k or IRA is basically trading present consumption for future consumption. And the goal is twofold: Firstly, accumulate enough assets that the income from those assets supports present needs. Secondly, earn some relatively good return on investment so that your money keeps pace with inflation or the rising cost of everything.

5 stages of the money journey, Develop your money map. Here is another way of framing the 5 stages of wealth building based on stages of life.

1. Dependence and Humble Beginnings

In the first stage of our money journey, we are dependent on others (usually our parents or other caregiver). At this stage we are fortunate if we have loving caregivers who are doing the best they can to provide shelter, quality food, some structure, guidance and of course love. In this stage we are observing others with money. We may see our parents fight about money and resource allocation. We may witness our parents lose a job or deal with financial stress of some kind. These experiences for better or worse shape our relationship with resources and money. For better or worse, these experiences shape our future use of money as a tool. Some people mimic their parents behavior and others reject it either way. KEY STRATEGY: The key strategy from this period in my opinion is to analyze it a bit, ask questions and make peace. Analyzing is the process of thinking back to some memories that stand out for us as we grew up. How did we feel? What did we learn or pick up from that? Next, how can we make peace with whatever was so we can move forward confidently and develop sound habits and behaviors that align with our higher interests?

2. Education Years

Usually around 18 we leave home and go to school or start studying a trade of some kind. This can be an exciting time of development as we venture into the world further, are exposed to new ideas and thinking outside the immediate family/communal unit. Hopefully our education is providing us the foundation for critical thinking, advanced knowledge, social networks needed to launch into a career. This is typically an idealistic period. We are idealistic about the world, justice, knowledge, etc. and can still be inside a kind of intellectual and social bubble. But it provides a nice progression and opportunity to expand our knowledge and contacts. This can be a critical period for launching stable careers and somewhat well paying work that requires some advanced skills. KEY STRATEGY: Find a field of study that is a balance between something one enjoys and is somewhat practical. The reality is that we must have stable employment in a somewhat well paying field in order to achieve FIRE. The other key aspect is to manage the school loan debt. High school loan debt becomes a drag on wealth building potential in the first 10-15 years of work.

3. Early Work Years, finding a partner, starting a family

This can be a challenging time from the early 20’s through 30’s, but is a critical time for personal finance success. We are trying to establish ourselves in some kind of career or vocation. We are typically trying to find a partner and perhaps a person to have children with. It is an exciting time but can also be a time of stress as we navigate what people call the “real world”. From a personal finance perspective there are two critical actions: Firstly, we must develop sound financial habits and an financial educational foundation. This consists of leaving within our means, understanding debt, learning about investing and compounding. Secondly, we should take the first steps into saving and investing. Money that is saved in and IRA, Roth IRA or 401k at this stage has decades to grow on itself.

4. Late stage career, career evolutions, acquiring assets

Before you know it, 15 years has whizzed by and you are in your mid-career. This can be a funny time because some things came to be that you might have imagined, but many things did not. You realize some realities of the world and the behavior of others. Quite simply, some people act horribly towards others and are petty minded. Others you bond with and become friends. By now you may have developed some skills to navigate the work environment and world in general. Here are a few thoughts from things I realized in my 40’s: 40 Life Things I Learned In My 40’s

5. Financial Freedom, retirement, hobbies, other pursuits, quality family time, etc.

Each person pursuing FIRE (Financial Independence Retire Early) reaches their tipping point at a different stage and age. There is no one way to do this and it is up to each individual. But when you have amassed enough assets, tamed expenses and calculated for health care costs; then you are financially free. Determine how to focus on your priorities in each circle of influence in order to map your path to FI. Like any good quest, there will be dragons and goblins along the way. With the right mindset, fortitude and habits you can successfully face these challenges and build a strong Money Viking future!


We hope this helps put a frame of reference on your current financial and life situation. I just remember to try and do what I can, with what I can influence, and from the point of where I currently am. Best wishes in wealth building!

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