What is Financial Freedom?
Financial independence is a journey, not a destination: Every day, by the choices we make, we move closer to or farther from Financial Independence. While there are some important milestones along the way (e.g., building an emergency fund, paying off all non-mortgage debt, retirement), these signs mark progress, not the finish line.
Some view Financial Independence as the point where one can live off of savings, a pension, social security, and the like. While the ability to live without the need of a 9 to 5 job is an important step toward Financial Independence, it doesn’t automatically make somebody financially independent. The problem is, we all know of people who are retired but are just getting by and, because of limited financial resources, are not living life as they choose.
Financial independence is not “one size fits all”: What I want or need to live life as I choose may be very different from what you want or need to live life as you choose.
What are You Working For?
You go to work for five days (or more) a week for 40 hours (or more). Even if you love your job, it’s time away from the other things you love, your family, your friends, your hobbies. We want to use the money we work so hard for to pay for our freedom. So, what are our financial goals and how do we achieve financial freedom?
Most of us will spend our entire lives doing hard work to make ends meet. And for what? A house bigger than you really need or can afford full of stuff you never use and don’t even remember buying?
Related: 10 Reasons You’re Still Poor
To pay off credit cards that you charged that house full of stuff to?
For the occasional vacation that you can’t really afford and your boss gives you a hard time about taking?
For the status that driving a Lexus and wearing expensive clothes gives you?
Dave Ramsey says it simply “We buy things we don’t need with money we don’t have to impress people we don’t like.”
Maybe you realize it and maybe you don’t but you’re in debtor’s prison and you don’t have much freedom.
What Can Money Buy?
When people dream about having money, it’s often the things they would buy that they fantasize about. But material things are not the best part of having money, not even if you have a garage full of Sports cars, lifted trucks, and any fun expensive grown up toys you can think to put in there.
Money can buy choices and choices mean freedom.
Do you hate your job? You can quit and take your time finding a better one.
In an unhappy relationship? Hate the town you live in?
You don’t have to stay, you can take your money and leave.
Money can buy convenience.
Are you too tired to make dinner? Order out.
Don’t you have time to clean your house? Hire a cleaning service.
You’ve been told to evacuate because of a hurricane? Woo! You’re not going to sit in a flooded house with no electricity for a week. You’re going on a impromtu vacation, which sounds kinda exciting.
Money can buy time.
You had a baby and you don’t want to go back to work? You’re a stay at home parent now.
Is your sister having a destination wedding in somewhere remote? Excellent, pack your bags.
A family member had surgery and needs you to stay with her for a few weeks? Cancel your appointments, you’re going to be out of town.
All of these examples are examples of having control over your own life, not feeling trapped. When we feel like we’re trapped and we don’t have choices, we feel unhappy and anxious.
Money can buy happiness.
We feel happy when we have control over our own lives. Money can also buy happiness if you know what to buy. Too many people think buying things brings happiness. And it does, but it’s very temporary and usually, the happiness extends only to you.
If you want to spend money to get happy, spend it on experiences. It’s been proven that experiences make us happier than material possessions. And it’s not hard to think of an example from your own life.
Experiences, rather than things, make us happy. And the even better thing about experiences versus things is that you can have all sorts of wonderful experiences for free.
It doesn’t cost anything to take your kid to the park or to go hiking with a group of friends. It doesn’t cost anything to spend the evening making dinner with your partner.