What does the phrase, "Financial Freedom" mean to you?
Updated: Feb 25, 2019
I always hear people talk about wanting to be "financially free", or that they're on the path to "financial freedom". But what does that truly mean? My definition of that phrase may be astronomically different from what it means to you. And your meaning of being "financially free" may be different from the person standing next to you or sitting across from you in the office.
Now this isn't a one answer fits all type of question, because in all reality, we all have different views, opinions, and life styles. The way we see the world varies from one to another. So what does it mean to me to be financially free. A simple 5 word phrase, "Not having to worry about money". If I were retire today, would I stress about money tomorrow, the next day, a week from now, a month, a year, you get the point. Could I continue to live my current life style without having to make huge sacrifices or downgrading. Sure anyone could sell their house, car, belongings, and go live in a box in the middle of no where. But is that truly the definition of being "financially free"? I'd disagree.
I consider financial freedom compromised of three main categories: Debt, Income, and Freedom Money. Debt in regards to financial freedom is any money you owe other people. Your car payment, mortgage, utilities, credit card payments, medical payments, student loans, etc. You will never be financially free when you have people constantly knocking on your door telling you what to do with your money. You wonder where that paycheck you worked so hard for goes by the end of the month with zero money left over... yeah that's all the debt you've racked up telling you to pay up. So the first step to being financially free is getting rid of all that debt.
The second part of being financially free is one's income. Can you retire tomorrow or are you stuck on the 9 to 5 grind working until retirement, if not longer. Now I totally agree with those who enjoy working and do not consider it a part of financial freedom. However, I'd argue the tipping point would be whether you get some life satisfaction/happiness out of working. Or would you rather do other things with your time. If you do plan on retiring, hopefully early, do you have your finances squared away allowing you to do so. Have you built a large portfolio in mutual funds, stocks, and bonds. Did you buy investment properties along the way? Do you have a pension in place. Those are all things to consider if you are truly serious about your financial freedom. Where is the income for the rest of your life going to come from?
The third part of financial freedom, which may very well be the most important part, is freedom money. What exactly do I mean by that? It's simple... Do you have the money necessary to do what you enjoy. What's the point of being financially free or retiring early, if you can't spend the rest of your life doing what you enjoy. That may be traveling around the world, playing golf, donating to church, treating the kids and grandkids, you get the picture. I believe it's a important part to consider when on the path to financial freedom. Life's to short to live under a rock or within four walls. You need to plan a set amount of money every month when calculating your path to financial freedom.
Being financially free may mean something else to you. And that's totally fine. I would love for you to leave a comment in the box below of what financial freedom means to you. But I think we can all agree that while it is tough to accomplish, it is a noble and worthy goal to pursue. Imagine what it would be like to be financially free. Imagine retiring today, and not having to worry about money tomorrow!
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