The road to personal wealth is a series of discrete stages, each with its own objectives and obstacles. These stages range from the early struggle to make ends meet to the latter stages of planning for your successors, insuring your own future, and giving back to society. Which phase are you in right now?

The phase of debt payment

Here’s where the adventure starts. At this point, earning enough money to cover your essential expenses should be your main priority. Whether you’re starting a business or working a job, your goal is to make sure you can provide for your family by feeding them, paying your rent or mortgage, and keeping the lights on. Other luxuries are not a reality yet; they are a goal for the future at this stage in our journey.

The phase of accumulation

After completing the “pay the bills” phase without incident, you move on to the accumulating phase. At this point, when your income begins to increase, you may find it tempting to buy more stuff and treat yourself to a few pleasures. Although this stage can be exhilarating, it’s crucial to avoid going too far and returning to “stage 1.” During this stage, you should have a safety net of funds in place in case your income source has a brief disruption.

The saving stage

It’s a good idea to start saving as your money increases. You are creating a long-term financial safety net during this phase. In order to be able to earn more money while working less in the future—that is, when you are ready to stop working for a living—you are also striving to increase your passive income resources. Here, having enough passive income to support your current lifestyle in the event that your principal source of income is permanently lost is your main financial goal.

The charitable stage

After you’ve established your passive income stream and safeguarded your own financial future, it’s time to consider contributing to society. Using your excess income to support causes you care about and give back to society is the main goal of the charity phase. The real first step to happiness is to identify your passion and provide resources to support it.

The phase of inheritance

At this final phase, you should think about what you want to leave behind for your loved ones. A healthy nest account, priceless possessions, or a legacy—preparing for your heirs is essential to achieving financial success. You’ll need to start considering how much is too much and how much is enough. We want the best for our heirs or children, but perhaps not to the point where they become spoilt and cease to be valuable members of society. These are difficult choices.

Three financial guidelines for successful businesses

After learning about the five phases of personal wealth, let’s discuss the guidelines for achieving wealth in business. The following three guidelines are crucial for managing your company’s finances:

Cash Is King: In terms of personal and commercial finances, having cash reserves is crucial. It is the best safety net available. Having cash on hand can protect you from unforeseen financial shocks whether you’re managing your personal affairs or a business. The total risk and debt you have will determine how much cash you need on hand. How much does your lifestyle cost, and in the event that you are unable to create, how long can you maintain it?

According to the Golden Rule, “He who holds the gold, rules.” Save your money until you are positive about the outcome. This rule is applicable in business while interacting with vendors, partners, or contractors. Preserving leverage is the key. You are in charge of the result as long as you have the money. You are at the mercy of whoever gets it once you give it up.

Pay Yourself: When operating a business, remember to take care of yourself. It is necessary to preserve both financial and mental well-being. If you are unable to pay your personal expenses, the stress and desperation may cause you to make bad company judgments. Keep that from occurring to you. Too many people try to handle their current issues or way of life by making poor decisions about their future.

Money plays a complicated but essential role in our lives, both personally and professionally. Knowing the five phases of personal wealth will help you make wise financial choices. A more secure and wealthy future will result from embracing the money rules for business success, which include paying yourself, maintaining leverage, and maintaining financial reserves. Take care of yourself, create a safety net for your finances, and avoid ever becoming a financial statistic. The success of your business and your financial well-being are intimately related. If you keep these ideas in mind, you’ll be more capable of managing money in all facets of your life.