Freedom has many different connotations for different people. It is a subjective term depending on your circumstances and personal evaluation. Freedom may be generally interpreted as a state of being free in one’s actions, thoughts and feelings, which allows one to have choices in how one lives one’s life with fewer or no limitations.
What about financial freedom ? What does it mean to you ?
Each person has a different idea of what financial freedom means to them. It may involve having enough financial resources to enable them to retire financially secure, or to maintain a certain standard of living, or just having enough to be content with.
The quest for financial freedom is twofold. On the one hand it may be to build up enough financial resources to meet current or future needs, but at the same time to also manage one’s financial needs and expectations. Isn’t it amazing how many people fortunate enough to have substantial wealth, are often unsatisfied and unfulfilled ?
Financial freedom may therefore not be so much a question of how much one has saved or accumulated over time, but rather a question of reassessing one’s financial needs and expectations from time to time. Maybe some of the questions to be posed are: What is important to me ? What can I learn to do without ? What am I happy to sacrifice today for greater financial security in the future ? Being financially content ties in strongly with emotional well-being and learning to become content with less.
Having said that, I am not suggesting you move to Bali , practice yoga and survive on green tea for the rest of your life. There is much to be said about developing sound financial habits to build up long term wealth, which ultimately provides more choices further down the line. Having financial resources is what gives you choices and the freedom to live the life you want to, either now or in the future.
Financial freedom is also something that most of us have to a large extent without realizing it. Earning an income whether it is through employment, your own business, or simply the ability to work, provides the financial lifeline for our daily financial existence. Our income may not only be supporting us personally, but also responsible for the welfare of our families and dependents.
Sometimes we may forget that our financial security may very easily be taken away from us as a result of certain unexpected turns in life, such as temporary or permanent illness, disability, incapacity, retrenchment , liquidation of one’s business and many other factors.
Even though it is impossible to look into the future and predict every event that could take place, there are certain risks to our financial freedom that we can protect against.
One solution to the problem is to take out income protection or severe illness cover to cater for the eventuality of not being able to work for a certain period or even suffering permanent disability. Having your income secured during a period of illness where one is unable to work, can make all the difference in maintaining your financial status quo.
There are different types of income protection that cater for different levels of income loss, however in essence it makes sense to protect your income in the same way we tend to insure our financial assets, such as our car, house or valuables that we tend to accumulate.
Financial freedom is a relative term that tends to be in a permanent state of flux. You may not have it now, you also may never reach this ideal state in the future, however it is a state that we can all move towards.