You have an emergency fund and investments, but are you financially mature? CA explains 4 stages of money management

Wealth building is often considered the holy grail of financial planning. People save, invest and build up years of financial security, but many struggle in terms of actually spending the money they have built up. Chartered Accountant Nitin Kaushik explains why financial maturity is more than just growing your bank balance, a point that is often overlooked in personal finance.

In a post on X, Kaushik outlined four stages of financial maturity, arguing that most financial advice focuses on wealth creation but pays less attention to enjoying the benefits of that wealth.

“There are four stages of financial maturity, and most financial advice only teaches you the first three,” he wrote.

Four stages of financial maturity

According to Kaushik, the first stage is status, where people spend money on expensive cars, gadgets and luxury goods to impress others. Financial decisions are mostly about looking good and showing off money at this stage.

The second phase is security and includes creating emergency funds, getting insurance and maintaining financial reserves.

The third stage is freedom. This means investing in equities and getting the benefit of compounding and creating passive income.

However, Kaushik believes the fourth stage, enjoyment, is often overlooked.

Why accumulating wealth is not enough

At this stage, money is actually used to improve one's quality of life. Kaushik identifies travelling, improving health, spending time with family and experiencing life as some ways people can use their accumulated wealth.

He pointed out that reaching this stage can be difficult even for people who have spent years building financial security.

“Many people spend decades reaching Stage 3 but struggle to enter Stage 4,” he observed.

The reason, according to Kaushik, is that years of disciplined saving and investing can make people uncomfortable with spending their own money.

“They become so disciplined about saving and investing that spending their own accumulated wealth starts making them anxious,” he wrote.

His central argument is that financial discipline should not end with accumulating money. People also need to learn how to use it without feeling guilty.

“Building wealth is a financial skill. Learning to enjoy it without guilt is also one,” Kaushik concluded.