Do you know what it means to have financial freedom? What’s your first reaction when an expected turn of events causes you to foot a significant bill, like for example, a medical expense? Or, more simply, how’d you feel if your kid broke the laptop? Do you handle it with equanimity or dread? Well, if you’re financially stable, then these are all just “stuff that happens” in life. If you are not, then these are usually disasters wrecking your livelihood. If you belong in the second category, then read on, because we have a series of articles on how to achieve financial freedom.
Let’s start by defining it. Financial freedom is the ability to be in control of your finances, in contrast to making life decisions based on them. You are “free” to go on a vacation, spend time with family and friends, do what you love, and go for a night out without worrying about the bill. If you are not financially free, but constrained, you will think twice about all the above-mentioned activities, and most probably, will not proceed because of a soon-to-be empty wallet.
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What is financial freedom it all about?
Being rich is different from being financially free because being rich means different things to different people. Some people would consider owning an expensive mansion or high-end vehicle to be the standard for “rich,” while, for others, it would be the ability to travel and help those in need. A businessman’s concept of rich would be different from someone living paycheck-to-paycheck. It differs based on circumstances and situations. But financial freedom is the common baseline to do what we love to do (up to a certain limit) without thinking too much about money. This is where we all need to start.
There are many ways to achieve financial independence. We will cover, in-depth, the strategies you can adopt in your life to achieve this in upcoming articles. Some of the tactics include clearing off debt, investments, negotiations, learning skills, financial literacy, financial instruments, tax planning, living below your means, and more. All this can be achieved with the knowledge and the will to change.
Before getting into the nitty-gritty, let’s delve a bit more into the obstacles that you are usually faced with when undertaking such a venture.
Misguided notions about financial freedom
When you are born into a certain family, taught in a certain school, are surrounded by certain people, you will have certain notions on many things in life, including wealth, accumulation, and sustenance. Wrong notions, especially those formed early on in life, tend to stick around and prevent you from moving beyond a level of financial freedom and success. Yes, you are one of the biggest obstacles in your life to becoming financially sound. Recognize the notions when they come about, and work toward removing them, for your sake.
Some examples:
- “Financial success comes only from getting a good college education.”
- “Credit cards and quick high-interest loans give me the ultimate financial mobility.”
- “How can I, coming from xxx family, living in xxx, earning xxx ever be wealthy?”
- “Invest later, party now.”
- “Keeping budgets is for losers.”
- “It’s too late to start anything.”
- “I’m not smart (or skilled) enough.”
- “Bought the latest model because the neighbor’s got one.”
Then, there is a lack of education. But keep up with this series, and you should be covered, at least on a foundational level. We can’t do much about the notions, bad attitudes regarding wealth building, and a lack of action. But we can teach you. So if you’re ready to figure out where and how to start, stay tuned.
Critical knowledge
Unfortunately, basic financial literacy is not taught in schools. It’s a conspiracy, if you ask me, as it is such an important aspect of life. Families that teach finance at home result in the household members not getting into debt traps and maintaining a stable financial standing throughout their lives. When you become financially educated, it is up to you to spread this knowledge among family, friends, and others within your circle.
