The Wealth-Building Hierarchy of Needs

Learn the ins & outs of the wealth creation process to understand where you are & how to move the needle

Unless you work in finance, chances are you didn’t learn about the wealth creation process in school.

But understanding the different stages will help you identify where you are in your journey so you can take the proper steps to build the life you’ve always wanted.

Read on as we explore the wealth-building hierarchy of needs, with practical tips to help you confidently progress through each phase and reach your financial goals.

What Are the Phases of Wealth Creation?

Unfortunately, outside of hitting the jackpot in Vegas, receiving a massive inheritance, or discovering buried treasure, there aren’t any shortcuts to building wealth.

It’s all about acknowledging where you are and steadily working your way through the five phases of the wealth creation process, using various financial strategies, such as budgeting, debt elimination methods, retirement accounts, and more.


The first stage of the wealth creation process begins once we’re no longer dependent on our parents for financial support.

This stage is where most young adults start, living paycheck to paycheck with the goal of building stable, consistent sources of income. But given life’s unpredictable ebb and flow, it’s easy for people to get stuck here for many years, even decades.

Typically, taking out a mortgage or eliminating your debt won’t be in the cards during this phase. However, with consistent income and careful money management, you can avoid going deeper into debt and maybe even start setting aside a little cash as you go.


To compare the wealth creation process to constructing a house, Solvency is the stage where you lay your foundation, and Stability is where you start building on it.

When you reach this phase, you’re no longer in financial survival mode. You can make rent, pay your bills, and live comfortably without pinching pennies. You have a steady stream of income—likely from a salaried position—a healthy budget that you stick to, and enough savings to cover one or two unexpected expenses that may come up.

In other words, your foundation is set, and you’ve started work on the walls, windows, roof, and doors.


Think of the Accumulation phase as putting the finishing touches on your house. This is where you build wealth, make investments that align with your long-term goals, and start saving money for retirement.

At this point, you’re likely seriously considering taking out a mortgage or already making payments on one. And, if your goal is to reach financial independence, you’re focused on making your income work for you in as many ways as possible.


With your finances flourishing, the last thing you want is to lose that sense of security. The Preservation phase is all about protecting your wealth by implementing financial safeguards like life insurance and investment diversification.

This stage of the wealth creation process ensures your nest egg is shielded from the elements so it can continue to grow, support your lifestyle, and help you reach your financial goals.


You’ve spent decades building wealth, saving enough to ensure you have a steady source of income for retirement, and more.

Now, you can enjoy the luxury of sharing the fruits of your labor, whether by giving money to friends and loved ones, passing down your assets, or donating to charity. The Distribution stage is where all your hard work over the years comes full circle.

Navigating the Phases: It’s a Marathon, Not a Sprint

Now that you’ve learned the phases of the wealth creation process, it’s important to remember that each one builds upon the other, like a financial pyramid that provides stability and support for your future.

The goal isn’t to rush through the journey as fast as possible. It’s to carefully and effectively build up each phase so you can progress through them with financial security and confidence.

Practical Tips for Each Stage of the Wealth Creation Process:

  1. Solvency: Create a budget and stick to it with the goal of building an emergency fund that can cover three to six months of living expenses. This safety net is a precaution in case of a medical emergency, car accident, or unexpected change in your living situation. It’ll also give you a leg up once you’re ready to move on to the next stage.

  2. Stability: Start tackling your debts strategically, focusing primarily on those with high interest. To do this, you can use debt reduction spreadsheets, Debt Elimination Software, or consult with a financial advisor.

  3. Accumulation Think about investing more than spending (with a focus on diversification), and take advantage of retirement accounts.

  4. Preservation: Prioritize low-risk investments to protect yourself from unexpected shifts in the market, set yourself up with insurance, and enlist the help of a financial advisor.

  5. Distribution: Plan your estate, consider giving to charity, and decide what kind of legacy you want to leave. The world is your oyster!

Your Wealth, Your Journey

Building wealth takes patience, well-informed decision-making, and the flexibility to adapt as your situation changes.

Whether you want a vacation home on a tropical island or to simply leave your loved ones with a solid financial safety net, now that you understand the wealth creation process, you have a roadmap to guide you on your journey to financial success.

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