The pyramid and the oxygen mask | The Escape Artist

The pyramid and the oxygen mask | The Escape Artist

Level 5 :  Plain broke

Here people lurch from one personal financial crisis to the next, tided over by borrowing.  Think Wonga customers.  These people typically spend over 100% of their income, being helpfully accomodated by finance companies who are always very friendly….until they’re not. They are either actually bankrupt or always teetering on the edge.

Level 4: Consumer sucker

This is where most of the population are.  Someone in this category might be watching QVC, see a fantastic designer toilet seat and get straight on their smartphone app and buy it using a credit card. They only stop spending when they go overdrawn at the end of each month. Typical savings rate: 0 – 5%. Net worth is very low: usually just some cash in a jar and a sliver of home equity.

Level 3: Sensible saver

At this level, people are following basic financial advice. They are still wasting much of their money on consumer shit but at least they are using comparison websites to get a discount on the shit. They’re saving 5 – 25% of post-tax income into a cash ISA or maybe even some popular (aka high cost) equity income funds. They may even use a budget.

Level 2: Financial Independence

People at this level are either on the path to financial independence or have achieved it.  Savings rates vary from 25% -75% for those building to FI. These people understand the power of money and have mastered some of their emotional weaknesses re money.  Paradoxically,  they are seeking to get to a point (see level 1 below) where they think much less about money.

Level 1 : Zen warrior

The top of the pyramid.  These people never worry about money because they know it can’t buy happiness. Their spending needs are tiny and they are smart, resourceful and productive. They do not need money other than to buy some rice and beans for food. Examples in this category would include : Obi-Wan Kenobi, Bear Grylls, Gandhi, Martin Luther-King, Nelson Mandela, the Dalai Lama, the old bloke out of Kung Fu who trained grasshopper and the androgynous bald kid from Monkey (see clip below).  These people spend most of their life trying to help others.  In doing so, they find happiness and meaning for themselves.