Want Financial Freedom? Here’s What it Looks Like

by Jessica Sommerfield · 9 comments

Have you ever seen people who have financial freedom and thought to yourself, “I want to be able to live like that, too”? For most of us, the mental picture of financial freedom looks like someone who spends what they want when they want to, without concern about whether they will be able to afford it.

While having more than enough income and control of your expenses are definitely worthy financial goals, how do you define the point at which you’ve “achieved financial freedom”?

Are you chasing after an elusive dollar amount in your bank account, online savings account, investments, or retirement fund? What does financial freedom look like for you?

I ask this because it seems that os many people list this as a goal every year (New Year’s Eve, usually) and yet fail to achieve it because they don’t understand what it really means. What’s your definition of financial freedom? Here’s mine:

Freedom from Stress

Money concerns are one of the most common causes of stress, and stress can lead to physical symptoms such as ulcers, high blood pressure, and sleeplessness.

Do you think having an overflowing bank account and certain possessions will free you from stressing out about money? Think again. Some research suggests that the wealthiest countries in the world are also the most depressed. And studies have shown that making $75,000 a year is the tipping point for happiness — anything above that adds to stress.

Why is this? I think the more some people have, the more they want, and then they realize that’s not what they really wanted. This vicious cycle can be pretty depressing. The old saying that money can’t buy happiness rings true.

Freedom from Fear

Throughout my life I’ve been fearful of not having enough money to pay my bills or buy groceries. Going broke is not fun, and for those who are looming dangerously near the edge, it can seem pretty scary.

Again, you might think that having a better income, getting your debts paid off, or controlling your spending will eliminate this fear. But then you might carry the fear of losing it, or of someone stealing it from you. Financial security can bring you freedom from fearing not having enough.

Freedom from Greed

Let’s face it, most of us view financial freedom as the ability to spend a lot of money…on ourselves. No one wants to think of themselves as greedy, but if you were to list the top ten things you’d buy if you had the money, most of them would be self-fulfilling.

Having more than enough money to spend on the things we enjoy in life is not a bad thing, but having more money will not necessarily free us from a greedy attitude. Start developing selfless spending habits now by contributing to charities, funding causes, and helping others less fortunate than you.

Freedom to be Yourself

More money will bring out more of who you really are: if you’re already a greedy person, you’ll spend a disproportionate amount on yourself (and probably end up depressed, as in the statistics).

If you’re a generous and outward-focused person, you’ll give and invest more in others. More money means more of youThis is why it’s so vital to realize that finances are just a way to express our passions, interests, and perceived purpose for living.

Freedom from stress, fear, and greed can happen at any point on the financial spectrum depending on how you view money and how you view life.

For me, financial freedom means making choices with my finances that are a true reflection of who I am, with the continuing goal of eliminating stress, fear, and greed from my relationship with money.

What about you? Is the pursuit of a better financial situation stressing you out? Are you afraid of going broke? Do you find yourself consumed with the desire for more stuff you can’t afford?

Do you have the incorrect assumption that your financial problems will disappear when you’ve reached that elusive financial freedom goal? Or do you realize it’s about much more than money?

What does financial freedom look like and mean for you?

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{ read the comments below or add one }

  • Christine says:

    You state: “that making $75,000 a year is the tipping point for happiness”

    Is this individually? How do couples come in on this number? If it is individually, then both my husband and I have to double our yearly.

  • Carla West says:

    Freedom from Fear is #1 for me. I try my hardest to combat the fear by feeling informed and educated regarding my personal finances. That’s what brings me to blogs like this. I’m always looking for clear, honest, and knowledgeable sources to help me on my quest to control the fear! I’ve recently been trying to get my footing when it comes to annuities. Trying to plan for my future, and ensure I’m on the right track has me evaluating my portfolio and annuities (or their benefits) have always been presented kind of vaguely. I’d love to see a post on Money Ning about them. I just finished reading ‘The Annuity Stanifesto’ by Stan Haithcock (www.stantheannuityman.com) and am feeling super motivated. It was a quick and informative read that gave me easy to understand approaches. I highly recommend it!

  • Trea says:

    I like the idea of “more money means more of you”. It speaks to your point of more money not being the solution to financial woes. If your struggle is spending, more money will equal more spending. Awesome job in helping us realize there is more to financial freedom than more money. Financial freedom more me is all about doing more with the money I have, so that it can work harder for me in the future.

  • freebird says:

    To me financial freedom isn’t about the ability to buy anything at all without knowing its price. Instead I see it as financial independence, which is defined as the ability to cover living expenses entirely from passive income and having no need for a paycheck or business income. This is when net invested assets exceed 33 times annual living expenses, including taxes. So I guess to me financial freedom means emancipation from involuntary work, no more and no less.

    I reached that point about a decade ago, but I kept my job and have worked continuously ever since. Of course the rules changed once I no longer needed the paycheck. When I gave notice management decided they needed my experience so they let me control the terms of my employment. This transition has made doing my job much easier and more fun, so financial independence actually saved my career. Still I’m ready to leave if and when conditions change in a direction I don’t like, so job stress is a thing of the past.

    For those who are young and starting out, I’d say that reaching financial independence as quickly as you can is well worth the sacrifice. You may love your job now, but things can change over long periods of time (just ask your middle-aged co-workers and you’ll get the picture), so it’s best to wean yourself from paycheck dependency. Income is an important factor but that’s usually hard to control– instead focus on the denominator, namely living expenses. As you reduce living expenses your saving rate rises so you get a double gain in terms of years till parole. Also it’s a marathon and not a sprint so plan your moves with an eye towards sustainability.

    • Katie K. says:

      I so agree with this! Very well said. We are working hard towards our financial freedom and I always reflect back and wonder how much sooner we would have achieved it had we started when we were younger — like, fresh out of college. We only started focusing on it within the last handful of years. We are 33 now and should be debt-free within the next 3 – 4 years. To me, that feels TOO LONG, though logically, I know we’re not doing too bad at all. 🙂 I love your term “paycheck dependency”. To me THAT is financial freedom — when we are no longer dependent on that next paycheck coming two weeks from now. I look forward to the day when my screen name can be “freebird” too! 😉

    • Geoffludt says:

      Where did the 33 times earnings figure come from? I imagine that the multiple is enough to insure that interest income provides for living expenses.

  • Once you have enough to fund your lifestyle you are there. It obviously takes living a smart-frugal life to reach FI and that habit stays with you when you retire early. For me it looks like what my life has been except now I can focus on things that are the most important to me. Family, friends, health, and pursuing anything that I can be passionate about. I really don’t fear loosing all my money or having to return to full time work because you do enter a whole different mindset. It could be the confidence knowing that you did it once so you know how to do it again.

  • dojo says:

    I think it’s more than money. Sure, it’s great to be able to afford a good lifestyle, but you need more than this. In my case we’re close to being financially independent, but family and health are way more important.

  • Finances are definitely about more than just money. Our household just had a small bump in income and it we had a fun talk about everything we’d like to buy! We’ll be setting the budget for next year soon though and then everything will be in perspective again.

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