People throw around the term ‘financial freedom’ quite a bit, but financial freedom can mean so many different things. A young adult might say they’re financially independent when they no longer need their parents to pay for any part of their living expenses. Some say that they’re independent when parents pay for just their phone bill or car insurance but they pay for everything else.
Many people think consumer debt inhibits financial freedom, therefore one is ‘free’ when they no longer carry a balance on credit cards or personal/car loans. Still others find financial freedom to be when their retirement investments are such that being employed is no longer essential to maintaining their lifestyle.
This is a showcase of very different views of financial freedom – and that begs the question; What is it?
- Mr. Money Mustache presents one way of living – cut expenses to the minimum and live off less than half of what you make. He is even so bold as to say that he can take you from zero to rich in a single blog post. Cutting out luxuries is easier said than done, but challenging what is seen as necessity is a pretty great philosophy. Is that what financial independence looks like? Extreme frugality that allows you to quit working as soon as possible?
(Seriously read this guy’s stuff – the chart in this early retirement article will blow your mind)
- Pauline’s advice at Reach Financial Independence is to turn your money into passive income. Living on a small amount now while you invest and save strategically and eventually find yourselves living off of income you have to put no effort into making. Is this the true picture of financial freedom?
- Following the American dream, do we take Dave Ramsey’s advice and live like no one else now so we can live like no one else tomorrow? Generate more income, create rigid budgets, avoid debt like the plague and work yourself into a millionaire upon retirement?
- An easier starting point is making a list of the luxuries that you can logically do without. For the necessities such as a how to find the right mattress, you can use online resources to figure out what gets you the most bang for your buck.
Why Should You Care?
We point out each of these ideas because they’re all good. The definition of financial freedom is different for everyone. However, the reason each of these financial bloggers and experts is so successful is that they care so much about financial freedom, whatever their vision of it might be.
Success doesn’t come from the right answer, it comes from dedicated vision.
We invite you to the simple step of CARING about financial freedom. Like any goal, knowing what you believe financial independence is will keep you motivated to reach it.
Our Two Cents
What we see in each of these different financial outlooks is the relationship between employment and needs. While working isn’t a burden to many we know that the pressure to generate income in order to make ends meet can be a burden. Your personal vision of financial freedom may include a job being a choice rather than a necessity. It may mean that you are able to travel freely to exotic places. Financial independence could mean having enough money to give to whatever causes or organizations you support. It is unique for each of us, the key is having your vision to work toward.
Could this fall into any one of the above mentioned financial approaches? Absolutely. There are many approaches to financial freedom. Find one that speaks to who you are and what you envision for your life – then chase it. Calcifying that vision gives you something tangible to work toward and achieve.
What does financial freedom mean to you? Do you lean toward one approach rather than the other? How committed are you to that vision?