Have you ever thought about what your life would be like if you no longer had to work for money and were free to do whatever you wanted with your time? That may sound like a fantasy, but every day more and more people are taking steps to do what’s necessary to reach something called “financial freedom”.
Financial freedom is when you have enough assets to cover your expenses for essentially the rest of your life. For some people, this might be accomplished by growing their net worth to 25 or 33 times their annual cost of living. For others, it happens when their business or side hustles provide them with consistent income for years to come. There are several ways a person can reach financial freedom, and half of what makes it so interesting are the creative methods and paths that so many people have used to get there.
But the other half of the story is all about what it enables someone to do with their time afterward. In this post, let’s explore why financial freedom is such a sought-after goal and how it can be used as an opportunity to live your best life.
Removing Yourself From a Toxic Environment
Every job has its up and downs, but some people have to endure work conditions that can take a serious emotional toll on them. According to an in-depth study by the Rand Corp., Harvard Medical School, and the University of California, Los Angeles, it was revealed that nearly one in five workers face a hostile or threatening environment. This could come in the form of unrealistic demands, being forced to work long hours, or just plain bullying.
If you’d describe your job to have these types of conditions, don’t understate the strain it can have. Not only will it make you detest working, but it can also cause you to lose confidence and motivation for other ambitions you may have.
People on the path to financial freedom have a card they can play in these situations. And one of the best examples I’ve ever heard comes from blogger J.L. Collins and his legendary story about F-You Money. F-You money is when you have enough financial resources to support yourself for the next 1-2 years. Through building this cushion, you can essentially afford to walk away from any toxic work situation or take on a better opportunity if one comes along.
The great thing about his example is that you don’t need millions of dollars or to be 100 percent ready to retire. As long you’re on the path to financial freedom and slowly saving up, then you’ll have all the security you’ll ever need to move forward.
No More Financial Stress
Adults have a lot that they’re responsible for: Family, health, their careers, etc.
However, something that seems to hit harder than any other topic is money. According to the CreditWise survey from Capital One, 73 percent of Americans rank their finances as the Number-1 source of stress in their life (above work and family).
Many of the people who decide they want to be financially free do so because they want to minimize as much of this stress as possible. When you have confidence in knowing that all of your bills are covered or debts are paid off, it can take an enormous amount of weight off of your shoulders.
That’s not only good for you mentally but also physically too. The medical community has spent years encouraging the reduction of stress because it can help us to:
- Sleep better at night
- Not get sick as easily
- Control our waistlines
- Lower muscle tension
- Improve social connections with family and friends
This is why it’s so important to get to a place where your finances become inconsequential to your well-being. The less you have to worry about money, the more beneficial it will be for your mind and body alike.
Becoming the Person You Were Always Meant to Become
Is there more to life than just punching a clock from 8 to 5?
Of course! Lots of people have made great achievements in their lives and helped the lives of others once they were free of traditional employment trappings.
Think about your own situation for a minute. If work was optional, then you’d finally have the time to:
- Pursue a hobby that you’ve always loved (like playing music or photography)
- Travel the world to see everything it has to offer
- Start your own business
- Do charity work for a cause you believe in
- Work in a totally different industry doing something you genuinely love, even if it pays less or nothing at all
The trick is breaking past the barrier of having to work because you “need” the money. Once you set yourself up to become financially independent, you’re finally free to live your life doing what brings you value, not because it will pay the mortgage.
How to Reach Financial Freedom
There are an endless number of ways that someone can achieve financial freedom. Simply type the term into your favorite web browser and you’ll find a seemingly endless list of blogs, articles, and videos devoted to the topic.
If I had to say there was one underlying theme to almost every successful story, it would be a foundation of solid financial management. This is simply the act of spending less than what you earn, and making good choices about what you do with the difference.
It makes sense that good financial footing is the springboard to financial freedom when you consider the typical formula for success:
- Work down your expenses while maximizing your income
- Contribute the difference to tax-advantaged retirement accounts where the money will be invested for compound growth
- Be patient as years of growth will multiply your contributions several times over
The easiest way to get started on this path is to first look inward at your own financial situation. Take a look at what you’re actually spending your money on and where it’s all going. Then ask yourself: Are these purchases bringing me closer to my ultimate goal of financial freedom or taking me further away from it?
The reason a lot of people struggle with budgeting is that by the time they get their bills, it’s already too late. Maybe the credit card is more than what they were expecting or there were too many other unplanned purchases. A good way to stay on top of this and know where you’re at all times is to use a helpful budgeting app like Buxfer.
Buxfer can automatically connect and sync to over 20,000 financial institutions. All of your transactions will be consolidated into one convenient dashboard. That way, you’ll always know if you’re on the right track or if improvements have to be made.
Click here to learn more about how Buxfer can help your budget and get on the path towards reaching financial freedom.
Featured image: Pexels