Key Points:
- Financial Freedom doesn’t mean what you think it does.
- Finding your “Why” is the key to success.
- All you have to do is believe in the process and follow the steps.
Financial Freedom and Your Why
Live today like no one else, so you can live tomorrow like no one else.”
When I mention Financial Freedom, most people think of “rich.”
Scrooge McDuck diving into a swimming pool filled with gold coins. Richie Rich, Gordon Gekko, Lex Luther, Great Gatsby, and all the other great movie personas come to mind. They gave us our interpretation of what being “rich” is.
Financial Freedom IS being “rich,” but not always in the way we learned growing up.
Financial Freedom means something different to everyone but has the same basic concept. The primary function is security around money.
It means you’re no longer tied to “needing” to make money through a job or career. You’re no longer a slave to your job and the income it provides.
Instead of earning through your time and skills, your investments are working for you.
Money’s not the root of all evil. It’s a tool to set you free. A tool to help you create and live your life by design. The way you want to versus how you need to in order to survive. And beyond that, you’re not just surviving but thriving.
Why is being Financially Free Important:
You love your job. Great! I’m not telling you to quit your job.
You can still go every day. The thing is, when you’re financially free, you go because you want to. Not because you have to.
You’re not only rich with money. You’re rich with time, which is our most valuable asset. It’s the one thing we can’t get more of.
Time and Money
Use your time the way you want to. Not the way you have to.
Time with your family or friends, time to help with nonprofit organizations, or to enjoy the hobby that you love. It may be working in a career you want instead of the one you need to pay the bills.
It can also mean that you’re monetarily rich and can use that wealth to help others. It’s widely known that Warren Buffett plans to give away 99% of his estimated 96-billion-dollar fortune to philanthropy by the end of his life. Being financially free embodies the saying that the world is your oyster.
You do what YOU want when you want and how you want.
Becoming financially free means something different to everyone. It’s vital that you not only determine what it means to you but “why” it’s important to you.
That’s where you start. Being financially free isn’t easy, but with a strong “why,” it’s something that everyone can achieve.
It's More Than Just a Goal
It’s simple to get going on your path to financial Freedom. It’s simple, but not easy. It takes being consistent, which isn’t easy.
A million things are holding you back from your goal. Hurdles in between where you are now and where you want to be.
You need to know why you’re working so hard for that goal to push through. What’s the real reason you want to get there? Why are you budgeting, crushing your debt, setting aside a portion of your paycheck for investing, and making the sacrifices you are?
None of those things are fun, and if you don’t have a goal in mind and a specific reason as to why you’re doing it, you’ll stop when it gets complicated. Maybe not the first time, but at some point, you will.
Find Your Why
In his TedTalk, “Start with Why,” Simon Sinek pointed out that your “why” is your purpose and what sets you apart from average. Your belief in “why” you’re doing what you’re doing keeps you going. It isn’t the plan or the goal. It’s not the “what” or the “how.” It’s the “why.” It’s the deep seeded belief of “why” we want what we’re going after.
This is what keeps you from being broken.
It’s the fire that others like Steve Jobs, The Wright Brothers, Martin Luther King Jr., and other great visionaries and leaders had. Absolutely nothing got in their way.
Finding My Why
For me, my big “why” was and is my children.
My entire mindset around money and time changed the moment my son was born. I became more purposeful with my spending and earning.
Why? Because the time I spend earning is time taken away from my kids. I started looking into the future at what my life would look like as my son was five, ten, twenty, and forty years old.
Will I even be here when he’s forty? I was thirty-six when he was born.
Will I even be here when my son is ten? Morbid, I know, but that’s the reality of life. It’s not guaranteed. You don’t know when your time will come.
It took my son for me to realize that I wasn’t getting the most out of life. It took him to make me take action to be purposeful.
More importantly, it took my son to make me realize “why” I needed to do the hard things. He and my daughter are my “why.”
The belief that I need to be there with them to live life at a high level is what drives me every day. Not only do I want to be there, but I want to be present and live life with them.
The day-to-day can be monotonous, and we inevitably get caught just getting through the day. Which leads to getting through the week, month and year.
There’s no purpose, and we’re not really living. We’re just surviving. And for whatever reason, I let that happen to me for many years. It wasn’t until I nailed down my “why” that I decided to take action and change my life.
Because of my “why,” I can take action consistently.
Find your “why,” and you will have a belief in yourself that will put you in a position to run through any barrier that stands in your way.
Examples of “Why”:
Family:
Family can be a very powerful “why.” There’s an extreme amount of love there.
Whether it’s your children, spouse, sibling, parent, or any other family member. Use it!
Success and Recognition:
Success means different things to everyone. Many will agree that the basic idea of success is winning.
This could mean succeeding and moving up the ranks in a career, winning in competitions, or making a lot of money. For some, hitting these marks quietly is enough. While others need the recognition of peers to see it as a win.
Leave a Legacy:
Many have left a legacy for us. Parents, Grandparents, Aunts/Uncles, Teachers, Coaches, Neighbors, World Leaders, and more.
So many people have impacted our lives and how we live today. The legacy’s that they left us shaped the foundation of our lives for the better or, the worse.
Leaving a legacy is the most essential thing for some people.
Wealth:
The definition of wealth is dependent on where you live and when you live there. Today’s society defines wealth as the total net worth of assets subtracted from the debts owed.
For some, building wealth shows its value in the form of status. I don’t want to steer you away from wealth being your “why,” but I’ll leave you with this quote from John D. Rockefeller: “If your only goal is to become rich, you will never achieve it.”
Steps to Financial Freedom:
Below is a version of Dave Ramsey’s 7 Baby Steps to becoming Financially Free.
Build an Emergency Fund:
The goal here is to save $1,000 as an emergency fund. This will cover any unexpected life events that weren’t planned for.
Examples would be: car needs repair, home maintenance, medical expenses, pet emergencies, rises in reoccurring bills, etc.
These costs inevitably happen in life and can set you back. The idea of the emergency fund is to keep you from taking two steps back.
If you don’t have an emergency fund, you’ll have to put these expenses on your credit card. Credit cards carry high-interest rates and can keep you buried in debt.
Pay Off Debt:
Get rid of that debt! Except for your mortgage. The idea here is to use what Dave Ramsey refers to as the “Debt Snowball” to pay off cars, credit cards, and student loans.
Start by listing all of your debts. Then put them in order from the lowest to the highest amount. Now you can start paying down the smallest amount.
Pay as much as possible while still delivering the minimum owed on the rest of the debts. You don’t want to establish lousy credit while paying down the others.
Once you’ve paid off the smallest debt, move to the next on the list and pay that off. Keep this going until you’ve paid them all off. This is the Debt Snowball.
Building a Reserve Fun:
You’ve paid off your debt, and I know you’re feeling good. The stress of money is starting to be lifted.
Now it’s time to take those payments you were making towards your debt and build the Emergency Fund into a Reserve Fund. The amount of this reserve fund is different for everyone.
It’s different for married people with single incomes, married people with two incomes, and people with commission jobs. All experts will have different opinions on how much you should have in each scenario, and the honest answer comes down to what you feel comfortable with.
Most experts agree that you should have a minimum of three months’ reserves. However, that may be if you have a dual-salaried income. If the paychecks were to stop with one individual, at least you have the other partner’s income.
You may want to carry around six months of reserve if you’re a single income. You may wish to have about twelve months or more funds if your income is commission-based. It all depends on your income status and how conservative/aggressive you are.
Invest:
Make that money work!
Take the money you allocated towards building your reserve fund and start investing it. If you can add more, add more. We’re building for retirement and becoming free.
Save for Kid’s College:
You can start saving for your kid’s college. But not before setting yourself up for Financial Freedom. A good place for this savings would be 529 college savings plans or ESA’s (Education Savings Accounts).
Pay Your Home Off Early:
This is tricky, and there are people on both sides of the fence. On one side, you have people who argue that paying your house off will set you free. And they’re not wrong. Once you pay your home off, you will have no debt and will likely have zero stress regarding money.
On the other side of the fence, you have people who will argue that if you pay off your house, that money isn’t working for you. And they’re not wrong either. Interest rates have been extremely low in past years, and you’re likely better off putting that extra money into investments to earn money.
However, that doesn’t provide the level of security that paying off your mortgage offers. This isn’t one size fits all, and there’s no right or wrong answer. Personal finance is personal, and there’s a different approach for everyone. Do what you’re comfortable with.
Build Wealth and Give:
Giving is one of the greatest feelings in the world. Whether you’re giving to friends, family members, or organizations, the ability to provide without stress is a fantastic feeling.
You’ve made it! Once you’re here, you’re living the good life. You do what you want when you want.
Achieving financial Freedom is the goal, but you will be changed as a person along the way. Being rich isn’t the goal. The goal is to have the money work for you, so you don’t have to. Living your life by your design is what you’re after.
Go find your “why” and get out there and be somebody!
