The True Meaning of Financial Freedom
I often hear people say things like, “If I only had a million dollars I’d be financially free,” or “If I only had that high paying job, all my money problems would be solved.”
The problem with statements like these is that they assume having a lot of money is what leads to financial freedom.
It does not.
In fact, you can have a lot of money and still be poor. You can have a lot of money and still not be free.
Take famous people like Ed McMahon from “The Tonight Show” and Nicole Murphy, the ex-wife of actor Eddie Murphy. Each had millions of dollars and lost it all. Nicole Murphy spent her $15-million divorce settlement in less than four years. And towards the end of his life, Ed McMahon faced foreclosure on his Beverly Hills home and owed $747,000 in credit-card debt.
We often think a certain amount of money will provide financial freedom, but we’re often dead wrong about how much we really need.
It was reported a while back that 37% of American’s believe they’ll need at least $1 million saved up in order to retire safely.”
The problem with this is that a million bucks only lasts so long in many places. In my home state of Hawaii, it only would last 11 years.
In order to really have financial freedom, you have to understand what that actually is…
How Most People Define Financial Freedom
Most people define financial freedom as having enough to retire. They work hard all their lives, putting money in a 401(k), and like mentioned above, they hope they can make their proverbial million dollars or whatever number they have in their head.
Oftentimes, because they won’t have steady income outside of their savings and investments, these people are advised by their advisors to cut back their expenses in retirement and live below their means.
They work hard all their life just to decrease their quality of life when they’re ready to enjoy the fruits of their labor.
It just doesn’t make any sense to me. And it certainly doesn’t feel like financial freedom.
The True Meaning of Financial Freedom
The reality is that financial freedom is not about how much money you have. Rather, it’s about a change in your mindset.
As my rich dad said, “There are two kinds of money problems. Not enough money, and too much money. Which type of money problem do you want?”
Scarcity vs abundance mentality
According to my rich dad there are two types of people in the world. Those that live with a scarcity mindset and those who live with a mindset of abundance.
By the former, what he meant is that many people see a world that is scarce. They think there is not enough to go around, so they operate out of fear. Fear clouds their decision making and keeps them back from doing great things. Fear makes them treat others poorly and look at everyone as a potential enemy who can take what they have. That kind of mindset is a prison.
Other people see the world as one of abundance. They don’t think there’s not enough to go around. In fact, they think that there’s enough for everyone to prosper. And when there’s not, they find ways to create enough.
These are the people who start businesses, make winning investments, and live life to the fullest. They are often the nicest and most generous people you’ll ever meet. They are living a truly free life.
Two Types of Money Problems: Too Much Money or Not Enough
When you realize that the world is one of abundance, you stop operating out of fear and instead you start asking, “How can I tap into that abundance?
Once you start asking that, you start seeing the world and how you interact with it in an entirely different way. Then you’re ready for financial freedom.
Why? Because the fear of losing money doesn’t control you. You’re free to learn and grow. You’re free to obtain your wealth, not just financially, but also physically, emotionally, and spiritually.
True Financial Freedom: Free to Be Who You Want to Be
Financial freedom is much more than having money. It’s the freedom to be who you really are and do what you really want in life. And many of us lose sight of this by putting others first and playing many different roles such as parent, spouse, employee, friend, and more.
It’s not that those are bad things. Rather they are things that often get in the way of discovering who we want to be in life and going after it. The amazing thing is when you invest in yourself, it pays big dividends not just for you but for all those who love you. They see both your example and experience the joy that comes from realizing your greatest potential.
If you want to be financially-free, you need to become a different person than you are today and let go of whatever has held you back in the past. It’s a process of growth, improvement and gaining spiritual and emotional strength to become the most powerful, happy, and successful “you” possible. That is the true reward of financial freedom.
Play it smart,
Editor, Rich Dad Poor Dad Daily