Financial freedom is a word that is been thrown around a lot these days. Earlier I ranted about the meaningless references to “six and seven figure incomes“. Without an actual number, it usually means the person making the reference is making zero. In another post I explain why. This time, financial freedom. What does it mean? Financial freedom describes a lifestyle that is organized in such a way that you no longer have to work to cover your expenses. It means being totally free from the burdens of money. Only requirement? You need a passive or active system to manage your finances and streams of money. At that may be easier than you think. Hear me out.
First of all, financial freedom doesn’t mean being rich, at least not in traditional terms. People that we think of as “rich”, often live beyond their means to keep up appearances. They’re not financially free, they’ve just scaled their financial life to the maximum allowable amount. Traditionally “rich” people are often not financially free. Financial freedom is a mindset, that’s supporting a carefully planned lifestyle and the amount of money you need to keep going.
A common misconception is that financial freedom equates to not having any debt. Not necessarily true. Debt can be defined as a managed expense. Someone who has achieved financial freedom may use debt as a part of their expenses, rather than a weight to his financial goals. It’s about the smart use of debt.
Financial Freedom is Time Freedom
In my Happiness book, I introduced my three pillars of true wealth: time, money and location. For most employees and entrepreneurs, time and money are connected. At some level, they trade their time for money, whilst mostly doing something they don’t love. Therefore we think that financial freedom equates to the opposite: having unlimited free time to do whatever we feel like. To be truly independent, the time and money connection needs to be removed. A financially independent person will realize that neither freedom nor money directly translate into time. Once you are able to develop a sense of time freedom, you are on the right track to achieve financial freedom as well. For me, extended travel has been instrumental in getting that sense, even though I didn’t have true time freedom just yet. It’s the sense, and developing a feeling for it, that matters.
Most people are always worried about money. Entrepreneurs fear their business won’t survive. As an employee you may be fearful of losing your job. How much financial security does a two week notice period really provide? What are you working those long hours for anyway? Financial freedom makes your finances less of a worry. You know your finances are taken care of and they’ll be able to support your chosen lifestyle. That certainty removes a huge degree of worry, which makes place for a sense of freedom. That newfound freedom allows you to spend time on activities without directly trading time for money. It creates breathing room to create additional “assets”, or “side hustles” to cover your living expenses. That opens the door to true wealth, and additional streams of income. Ever asked a millionaire what they do for a living? Most millionaires have an issue articulating what exactly they do, as they have created multiple streams of income, surrounding (somewhat of) a common theme. Wealth can be built on the first two pillars: time and money freedom. The third, which I talk about more in my book about happiness at work, is location.
Changing Your Limiting Financial Beliefs
Wealth is a mindset. Achieving financial freedom starts with learning to develop an appreciation for that mindset. You may have to change your lifestyle and overall mindset. If you’re living beyond your means, you may have to downsize your house, change your spending patterns, or both. The key is to make your existing finances support your lifestyle, whilst creating room and options for growth.
Here’s a few key rules to start changing your limiting beliefs about money:
- Money is only a means to an end is one thing.
- No one should be judged depending on the amount of money they own or earn (that includes your own ideas about how much you own or earn).
- Financial freedom doesn’t equate to a fixed amount of money (becoming a millionaire doesn’t necessarily do the trick).
- You will never find financial freedom if you are not satisfied with the money that you have today (and manage it following a proven system, regardless of what the amount is).
Achieving Financial Freedom
Ultimately, financial freedom is a state of mind, formed from your personal perception about money. Your perception is directly related to how happy you are with your financial situation today. If you manage your money properly, following a proven system, you’ll start to create and attract experiences in your life that’ll help you raise the bar on your limiting beliefs about money. Once you become used to the occasional “VIP” experience in your life, it becomes addicting and you’ll start to attract more of that into your reality.
Achieving financial freedom is a healthy endeavour as long as one feels it is ethically sound to make money. In the end, having the right attitude about money will go a long way in dealing with different perceptions of financial freedom. Financial freedom is ultimately the ability to make a choice, and having different options. That’s the core of my Millionaire Mindset class: introducing different options into your life. Learn more and watch a preview here.Financial Freedom Preview