What Is Financial Freedom? 3 Finance Bloggers Offer Answers

Posted in Community
April 25th, 2012 at 9:47 am by Ally

For many people, financial freedom is the Holy Grail of their financial journey. But what exactly is financial freedom? The concept goes beyond mere wealth, but it means different things to different people. We asked three personal-finance bloggers to describe financial freedom, and the steps you can take to achieve it.

For SVB of The Digerati Life, achieving financial freedom isn’t so much a financial exercise as a mental one. “Money can be a source of stress,” she says. “No matter how much you have, being financially free is about doing away with the stress that money can bring.”

Instead of focusing entirely on how much money you want, SVB believes that financial freedom can be found by “conditioning your mind to live within the limitations of your finances and still being happy.”

SVB has tried a few strategies to get to that point, including meditating on what’s truly important to her, being more flexible about her expectations and continuing to pursue personal and business goals while maintaining balance. “It helps when I remind myself that net worth is just a number, but freedom is in your head.”

Philip Taylor of PTMoney.com has a slightly different take. He believes that financial freedom means being completely free of debt, having enough money saved to cover expenses and having adequate insurance to minimize risk. “It means that I can make daily life decisions without the need to factor in any financial responsibilities,” he says.

Taylor recommends following four steps (in no particular order) to achieve this kind of financial freedom:

  1. Pay off all your debt.
  2. Create sources of passive income, such as investments or real estate.
  3. Save cash to shelter you in the short-term.
  4. Maintain adequate insurance to protect you where money can’t.

Meg Favreau of WiseBread.com says that financial freedom means having “the freedom to never be stuck” by a bad situation, like a car accident, medical emergency or sudden job loss. “What makes those situations even worse is being in a constant state of worry about finances when you should be focusing on more important things like caring for yourself or others.”

Favreau recommends building an emergency fund, starting with $1,000 and moving up to having three to six months of living expenses saved. She also recommends having a secondary savings fund to give you more flexibility. “This is money for lesser emergencies that still make you feel stuck – things like wanting to quit a job that makes you cry, or getting out of town for a long weekend when you’re going stir-crazy.”

While financial freedom means different things to different people, the fundamental ways to achieve it are basically the same – have a plan, master the art of saving money and, most importantly, identify what freedom means to you so you can start taking steps to achieve your goal.

What does financial freedom mean to you? What steps have you taken to achieve it?
 
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Responses to this post (8 comments)

  1. 5/1/2012
    7:08 pm
    apogyi says:

    Where is this new security program that you emailed me about?

    • 5/2/2012
      9:38 am
      Ally says:

      Sure, Apogyi, just log into your online account and click security at the bottom of the page. Then select the Prevx security offer on the bottom left.

  2. 5/1/2012
    8:34 pm
    DonPaul says:

    Real financial freedom means having the resources to say “shove it” whenever the situation, but primarily your job, requires it. I worked two jobs for 27 years to age 42 while saving half my income to get there. It’s the most awesome experience of a lifetime to kiss the old boss goodbye and take charge of your own life! Now “retired” for 25 years, I can say for certain that having “shove it” money is REAL financial freedom. Anything else is a most pitiable substitute.

    • 5/2/2012
      9:44 am
      Ally says:

      Ha! Thanks so much for sharing your experience, DonPaul. It really does make a difference to start saving when you’re younger. We hope you keep enjoying your financial freedom for years to come.

  3. 5/2/2012
    10:19 am
    Memom says:

    Have money automatically withdrawn from your paycheck to start building a cash reserve. If you don’t see it, you won’t spend it
    Start with a small retirement investment and gradually increase it each year and with raises. Your account will grow and you will adjust to the lower income

    • 5/3/2012
      9:40 am
      Ally says:

      Thanks for the great advice, Memom. Sounds like you have a real sound and gradual approach to financial freedom.

  4. 7/1/2012
    11:56 am
    Anonymous says:

    Bad jobs can make you sick or even kill you. A bad job actually IS an “emergency” along the same order as a car accident, job loss, or sudden illness.

    Also, I’m not sure why this is always left out: some people actually aren’t making enough money to cover the bills and put some aside. If the math doesn’t work out, the first step is to find a way to earn more money.

  5. 11/29/2012
    5:42 pm
    Oscar says:

    Saving might have been a good way to reach financial freedom in the past but that money rule does not apply in today’s inflationary economy. Every time you put a penny away in the bank only the bank makes money while your hard earned penny devalues each day. I would not entrust my money to any retirement investment fund either, you would have no control over your fortune that way. Invest in real state that yield positive cash flows, buy gold in lieu of saving cash, and start you own business while still employed by someone else. Good luck guys.

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