Definition of Financial Freedom
Based on Your Money Attitudes
What is the best definition of financial freedom? The one that is most helpful is actually based on your own money attitudes. Over the years, you have developed many ideas about money that formed the way you look at the world in a financial sense.
For instance, most would agree that people who live financially free are able to do whatever they want without being limited by the amount of money or resources that they have. Think of it like going on an all inclusive vacation that you have paid for in full prior to the trip. All your costs, including meals, lodging, and entertainment are already covered. You don’t have to worry about money at all.
A vacation, of course, is only for a short period of time. When you come back to the real world, you return to the financial challenges that were there when you left. Financial freedom, on the other hand, is for the rest of a person’s life.
Living Debt Free
Living debt free is an important prerequisite for financial freedom. A person with debt can’t be financially free because, in a sense, he or she has become a slave to the lender. People with debt are required to meet the terms of their debt repayment rather than using their money how they please. They aren’t truly free until they learn how to eliminate debt in their lives.
Money and Happiness
Your idea of financial freedom will be partially formed by the relationship you see between money and happiness. Some people, never quite satisfied with the wealth that they have, are always looking for something bigger and better. Others are content with a base level of wealth that covers all of their needs and allows for a few luxuries.
Frugal and Free
The price of financial freedom is much less for those who know how to live frugally and are content with a lower standard of living. They can be just as free, by adopting a frugal lifestyle, as people who have a great deal of wealth. They are frugal and free to live their lives as they choose.
Work and Early Retirement
Your idea of work will also help shape your definition of financial freedom. If you enjoy your job and have money to do what you want to do now and in the future, you can consider yourself financially free even while you are working. If, on the other hand, you don’t like your job, but feel you must work to make ends meet, you have not yet achieved financial freedom.
Some people feel like they want to be fully retired before they can really experience financial freedom. Others may opt for an early retirement from their main career and work part-time at something they enjoy during some of their retirement years. This is also a way to experience financial freedom.
As you look forward to the time in your life that you can be financially free, you may want to use a retirement saving calculator to help you determine if you are on track to meet your goals.
As you can see, there is not single definition of financial freedom that is right for everyone. Only you can determine the one that is right for you.
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