Understanding the 7 levels of wealth and how to achieve lasting financial security. Wealth is a journey, not a destination
When most people think of wealth, they imagine big houses, fancy cars, and luxurious vacations. But true wealth is not just about material abundance. It’s about financial security, freedom of choice, and building a life that aligns with your values.
For many, the road to wealth is filled with ups and downs. Whether you’re trying to make ends meet or working towards generational wealth, knowing where you are in the wealth building ladder can help you take the right steps forward.
This article breaks down the 7 levels of wealth, a concept popularized by Ramit Sethi, and tailors it to our realities. Each level has its own challenges and strategies, and understanding them can help you take practical steps from survival to legacy.
Level 1: Financial Survival
Before most people begin to understand the 7 levels of wealth; they have stayed too long at the survival level.
At this stage, you’re struggling to meet basic needs. You may be living paycheck to paycheck, borrowing to survive, or dealing with job insecurity. There’s no financial cushion — just a constant hustle to stay afloat.
Signs You’re in Survival Mode:
You might be in survival mode if your income barely covers basic needs like rent, food, and transport. You often find yourself borrowing just to pay bills or buy essentials, and there’s little to no savings to fall back on. When unexpected expenses arise—like medical bills—they trigger immediate financial panic.
How to Move Forward
Start by tracking every kobo so you know exactly what’s coming in and going out. Cut all non-essential spending by eliminating things like unused subscriptions, luxury purchases, and impulse buys. Look for ways to increase your income—whether through side gigs, freelance work, or acquiring new skills. Lastly, begin addressing high-interest debt by exploring options like debt restructuring or joining community-based savings groups such as ajo or esusu.
Level 2: Financial Stability
The first true step in the ladder of wealth.
At this income level, you’ve gained some control over your finances. You are able to pay bills on time, and have started to repay debts. You have a sure sense of relief, but you’re still vulnerable to shocks or setbacks.
Some Signs of Financial Stability to Note
Financial stability begins to show when you’re able to pay your bills consistently and are slowly chipping away at your debt. You’ve created a basic monthly budget to guide your spending, though emergencies can still hit hard and cause disruption.
How to Progress Beyon Stability
To move beyon financial stability, you have to start building an emergency fund—even saving ₦10,000 a month can make a difference over time. Automate your savings by setting up a standing order or using fintech savings apps to make the process easier. Stay consistent and disciplined, especially during tough periods often referred to as ‘sapa’ moments. Most importantly, resist lifestyle inflation by not increasing your expenses every time your income grows.
Level 3: Financial Security
This is the first level where you start to feel real financial peace. You’re not just managing — you’re thriving. Your expenses are covered, debts are low, and you’re building savings and investments. You are not afraid of shocks because you have an emergency fund to withstand setback.
Reaching the security stage means you’ve saved enough to cover three to six months of expenses. You’ve also begun investing, even if on a small scale, and you no longer feel anxious about handling minor financial emergencies.
You’re covered by basic insurance, whether it’s health, an HMO plan, or third-party motor insurance.
To build on this foundation, look into diversifying your income through options like mutual funds, Treasury bills, or farming cooperatives. Stay committed to your financial goals by making them clear and measurable. And above all, keep learning—financial literacy remains one of your most valuable tools for long-term security.
Level 4: Financial Growth
You’re earning, saving, and investing regularly. Your net worth is growing steadily. At this point, you’re planning long-term and actively building wealth.
What Growth Looks Like
You’ve reached a major milestone by saving or investing your first ₦1 million or $10,000. You’re consistently setting aside a fixed percentage of your income for investments and actively tracking your net worth each month. Your financial focus has shifted toward bigger-picture goals, such as purchasing property, starting a business, or planning for your children’s education.
Strategies for Continued Growth
Make it a habit to increase your investment rate each year—even a 1–2% bump can make a significant difference over time. Learn to diversify your investments by balancing your portfolio across stocks, real estate, and alternative assets. Additionally, focus on building multiple streams of income, whether through passive income opportunities, side hustles, or dividend-generating stocks.
Level Five: Financial Independence
At the level of financial independence, you can finally shout, ‘Hurray’. You have escaped the rat race.
This level comes to sight when you start earning income passively because you have put in place framework that allows you to make money whether you work or not.
Yes, even while you sleep
This is where the dream begins. You no longer need to work to live — your investments and passive income cover your lifestyle. Work becomes a choice, not a necessity.
Signs of Financial Independence:
You’ve reached a point where your assets—such as investments and rental income—can fully cover your essential living expenses. You’re either completely debt-free or managing low-interest debt in a strategic, sustainable way. You also have enough financial cushion to maintain your lifestyle for extended periods without needing active income.
Action Plan
Begin by setting a clear FIRE (Financial Independence, Retire Early) goal to guide your financial decisions. Be mindful of lifestyle creep, making sure increased income doesn’t lead to unnecessary luxury spending that undermines your progress. It’s also time to focus on protecting your wealth through tools like insurance, estate planning, and long-term investment strategies.
Level 6: Financial Abundance
You’ve gone beyond financial independence. Now you can fund your dreams, passions, and causes. You can afford to be generous, support loved ones, and explore opportunities without financial worry.
You’re in a position to comfortably fund your children’s education, even if it means sending them abroad. You have the freedom to travel, launch new business ventures, or contribute meaningfully to community initiatives. Giving back becomes a regular part of your life, with consistent support for the causes you care about. At this level, you likely work with professional wealth managers or financial advisors to steward your resources wisely.
Maximizing Abundance
Now is the time to bring more structure to your finances through tools like trusts, portfolio rebalancing, and succession planning. Your approach to giving can also evolve—consider creating a scholarship fund or sponsoring impactful community projects. Above all, ensure your financial decisions reflect your core values, allowing your wealth to align with the life and legacy you want to build.
Level 7: Legacy
This is where building the generational wealth begins.
Legacy wealth is about creating a lasting impact. You’re planning not just for your children, but for generations. Your money becomes a vehicle for values, purpose, and long-term influence.
Leaving a legacy means preparing for the transfer of wealth across generations. It includes thoughtful estate planning, creating wills, and potentially establishing foundations or charitable trusts. More than just money, it’s about passing down financial values and principles to your family.
How to Cement a Legacy
Start by setting up a will or living trust to ensure your assets are distributed according to your wishes, avoiding unnecessary legal complications. Invest time in educating your heirs about financial literacy and responsible stewardship. Most importantly, align your wealth with a long-term purpose—think in decades, not just years—to create a legacy that lasts well beyond your lifetime.
How to Climb the Legacy Wealth Ladder
Progressing through the levels of wealth takes time, intentionality, and discipline. Here are actionable strategies to help you rise through each level:
1. Know Where You Are
Start by tracking your net worth, income, expenses, and debts. Awareness is power. A simple Excel or Google sheet spreadsheet comes handy if you don’t have the strength for complicated tools. There are also simple online tools, both paid and free, you can use to track your daily financial story.
2. Set Clear Financial Goals
Use SMART goals — specific, measurable, achievable, relevant, and time-bound. Goal setting is one of the most critical financial habits you must develop if you want to go far in the wealth creation journey.
3. Master Budgeting
Use budgeting apps or simple spreadsheets to allocate your income effectively.
4. Save and Invest Consistently
No matter how small, consistency builds momentum. Start with mutual funds, then diversify into real estate, stocks, or agriculture.
5. Stay Educated
Read finance blogs like Kobotalk, attend webinars, listen to podcasts, and follow thought leaders.
6. Protect What You Build
Get insurance. Create a will. Learn about asset protection.
7. Give Back
Wealth has purpose when it helps others. Volunteer, donate, mentor.
Final Words
Here you have it: the seven levels of wealth!
True wealth is not just about having money.
It’s about having options. It’s being able to say no to things that don’t serve you, and yes to the things that do. Whether you’re in survival or on the verge of legacy, every step counts.
Start today. Take control of your money, and you’ll be amazed at how far you can go.
Buchi creates content and leads the Team at Kobotalk Management Services; a business development and investment consultancy firm. He provides strategic advisory to help SME's, small business owners and HNI's grow profitable business and make informed investing decisions.
