Financial freedom can be defined in so many ways. With many experts jumping into the money freedom bandwagon, it is easy to confuse the many ideas about it with other related concepts like wealth creation and entrepreneurship. However, to me it is very simple. It is affording the lifestyle that you really wanted, the kind that gives you real happiness and fulfillment minus the work. Yes, minus the need to earn every dollar to thrive.
So this is not about how much money you have in the bank, it is about your needs and wants and having money to have that (without lifting a finger to get it). Easy right? Now I want to talk about the principles behind my definition.
Having money is not enough
It is not the question of having but how you earn and how you spend what you earn. It is also about how you replenish your money. There are many people who won the lottery that are penniless in less than a year – the problem lies in the failure of setting up a money machine to keep money coming in and minding one’s spending habits, or how money is used to translate to happiness or fulfillment.
How are you making money? Trading your time for money is one of the most common ways to make money. While it can be reliable in giving a steady income, it can fail big time in giving you freedom to do whatever you want to do.
Having money is only half the story.
The employee and entrepreneur tug-of-war
It is not just about employment or being in business.
That statement might be too controversial for some. But it’s the truth. It is not what you do that defines financial freedom. It is what you can afford NOT to do that holds the key. Sure you have a business but can you maintain your lifestyle if the business suddenly gets bankrupt? Employment might be considered by many as the surest way to not get out of the rat race, but some people keep their job even if they can afford to stop going to the office. If you don’t have to do any more extra effort but manage to double your income then you are on the right track towards business freedom.
I always tell my people in my BPO business that it is possible to have a business system giving you another income stream while you do an 8-5 job. You just need to set that up, perhaps use other people’s time and money to get it running with minimal to zero involvement from you.
You do not want to be in crisis over employment and entrepreneurship. Just do both!
Having complete control of your finances
How can you completely control your finances? Educate yourself how money works or how business systems are revolutionizing how people earn. The first skill you need to develop is tracking your money, understanding how you are earning it, how you are spending it, and where you can save some. Simple accounting skills can be enough for this. You can also learn how income statements work. If you are the techy type look for good financial recording app on Google Play or iTunes.
If you are leaning towards a specific business venture, get to know how financials are handled in that kind of business and what are the industry best practices. I am in the property rental industry and it took me some time to learn the basics of property taxes and other applicable financial concepts and activities. I am still learning to this day and that’s okay. You cannot control something you do not understand. You cannot improve an idea when you have not practiced its concepts.
Financial freedom is not for people who are comfortable in settling for the status quo or are not into exposing themselves to some risks. The freedom lifestyle demands time and effort on its early years. As you begin to gain more knowledge about your finances, you get more control over it. The secret is to keep on learning and not lose focus on your money goals.
