I’ve written before that most of my big money decisions are based on whether it helps me achieve either of my top two financial goals:
Security is something I’ve valued for a long time. I’m generally a conservative person who likes to stay in my comfort zone, and I get a little uneasy when there are big rocks to the boat. The big financial benefit to that mindset is that I learned very early on to embrace the beauty of insurance and I’ve always made it a priority to build a secure financial base for my family.
The idea of financial freedom is something that is much newer to me. Like many of us, I grew up with the standard life path in mind: get good grades, go to college, find a job, advance your career, work until 60-65, retire.
It wasn’t until recently that I’ve started thinking that things can be different.
What is my definition of financial freedom?
My definition of financial freedom is simple:
Financial freedom is the ability to do what I want with my time
That’s it. No more. No less.
But what the heck does that mean?
To me, financial freedom is not defined by whether or not you are working. It’s not defined by how much money you have in the bank. Instead, it’s defined by our freedom to use the most precious we have:
If my son has a school play in the middle of a weekday, I want to be able to go to it.
If my wife has an opportunity to do something that will advance her counseling practice, I want to be able to take the kids so she can do it.
If we decide that we want to take a few weeks to travel the world as a family, I want to be able to do it.
Some of these things require money (particularly the travel), but more than anything they require that you have an ability to decide how you use your time. No one is dictating the use of your time other than you. That is true freedom.
How will we reach financial freedom?
So let’s step back for a minute and think about how this can be achieved.
To be completely honest with you, my wife and I are still forming our ideas around this. As I said above, it’s a concept that’s relatively new to us and our plan is still developing. But here are some of the basic ideas for how we anticipate achieving this kind of freedom.
1. Spend money on things we value, not on things we don’t
Notice that I didn’t say that we want to cut our budget to a bare minimum. Less is not inherently better.
We’re happy to spend money on things we value and that bring us real happiness. A good example is the money we spend on travel to see our family in Florida. That’s real money that if saved would help us quit work sooner. But quitting work isn’t the goal. Spending our time how we want is the goal. And we want to see our family, so we spend to do it.
On the other hand, we’re more than happy to cut spending out of our lives when it isn’t providing us with real value. We recently cut our cable, but it had nothing to do with being able to afford it or thinking cable is evil. It simply wasn’t something we valued very highly, so it was cut out of our lives.
The goal here is to make sure that your money is spent purposefully. A big part of having the freedom of time is minimizing your financial obligations that don’t have importance to you. It’s much easier to go see that school play when you don’t have the financial pressure of paying off the cost of all those “things” you barely ever use.
2. Start businesses we love
Just over three years ago my wife started a mental health counseling practice that she currently runs on Saturdays. She’s bringing in some incredibly helpful income already, but more importantly she has the ability to scale it up or down as she pleases. And even more importantly she loves the work.
I’m way behind my wife, but I have plans to build something similar. The goal is to build something I love doing and that allows me to be flexible with how I spend my time.
Remember, my definition of financial freedom has nothing to do with whether or not I’m working. It has to do with how I spend my time. If I can spend it running a business that I love and that gives me ability to do the other things I love, that fits the bill.
3. Invest early, often and consistently
You can read all about our personal investment plan here. We recognized from an early age that investing early and often is one of the big keys to generating long-term wealth. Staying consistent with that plan is another key to success. Our only big changes will be in the amount we contribute, which we hope to increase over time.
If you’re stuck on how to get started investing, you can read my two-part guide here:
4. Keep family at the forefront of all decisions
For my wife and I, the primary reason we want financial freedom is because we want to be able to spend time with our family. But that’s not just a future goal. It’s a present one as well.
There are career paths I could explore that might cut our time until financial freedom in half because of the salaries they pay. But they would also require me to spend almost all of my current time at work and would rob me of years of family time.
For some people that tradeoff would be worth it. For us it’s not. We want to work hard and make something of ourselves, but not at the expense of forming the strong family bonds that will carry us through our lives.
If time with family is the ultimate objective then for us it needs to be a constant one.
The journey is ongoing
An inherent part of my definition of financial freedom is that there is no end point. As opposed to the traditional definition of retirement where you reach a certain amount of money and then quit working, there is no definitive marker saying “now you can use your time how you want”. And even when you do reach that point, there’s the possibility of it slipping away from you if you don’t keep that goal at the forefront. A business you loved 5 years ago may not be a business you love today. If that’s the case, some work needs to be done to recapture that freedom of time.
So to me, financial freedom is more of a journey than a destination. It’s more of an approach to life than it is an end goal.
But it’s an exciting one. And it’s one I look forward to pursuing.