What does the term financial freedom mean to you? When you hear those words, what do you picture? Close your eyes for a moment and reflect on that phrase. What do you see?
When I think about financial freedom, I envision young, wrinkle-free faces, posing on exotic beaches, sailboats, and RVs.
The media often presents financial independence this way, and I’m a sucker for these stories. The lure of moving to a foreign country and traveling the world intrigues me.
The Best Part of Financial Freedom
Now ask yourself, what is the best part of financial independence? Magazine articles might lead you to believe it’s living a life off the beaten path. Michelle Schroeder-Gardner lives on a sailboat, Steve Adcock tours the U.S. in an airstream, and Go Curry Cracker travels the world.
There is value in each of these choices, but I am oddly content with my ordinary life. I haven’t done anything exciting since becoming financially independent, and I don’t plan to.
I commend those who choose these paths, but I don’t want to pursue those same dreams. I’m a quiet, introvert who likes to stick to one place. Perhaps, I’m drawn to these articles because my life feels so ordinary in comparison.
Whatever the reason, I can tell you that the best part of financial independence isn’t newsworthy. It isn’t traveling the world, living in a tiny house, or going off the grid.
The best part is paying the bills without stress or worry.
The Image of Financial Freedom
Sensational headlines can distract us from the real value of financial freedom. You can choose to live where you want and do whatever you enjoy. These details can be sensational or uneventful and boring.
The value isn’t in your lifestyle choices. It’s in your ability to pay for whichever option you choose.
We are all unique. We each have different dreams, passions, and pursuits. If you want to visit every country before you die, so be it. If you want to live in a comfortable house and never travel, that’s okay too.
Financial freedom allows us to pay for the life we want, whatever that may be.
Financial Freedom in the Media
Imagine reading the headline, “Seek financial freedom to pay your bills.” That doesn’t sound very exciting, does it?
How about, “Travel the globe in early retirement!” That has a much nicer ring to it.
Saving money may seem dull. If you aren’t a money nerd, pulling up those excel spreadsheets, typing in numbers, and investing your money may sound dismal.
Is it any wonder the newspapers and magazines spice up the headlines?
Tracking your finances may be tedious, but in this case, boring isn’t necessarily a bad thing. The reward for those monotonous tasks is a life where you don’t lose sleep or feel stressed about money.
Sure, you can’t slap that on the front cover of a magazine, but in my opinion, it’s the most valuable part of financial independence. It’s also a vital component that gets overlooked in the headlines.
What is Financial Freedom?
What is financial freedom? Financial freedom is the sense of calm you feel when dealing with financial situations. It’s the peace of mind you experience when buying something you need.
To achieve financial freedom, you need enough money to pay for your lifestyle and the unexpected expenses you might run into throughout your journey.
Think about the last time you encountered an unexpected house repair or medical bill. Did you feel calm and composed, or did you immediately wonder how you would pay for it?
Financial freedom enables you to reach into your wallet without panicking. During a crisis, you can focus on fixing your problems and comforting your loved ones, rather than worrying about paying the bills.
Most of us don’t have that luxury. Instead, we feel the strain of an increased financial burden on top of the original problem.
Financial freedom enables you to pay unexpected bills without stress or worry. The money is waiting for you. It’s sitting in your checking account or emergency fund.
You don’t have to juggle your bills or miss other payments to fund your expenses. You can pay for everything you need without incurring a significant impact on your finances.
That is the beauty of financial freedom.
Financial Peace of Mind
The last few months have been costly for us. Our refrigerator broke, our air conditioner stopped cooling, and our tub sprung a leak.
In the past, these events would’ve induced stress, but this year it was different. Each time an issue arose, I calmly handed over my credit card. I knew we had enough money to cover our bills on top of our typical monthly expenses.
This isn’t to say we throw money around and buy whatever we want, but it does mean we can pay for the things we need.
When I needed a new retainer, I didn’t ask how much it would cost. I simply sat back while the dentist created a new mold. When I decided to homeschool my two kids, I purchased books and curriculums without wondering where I would find the money to pay for them.
Money can buy happiness, but more importantly, it can provide a sense of calm and tranquility.
An emergency fund will cover the unexpected, but financial freedom is much bigger than that. Imagine having enough money to pay for ten simultaneous emergencies without worrying about any of them!
Budgeting for Unexpected Expenses
When I was in my early twenties, my friend’s dad taught me to budget. We sat down one afternoon and wrote each of my monthly expenses line-by-line on a giant excel spreadsheet.
“Here you go,” he said, “now you know that your income can cover your bills.”
“That’s great!” I said naively, but by the end of the month, I was underwater.
What happened? I encountered unexpected expenses. The electric bill was high that month, my car was leaking fluid, and a friend’s birthday party topped out at three times the amount I planned.
“Okay,” I thought. “I didn’t add enough buffer to my expense categories.” So I recalculated my expenses, but the next month the same thing happened, and the month after that too. Unexpected expenses were always popping up, and each time they did, I felt stressed and anxious.
Stop Worrying About Money
I knew I’d reach financial freedom when I stopped worrying about money. It dawned on me the first time an appliance broke, and I didn’t immediately panic about paying the bill.
Our emergency savings usually covered these costs, but I still worried about them. As soon as I paid the bill, I focused on plumping up the emergency fund again.
Then one day, I stopped worrying. My preoccupation with financial concerns disappeared.
My husband and I are in control of our financial situation and optimistic about our financial future. We have enough money in the bank to pay for the things we need without future income.
Steps to Financial Freedom
Unfortunately, you can’t achieve financial freedom overnight, but you can set small goals to ease your financial worries.
Begin by creating an emergency fund. If you are starting out, this may seem impossible, so I suggest setting aside a small amount of money every week. Even the smallest amounts will get you in the habit of saving.
This emergency fund will buffer you from unexpected events in life. Think about all of those calls to plumbers, technicians, electricians, doctors, and dentists.
When issues arise, you will feel less stressed and anxious. You don’t have to question your decision to visit the doctor when you are sick or get that strange noise checked out on your vehicle.
Creating an emergency fund isn’t the same as reaching financial independence, but it’s the best place to start. It will ease your financial anxieties.
After fully funding your emergency fund, you can begin to save for longer-term goals.
How to Gain Financial Freedom
The leap from an emergency fund to financial freedom may seem daunting. Unfortunately, most Americans will never get there, but that shouldn’t prevent you from trying.
Begin by picturing your desired lifestyle. Where do you want to live, and what do you want to do? How much will it cost to achieve those dreams?
Try to calculate the answers. Look up prices in the areas you like and start writing down how much you need to support yourself.
Then begin saving to fund that lifestyle. Start by living below your means. Evaluate every expense and teach yourself to stop buying stuff you don’t need.
The less you need to spend each month, the less you’ll need to save. Living in an RV is cheaper than living in a house. Similarly, living overseas may be less expensive than living in the U.S.
That’s why many financial independence stories focus on these lifestyles but don’t limit your options.
You may be able to live in an area with a lower cost of living or buy a less expensive house in your current location. Evaluate your choices and explore ways to spend less so you can save more.
Then put money aside for savings as soon as you receive it and assign every dollar a job.
Don’t let yourself see excess cash in the bank. Push your money out of your checking account and into a savings or investment account. Remind yourself of the purpose of those dollars. What future goal will they fund?
Learn to invest. That’s the only real way to make your money grow. Educate yourself before investing, so you can make smart decisions with the money you saved.
I Want Financial Freedom
Saving for the long term isn’t always easy. Figure out ways to remind yourself of your goal. Say, “I want financial freedom,” when you feel tempted to purchase something you don’t need. Repeat it when you move money into your savings and investment accounts.
You know what it’s like to want. You want tangible objects and exciting experiences. Start thinking about financial freedom as a want too.
What do you want more than anything? If you jotted down a list, eliminating financial stress and worries might not break the top ten. It isn’t as exciting and glorious as an around-the-world journey, but your peace of mind will be worth every penny.