What Is Financial Freedom?
We all have our visions of financial freedom, which can include anything from financial independence to being rich enough to retire early.
To some, financial freedom could mean that they no longer have to work for money because their investments are yielding them enough financial income.
For others, financial freedom means having the ability to travel the world without financial constraints.
However financial freedom is defined by you.
Although this may have different definitions to each person, it can be broken down into three components: financial independence, financial security, and financial abundance.
Financial independence means financial freedom in the sense that your resources are enough to support you so you no longer have to work.
Financial security means financial freedom in the sense that resources are safe, which could simply mean that they are secure or that you can provide financially for yourself.
Financial abundance means financial freedom in the sense that resources are abundant in your life, in that resources are flowing in continually.
Why Do People Strive for Financial Freedom?
Financial freedom is sought after because resources are a large concern when it comes to living in today’s world.
There are several reasons people strive for financial freedom:
Staying financially secure is a financial objective that everyone has to some degree.
You always need resources to be able to pay the bills and also have financial resources available in case of an emergency: car accidents, medical emergencies, etc.
Having Resources Available for Opportunities
If you are financially free, you have resources available to take advantage of opportunities.
For example, if you are looking to start a new business venture or go back to school and take on debt, financial freedom would give you the resources needed to pay off debt and support yourself while you pursue this opportunity without having to hold down a full-time job.
By having financial freedom, you also have independence in terms of being able to make decisions without needing anyone else’s assistance.
Financial freedom enables you to have the resources to be able to choose where you live, what kind of lifestyle you want to live, travel, etc.
How To Achieve Financial Freedom?
Once you’ve decided financial freedom is something you are looking for, there are several things you should do:
Learn About Personal Finance
If you don’t already know the basics of financial management, such as making a budget and sticking to it, finding good investments, etc., then now is the time to learn.
Once you understand how money works and what options are available for you, you’ll find financial freedom much easier to achieve.
The easiest objective you can accomplish is simply decreasing your expenses.
Some common ways to decrease expenses are using coupons, buying generic brands, etc.
This method is definitely not the most profitable, but sometimes resources are low and financial freedom has to be put on hold.
Another financial objective you can try is increasing your income.
There are several ways of doing this, such as getting a raise at work, starting your own business, taking financial risks, etc.
Some risks include stock picking or investing in real estate. Stock picking can be a risky investment, but it can also pay off big time.
Maximize Savings Opportunities
One of the easiest financial objectives is to simply maximize your savings.
You can do this by increasing your 401K contributions and making sure you have an emergency fund in case of unexpected emergencies.
Continuously Work On Financial Freedom
Financial freedom is an objective that shouldn’t be looked at as a one-time decision.
Instead, this should be viewed as an ongoing process where you consistently work on financial objectives to help you achieve financial independence.
Is Achieving Financial Freedom Worth It?
Yes, financial freedom is worth it.
Once financial freedom is achieved, financial independence follows suit.
Financial independence means you have the financial resources to live on without having to worry about where your next paycheck comes from or how you’re going to pay for that financial emergency that just happened.
Financial freedom is definitely worth it because financial worries will no longer be something you have to worry about.
If financial freedom is something you want, then definitely work on financial objectives.
You have to be smart about achieving financial freedom, but financial independence is an amazing feeling that everyone should experience at least once in life.
Be sure to follow the tips in this article when working towards financial freedom so your financial objectives are met and financial liberty becomes a reality.
About the Author
True Tamplin, BSc, CEPF®
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.