Six stages of financial freedom
From dependence to abundance — see which stage your family has reached.
In One Sentence
Divide a family's finances into six levels — dependence, repayment, stability, security, independence and abundance — work out which level you're on, then climb.
Why It Matters
Only when you know which level you're on do you know what to do next. In the first two levels, cut your expenses first, with the goal of saving a quarter of your income. Once you reach "stability," with enough cash on hand to cover six months of expenses, start planning to invest. "Independence" means your passive income is more than your salary — in other words, financial freedom. And at "abundance," your money can also go toward helping others.
One Number
By UBS's estimate, the average wealth of an adult in Taiwan is about US$330,000, but the median is only about US$110,000. The average is pulled up by a small number of wealthy households, so don't let it scare you (UBS 2026 · Chapter II).
In the Book
Section 6 of Chapter II defines the six stages one by one, with a chart (the levels are based on the six levels of wealth introduced by Taiwan's Business Weekly). Chapter I first talks about waking up, learning and taking action — the groundwork before you start to climb.
Go Further
- Passive income From the "security" level on, what matters is whether your passive income covers your living costs.
- Pay yourself first Your homework for the first two levels is to pay yourself first.
- Compounding The higher you climb, the faster you go, because assets produce more assets.
- The retirement gap Once you reach "independence," you won't have to lower your standard of living in retirement.