“Financial Freedom” is a term that’s often kicked around and discussed here in personal finance blogs, on TV and in books, etc., and it seems like it is a never-ending part of the chatter that only adds stress in your financial life.
Financial freedom means that you get to make life decisions without being overly stressed by those decisions and their financial impact on your life. When you start to control your finances instead of being controlled by them, you begin the path to financial freedom and that is not any kind of get-rich-quick strategy.– Dave Ramsey
But can you ever be financially free? Will you ever be financially free?
I Have to Be 100% Honest Here
Before I begin, let me make this perfectly clear: I am not financially free now and I am perfectly willing to admit that I never will be!
In fact, I’m going to go out on a limb here by saying that financial freedom, the feeling of never being overly stressed about your financial decisions, is something that will never happen to almost everyone on planet Earth. Yes, of course there are some few rare exceptions, but frankly I don’t know of anyone who doesn’t stress about the financial decisions they make, even when they are really, really wealthy!
That’s because people worry and stress all the time about keeping their wealth, growing their wealth, and thinking about the “better deals” they might have missed along the way that would make them even more wealth, and every other variable about wealth you can imagine! But, it seems that an awful lot of people miss one very important point: Having lots of money in itself does not guarantee financial freedom!
How and Why I Got to Where I Am
In my life, I have worked my way along a pretty good route to being (at one point) a high wage earner. Earning a six-figure income in my peak earning years seemed almost impossible when I look back at “younger Gary”. My very first job upon graduating from college in 1971 was at R.H. Macy Corporation where I earned a whopping $7,800 a year ($150 a week) and yet I was planning to be married shortly thereafter. Back then, I felt lots of financial stress and never could imagine earning six figures (that didn’t actually occur until decades later and was inflation infused times 25 years!). In 1971, it seemed like it had no chance of happening.
Naturally, I spent the next 20-something years trying to learn (slowly) the how and why I landed in the place I was and what I needed to do to stop the financial stress in my life. Essentially, I had to try to learn how to appreciate my good fortune and life.
So, What’s the How and Why You Got to Where You Are?
You may have started off in life with lots of roadblocks in your path to financial success. Perhaps you were unaware of the role of real financial responsibility with few role models while growing up or you came from a difficult family environment and real poverty. Even if you were lucky enough to start out in life with a great financial acumen and a great family foundation, you may never have seen or known what a financially free life was like despite always feeling like it was out there waiting for you. The reason for that feeling is that we are convinced early in life that if you work hard and are smart with money you will get to the mountain top of financial freedom!
But, just having a high-paying job, even one you really love, is not the answer to reaching a goal like financial freedom. When you think about it carefully, it’s not that tricky to understand that unless you live on less than you make, no matter how much you earn, you will never be any closer to financial freedom than just a long distance view.
It Doesn’t Matter What You Call It
Call it, “living below your means”, “making more than you spend”, “frugality” or anything else describing how you see and treat your money. If you develop expensive tastes in houses and cars, and need to look more affluent than your neighbor or are always out to impress others, then you could wind up worse off financially no matter how much you make. Those are the facts and I and about a zillion other people can testify to that from personal experience. You are way ahead of the game if you come to that realization before you experience the over-the-top financial stresses that often can lead to real financial disaster!
I sometimes feel like a broken record when I say that you can’t start heading in the right direction with your finances unless you simply start to track your expenses and understand where your money is going. That’s called a budget and it doesn’t matter whether you make $500 dollars a week or $5,000 a week. Learning about your money and where it goes will lead you to real ways of improving your spending and saving and that means budgeting better.
I can’t say enough how important it is to identify the very few areas where money you spend truly pays off in better quality of life for your core interests. Spending your money there and cutting back in other ways or even every other way may be your very best chance to get as close as possible to financial freedom.
What’s Causing Your Financial Stress Right Now?
The big question is: Why are you stressed? The answer is a little different for everyone, but it almost always centers on the word “debt”. It can be long-term or short-term, it can be current or future, it can be necessary or frivolous, it can be planned or unplanned, but no matter what kind of debt it is, it always weighs on you and stresses you out. That’s why you need to identify the reason or reasons for it and plan your escape route now.
Ask yourself a few honest questions. How much is your debt? Where (and why) did it come from? What plan do you have to exit from it? When will you ever be able to say “mission accomplished”?
Once you can answer those questions, you will have a real chance to overcome your debt and reduce or eliminate the vast majority of your financial stress. It probably won’t ever go away completely, but you will be steering the ship and not just riding along adrift on the high sea. Or to put it more in the vernacular: “be up the river without a paddle”!
The Building Blocks to Financial Freedom Do Actually Exist!
A quick list of what you need if you will ever take your best shot at financial freedom includes these primary rules:
- Make a budget based on real needs and income, and use it
- Be responsible, not impulsive, with your money
- Make goals and plans on how to achieve them
- Learn from others’ successes and mistakes, especially the mistakes you make…and never repeat them
- Find as many legitimate alternate streams of income as you can
- Pay yourself first in the form of saving and investing
- Understand the differences between “wants” and “needs”
- Be responsible with credit and keep yourself in good standing
- Plan for your retirement and get started as soon as you get your first job!
- Use common sense and try to be healthy
The feeling of financial freedom, in my view, is a lot like a game of horseshoes. There are a few out there that get a “ringer” every once in a while, and bravo to them! For everyone else who plays the game, getting as close as you can to the stake is a pretty good showing, and in most cases you can be called a winner when you do that. The closer you get to the stake, the better.
When you look at the target, take careful aim at it and then use just the right amount of energy and effort and you will have a pretty good chance at getting close. If you do anything else, you might as well just turn your back to it, close your eyes and throw the horseshoe over your right shoulder and pray…you really don’t want to know how that will turn out, do you?
Sometimes the most complicated problems have the most simple solutions. Financial freedom is one big goal to try to achieve. But more likely than not, because of the fact that we are all just human and don’t always make the very best money decisions, we just might not make a “ringer”, no matter what Dave Ramsey may say. Despite that, if you get real close to the stake, and you reduce your financial stress so that you can actually sleep at night, you can take that as a win. That’s what I found out and appreciate these days and you can, too.
Do you feel financial stress out there? Do you think you can achieve total “financial freedom” on your timetable? What are you plans to reach your financial goals and what are any of the roadblocks ahead that you see? Do you sleep peacefully at night when it comes to your finances?