28 Dec How do you define financial freedom?
Freedom is a very subjective concept. Its definition doesn’t only change from person to person but also from area to area. Many have tried to define it legally, economically, philosophically, and spiritually.
From a financial standpoint, some assume that being free equals being wealthy. Yet having more money isn’t necessarily synonymous with having more freedom.
After all, even millionaires have their issues too.
What if they have a large business to run, and this leaves them with little time to spend with their loved ones?What if they invested a lot of money in financial markets, and this causes them significant stress?
What if they owe large amounts of money to banks and other financial institutions, and a significant share of their revenues goes into debt repayments?
Not to mention the countless stories of super-rich people living unhappy and depressed lives because the only thing money won’t buy is happiness.
Sure, having more liquidity can help a lot if you use it to boost your quality of life and increase your peace of mind. However, defining financial freedom merely as being rich is very short-sighted.
How do you envision yourself as a financially free person?
Imagine you’re going to be financially free in a couple of years. What do you think will get you there?
Winning the lottery and being able to purchase any high-ticket item at will?
Investing your money wisely and generating a nice, passive income stream?
Earning well doing a job that you love while also having enough time for your hobbies?
Buying a big house where you can happily enjoy your time with your family?
Becoming a digital nomad and traveling around the world while working with your laptop?
Most importantly, what would financial freedom feel like to you?
Here are some common feelings people associate with being financially free.
Being in control.
Would you feel financially free only if you knew that you fully control your finances? For many of us, the lack of control makes us feel small, powerless, and dependent on others, whether it’s the bank, a spouse, or an employer. Creating a stable source of income and budgeting to live within your means can do a lot to help you achieve this feeling.
Enjoying a comfortable life.
Is living in a beautiful area, having a nice house with a lovely garden, and driving a good car your idea of feeling financially free? This is probably the most sought-after lifestyle in modern western society and increasingly more in emerging economies. It’s also the main drive behind the American dream, the goal that allowed many families to improve their financial situation and social status generation after generation.
However, western society has another side of the coin: we have little time to do what we really want. Let’s be honest; we spend more time making a living than actually living. Learning how to invest can help you gradually increase your passive income stream until you no longer need to work full-time to sustain yourself.
Life can be unpredictable, and not always in a positive way. People often worry about whether they have the financial means to deal with unexpected emergencies or whether their retirement plan will provide them with enough peace of mind during their senior years. If these are your main worries, adding a monthly sum to your emergency fund and learning about different retirement plans can bring you closer to feeling financially free.
Debt can be a heavy burden. We often apply for a credit card or take out a loan to improve our lives, but we soon realize that an increasing share of our income is going toward debt repayments, that we are increasingly stressed, and that our peace of mind and psychological health are quickly decreasing, with negative effects on our social and family life too. Fortunately, many options are available to those whose priority is getting out of debt fast and as affordably as possible. Consider a debt management or debt resolution plan to get one step closer to being financially free.
Setting Goals and Defining Obstacles.
After defining your own idea of financial freedom, it’s time to set your goals and prepare a plan to achieve them. This also involves defining the obstacles that are currently in your way, from low pay to high debt to stressful working hours. Then, come up with practical and attainable ways to overcome them.
Time to tell us about yourself. How do you define financial freedom? What’s currently the major obstacle on your path to obtaining it? You’ll be surprised to learn how fat you can get with the right attitude and advice.