GENERATION WEALTH

First Generation - The Wealth Creator

How does one go about being a wealth creator? Where does it begin? What characteristics distinguish a successful wealth creator? A wealth creator typically begins with no or little income and no inheritance. Some may even begin with a debt, such as a college loan. The Funding Society outlined four stages of wealth in which a person goes through a particular personal financial transformation (“Four Stages”, 2022).

Stage one Financial Stability is characterized by having savings for future goals, life and health insurance coverage for the family, and enough cash to meet unexpected needs, with liquid assets worth six times monthly expenses. Some could also have debt in this case.

Stage two Financial Security is about having sufficient assets or investments to generate passive income to cover basic expenses. Also, one must be debt free and able to comfortably pay monthly debts while still having enough money to save.

Stage three Financial Freedom means having sufficient positive cash flow assets to generate passive income to maintain one's existing lifestyle. It emphasizes the importance of having adequate cash to cover daily expenses and having valuable time to engage in activities other than working. Prudent spending is still necessary. The wealth creator would have amassed positive cash-flow assets by the time they reached Stage 4 Financial Wealth, allowing them to live in a preferred state of financial nirvana free from financial stress.

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The other perspective of a wealth creator can be seen through the lens of income level. The World Bank divides income into four classifications that are low, lower-middle, upper-middle, and high (Nada, Catherine, Eric & Shwetha, 2022). Low-income is a group that doesn't have sufficient financial resources to make ends meet.

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Hence a wealth creator can be summarized as a person who started categorically as a low-income earner who had entered into the realm of wealth transformation by accumulating, managing, and maintaining financial wealth gradually to high-income status over time.

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There are four characteristics of wealth accumulation (Robb, 2022). Acquiring these characteristics is neither easy nor difficult but must be done consciously and continuously. The ability to focus on achieving the goal of wealth while maintaining self-discipline in managing wealth is essential to avoid unnecessary spending. A wealth creator is an expert in applying financial knowledge and calculated risk management to achieve their wealth destiny. Hence a wealth creator can be summarized as a person who started categorically as a low-income earner who had entered the realm of wealth transformation by accumulating, managing, and maintaining financial wealth gradually to high-income status over time.

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I'm personally drawn to the Financial Freedom stage to explore ways to enhance the generation of passive income from the same assets while putting the notion of wealth preservation into practice. Perhaps, another article to discuss in the future.

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Next, how does Wealth Creator overcome the low-income hurdle?

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References

1.??????Four Stages of Wealth, a methodology on how to reach your financial goals | Funding Societies Malaysia Blog. (2022, August 23). Blog.fundingsocieties.com.my. https://blog.fundingsocieties.com.my/four-stages-of-wealth/

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2.??????New World Bank country classifications by income level: 2022-2023. (n.d.). Blogs.worldbank.org. https://blogs.worldbank.org/opendata/new-world-bank-country-classifications-income-level-2022-2023#:~:text=The%20World%20Bank%20assigns%20the

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3.??????Robb, B. H. (2022, February 26).?4 Critical Traits You Need to Build Wealth. Entrepreneur. https://www.entrepreneur.com/leadership/4-critical-traits-you-need-to-build-wealth/415142