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How to reach financial freedom

by Money Puzzle   ·  April 22, 2024   ·  

How to reach financial freedom

by Money Puzzle   ·  April 22, 2024   ·  

What does it mean when you say that you’re working towards financial freedom? Freedom from what?

This term is overused and highly misunderstood. Financial freedom sounds like you must accumulate a certain sum of money to attain some sort of monetary nirvana early in life and then you will be free. It’s the two words in the phrase which make it sound exciting – financial and freedom- both these words have incredible potential to elevate you out of a stupor that gets built thanks to being stuck in a mundane job with little flexibility around how you use your time.

The vision of escaping a rigid reality presents itself in the form of financial freedom, you’re not retiring – that would mean continuing to do what you don’t like for several more years – rather you are working hard to earn enough money which sets you free.

The problem with monetizing financial freedom is that the money value you attach to it can become a moving goal post as your life and lifestyle both evolve in the time you take to reach financial freedom.

It’s counterproductive to think of financial freedom in terms of money. A purely monetary goal post tends to become a moving post which is hard to catch up with as lifestyle shifts upwards with each promotion. Also, let’s assume you do reach a monetary amount good enough to induce you into quitting your job, but what then? The first one month will feel like true freedom, waking up without having to follow a routine you disliked anyway. The second month will be renewed with new found energy to start ideating and by the time you reach the third month disillusionment would have hit because you realise that not doing anything at all or alternatively starting from scratch is harder than doing something you disliked but got paid for.

Financial freedom is not just about money

And so, financial freedom necessarily must be defined in terms other than an amount of money.

How do we define something financial if it isn’t in monetary terms? Step one is that you need to define what freedom feels like. What is it that you can do which makes you spend your time in a way that brings you true happiness, adds value and meaning to your life. It could simply be travelling the world in a way that brings true contentment, it could be taking up teaching, it could be gardening or it could be writing a book; finding and embracing the true value is important. What it doesn’t have to be is inactivity, unpaid work or whatever else traditionally qualifies as hanging up your boots.

It’s your job, to first find those aspects of your life which you cherish and are happy to spend more and more time on; you will have to look within in your present and search for the parts which are the most meaningful. Let money not be the motivator for financial freedom, rather replace it with values that define you and work that you identify with.

Once you have narrowed down what those life values are which you want to pursue, you start planning how to get there. The sooner you begin this planning the sooner you will be able to move out of a life where you are too afraid to listen to your inner voice and simply continue to do the work you need to pay the bills thus, leading a mediocre life at best.

In the new journey you are carving out, certain things are a must. You must save before you spend, you must invest those savings in a manner that you create inflation beating wealth and you must budget your spending to cater to whatever it is you need for financial freedom. These are hygiene factors which you cannot ignore. The quality of what you are trying to achieve will simply not be there unless the hygiene is catered to.

What is the one thing you can do today to come closer to identifying what brings value to your life? Think about this next question, what is the one most meaningful thing your 95-year-old self will share with her grandchildren about the life she led. In this hypothetical story which you tell your grandchildren, you will find the shoots of value and meaning. Dig deeper and you will find what you are looking for.

Once you figure this out, work backwards to determine how much money you need in what time period to be able to quit your job and plunge into this other work which defines who you are more authentically.

Watch this video on How to get firmly on the path of financial freedom

Live within a consistent lifestyle

The kind of financial freedom we are discussing is not one in which you break the shackles of your current lifestyle to move upwards into the most luxurious one you can reach and then remain there. Rather the financial freedom you should seek, must engage, the heart, mind and money in a way that brings complete clarity of purpose and of being.

The sooner you have the monetary resources needed to achieve this the sooner you will start out on this new path. So, start calculating how much you need to become a travel junkie for the next 20-30 years or start a recycling venture or take up pro bono teaching or relocate to a village to become a farmer. Start saving this amount. A key part of this will be developing an ability to maintain your lifestyle at a point where you feel that you have enough and even after giving up your well-paying job you will be able to sustain this lifestyle of enough.

While you are earning active income in well-paying jobs, getting promoted and earning more, you may be tempted to go on spending more and enhancing your lifestyle with each promotion. This increased lifestyle spending can easily infringe and even take away from the financial freedom goal that you have so painstakingly defined.

Hold on to a constant lifestyle once you reach a point where as per your requirements and wants you have enough.

There is little incremental joy to be gained by the next marginal shift upwards in lifestyle spending. Instead, if you use that money to save and invest towards the goal, then you will get to it that much quicker.

Be patient

Building a dream takes time and nurturing it into reality takes even more time. Keep at it but also allow yourself the leeway of mistakes and hiccups. Sometimes, due to unforeseen hurdles, your speed towards the goal may even slow down. Don’t lose heart and don’t become impatient.

Patience is not just about waiting, it’s also about keeping your current life as much status quo as possible, so that you are able to absorb the big changes when they come your way. If there is too much incidental movement, too many variables and too much noise on your journey itself, by the time you reach your point of achieving financial freedom, the exhaustion will catch up.

Understand that our entire discussion around financial freedom is about change, it’s about uprooting and replanting. This takes time, effort, money and a sense of stability leading up to the imminent change.

Ultimately, financial freedom is one more goal and not a final destination. Allow for a constant evolution and in planning for financial freedom it’s important to first understand what exactly are you freeing yourself from. Then you have to decide how can this freedom help you in being the best version of yourself. Deconstruct the term freedom, what it means to you and then attend to the finances.

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