Financial freedom is the stage when you can be and live how you want without the trappings of finances. You’re living the life you choose. Welcome to Stage 5 on the Financial Wellness Roadmap.
Stage 5: Financial Freedom
Similar to financial independence, financial freedom means your wealth covers lifestyle choices and expenses. Making money is not a priority and work is purely a choice. Additionally, financial freedom can mean the ability to take on risky opportunities because finances aren’t an issue.
Financially free people have attained a high level of financial knowledge, accumulated enough wealth, manage money exceedingly well, and make mindful spending decisions. Being financially free, you have regained full use of your time to do as you wish or to serve a greater purpose.
At stage 5, you’re able to answer questions like: how do you spend your time?
- control over one’s time;
- large financial nest egg;
- income-producing assets;
- passive income streams;
When you’re financially free it’s much easier to do things you enjoy with little thought to money allowing you to focus on wellness.
What does financial freedom look like to you? Consider the following:
- Freedom to work at a job you love regardless of pay
- Freedom to spend time on your interests and projects
- Freedom to choose family over finances
- Freedom to buy things and experiences
Through conversations across the country, I’ve learned most people can define financial freedom but often cannot express what freedom actually means to them. I’ve met quite a few people who are financially independent or achieved financial freedom that still experience a great deal of anxiety and stress.
Financial freedom is as personal as your health and wellbeing.
Freedom must be defined based on your set of values and priorities. The idea is living free of financial stress and more free time to spend on what matters most to you. Most often the stress is related to not know what to do with one’s free time or lacking a sense of purpose or direction.
More Free Time
It’s important to understand that money isn’t what makes you feel rich, its the freedom that comes from having money that enables you to pursue whatever it is that brings you joy and happiness.
The true goal of financial freedom is to give you more choices to live your life and spend your days. You regain back your time to be more of who you are free of financial distractions.
Purposeful Work, Not “Retirement”
Being financially free gives you the ability to choose work that matters to you. It doesn’t mean you stop working altogether. In fact, working on your important projects and with people you enjoy can support your wellbeing. At this point in your journey, you should have a good idea of your life goals. Now, you have the time and resources to fully embrace them.
It means no longer working at a job or doing work for financial reasons. You’re choosing to do work because it interests you and aligns with your values.
But you certainly can retire indefinitely sitting on a beach chair staring out into the horizon.
How to Achieve Financial Freedom
Reaching financial freedom starts with becoming independent from a job for income. What’s your FI number?
Calculate your financial independence number. An important step to financial freedom is knowing and thinking about your number or the amount of money needed to help you become financially free. Keep in mind there’s no one size fits all number. The number is based on a variety of factors relating to your lifestyle choices.
Ultimately, the number helps you know the amount of money you’ll need to enable you to live freely.
How much do you need?
Challenge your limiting money beliefs
Financial fear affects many people even those who we may consider rich and have plenty of money. To live free, you must challenge your beliefs and face your financial fears.
What are some of your limiting money beliefs?
Learn more: Improve your relationship with money
Create your personal plan
You’ve gotten this far on the road to financial wellness and its time to find your way to financial freedom. Start by enhancing your existing financial plan. And if you’re new to this journey, get familiarized with setting financial goals, assessing your current finances, starting a budget, and creating a spending plan.
Your financial freedom plan focuses on ensuring your finances remain on track with little effort on your part.
Monitor, evaluate, and make changes
Have a system in place to notify you of any changes to your investment portfolios and income streams. Make any adjustments as necessary. Monitor your spending and expenses to protect your finances.
Keep in mind being financially free doesn’t mean you let your money do its thing without supervision. It simply means you don’t stress about money because you’re fully aware of how financially free you are.
Read more: How to Retire Well.