Why pursue financial freedom?

Your financial choices do not stand in isolation. They have a cumulative effect. As you pay off debt, as you save for retirement, as you reduce your spending, you are creating a snowball of right action.

Or, to use a better metaphor, each smart choice you make creates ripples throughout your life. As you work toward financial freedom, you make it easier for yourself to accomplish other goals.

With the help of my Twitter followers, I've drafted a list of several ways that financial freedom makes it easier to accomplish other goals. Financial freedom means:

  • Freedom to choose your work. “Financial Freedom means choosing a job or career I want to work at,” tweets @squawkfox. “I don't need money to be the sole deciding factor.” I think this is huge. For sixteen years, I worked at a job I hated: I sold boxes for the family business. I couldn't leave because I felt trapped by debt. Once I repaid my debt, I could consider other opportunities — like becoming a professional blogger.
  • Freedom to live where you want. Do you like where you live? Would you rather live elsewhere? New York? South Dakota? Rome? There are other considerations than money, of course, but when you are financially secure, you're better suited to practice “geographic arbitrage”, to explore location-independent living. In other words, if you have the money, you can live where you damn well please.
  • Freedom to do what you want. Wealth doesn't just open doors with work and housing. It also gives you freedom with your time. On Twitter, @MillionMommyND writes, “For me, financial freedom = The freedom to choose how I spend my time: wake when rested, play when playful, work when/if I want.” My friend Sparky had financial freedom, if only for a little while, and it let him travel the world.
  • Freedom to seize opportunities. On Friday, I met Tsilli, a long-time GRS reader. She explained how being out of debt and financially secure allowed her to refinance her mortgage when the opportunity came along. She was financially prepared, so she could act. My friend Rhonda practices what she calls “predatory shopping”. She can afford to delay purchases until she finds what she wants at rock-bottom prices. On Twitter, @healthymcm suggests, “Financial freedom means no worry about paying everyday bills. Means able to give back, able to invest when opportunities arise.”
  • Freedom from worry. Most of all, financial freedom means freedom from worry. When you've eliminated debt, when you have money in the bank, you can sleep more soundly. As @crowgirl tweeted: “Financial freedom means freedom from worry to me. It means knowing I've done the best I can to spend and save wisely.”

I think @MoneyEnergy provided the best summary of financial freedom: “For me, it means never having to work to further someone else's goals instead of my own. It means options and more opportunities.” Financial freedom means options and opportunities. I like that. I believe it's true. Debt is slavery because it limits your options and prevents you from seizing opportunities. But financial freedom allows you to pursue your own goals, to build the life you've dreamed of.

What does financial freedom mean to you? Have you reached it yet? Do you have a plan to do so? Or do you think the notion of “financial freedom” is just a marketing ploy?

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ColdFrenchFries.com
ColdFrenchFries.com
11 years ago

Financial Freeedom does exist, but for me it more reliant on financial literacy more so than loads of cash at my disposal. A sound and realistic understanding of the flow of money can make up for the lack of cash reserves and allow a consumer to develop more efficient spending habits and relax a dependency on cash and credit.

Alison
Alison
11 years ago

I am reaching financial freedom tomorrow, which is my last day at a “regular” job. We have no debt (including no mortgage), tens of thousands of dollars in the bank, and a 3 yo daughter. The combination of wanting to spend time with our young child and our great financial situation means that I get to pursue a long-time goal of being a business and personal finance consultant.

Studenomics
Studenomics
11 years ago

For me financial freedom means that I do not have to work a job I despise. It’s the ability to have enough money saved up that I can take some time off while I search for a new job. It also means not having to work over time or 60 hours a week just to make ends meet.

Pretty much financial freedom means that to me that I don’t have the whole “work” restriction on my life. Meaning that if I don’t want to work for a day,week, or even a month, I don’t have to.

Ray
Ray
11 years ago

To me it means not having any debt and not having to worry about $$ so that I can enjoy the good things in life. I do not need millions of dollars or huge amount of passive income, as long as I enjoy my job and don’t have worries about $ than I am free 🙂

Noel
Noel
11 years ago

Ability to be generous (with time and money) toward people in need and causes that matter to me.

Chett
Chett
11 years ago

I have brought my expenses down to a level where I can do just about anything I want and still be able to pay my bills. We have money in savings, we are investing, and feel secure. Financial freedom is different for every person. I think what gets so many people in trouble is they hang a number on what financial freedom means, then begin pursuing wealth for happiness/freedom. Thoreau said something about this when he wrote. “A living dog is better than a dead lion. Shall a man go and hang himself because he belongs to the race of… Read more »

TosaJen
TosaJen
11 years ago

“financial freedom” = choices, choices, and more choices. And security. I’m sure I’ve already mentioned that DH and I have lived on one salary with our kids for 7+ years so far, and I’m still sleeping even looking at a likely layoff. I’m not sure we’ll ever be completely financially independent/free — the amount of money we’d have to save to cover medical insurance and costs (DH has a few chronic conditions) make that unlikely before age 65. I’m hopeful that this could change, but not planning for it. If we didn’t have to worry about medical costs, we’re not… Read more »

Martin
Martin
11 years ago

I’m wondering how much other readers perceive mortgages differently from general debt. Would you say a mortgage enslaves you just as any other debt or would you rather view it purely as an alternative to paying rent (which you would have to anyway)?

Oskar
Oskar
11 years ago

Ability to spend more time with my family doing the things we enjoy is the messure of freedom for me. I have even started counting money in the form of ‘days off with family’= day of living expences.

E.g. We don’t have a second car because it will cost 3-4 days less time off with the family per month (with is very real value).

Kevin
Kevin
11 years ago

“My friend Rhonda practices what she calls “predatory shopping”. She can afford to delay purchases until she finds what she wants at rock-bottom prices.” Wait a second… I get the rest of them, but this one doesn’t make sense. When you’re financially secure, you can “afford” to put off purchases until you can find it for the lowest possible price? How, exactly? What about being financially-secure allows you to NOT buy things you need? Isn’t this kind of thing standard operating procedure for poor people? Poor people can’t afford NOT to put off purchases until they find it for the… Read more »

Caitlin
Caitlin
11 years ago

Financial Freedom is freedom of choice!! I got my first small taste of this earlier this year when I was able to quit a job I really hated and was killing me emotionally for a better one that I love. It was mere months into the recession and everyone was still in panic mode. I was really, really worried about leaving a secure position for a different company. I am by no means Financially Secure yet, but we were stable enough that I could take the risk and do something I love. It was SO worth it! I have worked… Read more »

J.D.
J.D.
11 years ago

@Kevin (#10)
It’s possible that I went to far in editing and the bit about Rhonda no longer makes sense. Or maybe I’ve confused cause with effect. It may be that because Rhonda is willing to wait, she has financial security.

In any event, what I’m trying to say there is that because she has a degree of financial freedom, Rhonda is able to buy when she wants to buy, not when she has to buy.

Hm. That’s still confusing to me. I think perhaps I’m just doing a poor job communicating this one. 🙂

Michael M
Michael M
11 years ago

When you’re financially secure, you can “afford” to put off purchases until you can find it for the lowest possible price? but this one doesn’t make sense. When you’re financially secure, you can “afford” to put off purchases until you can find it for the lowest possible price? When we’ve been financially secure, we can afford to buy the 50 lb. bag of flour and the extra big box of diapers. When we’ve been less diligent about our finances, we can’t afford the bulk (money saving) packages because we don’t have cash on hand. Being financially secure allows us to… Read more »

AD
AD
11 years ago

@Martin (#8)–I would much rather pay a mortgage than to pay rent, which I view as money down the drain given the real estate market where I live and the fact that my husband and I have no plans to move from the area. That said, I don’t feel enslaved by a mortgage. I think the key is to buy within your means. Our goal is to keep all expenses low enough to be covered by one of our salaries, and to save the other half. If we both had to work at grueling jobs to make big payments on… Read more »

Michelle
Michelle
11 years ago

Maybe it’s the opposite – pre-buying rather than post-buying. Say Rhonda finds a beautiful dress on the clearance rack. She doesn’t have an event scheduled where she would wear it, but she knows that she will in the future. Because she has financial freedom, she can purchase the dress in advance, on-sale. If she didn’t have that flexibility in her budget, she might later find herself with an invitation in hand and no dress, causing her to overpay later.

Though “Just in Case” spending rather than “Just in Time” must be done thoughtfully, or there goes the budget again.

ldk
ldk
11 years ago
I don’t presume to speak for Rhonda, of course, but for me, predatory shopping means having the cash at my disposal to take advantage of great deals when they come along. (ie. over the past year there have been some great deals on airfare.) I think this would primarily apply to the purchasing of ‘wants’ however, rather than ‘needs.’

Just my thoughts!

Michael
Michael
11 years ago

Right now I am free because I have no obligations to others. When I am wealthy, I will be obliged to use my wealth for the benefit of my family, neighbors and city as well as myself. My religion obliges me to help others, but the “social construct” around me would oblige me even if I were not religious. So I am moving away from financial freedom toward financial responsibility. All the respondents see wealth as something to give only themselves options, time and pleasure. That is greed! It’s also unrealistic because money brings obligations with it whether one wants… Read more »

Beth
Beth
11 years ago

Financial freedom for me is knowing that I’m provided for, even through an emergency (so I’m not a burden to anyone). I don’t need a big house, a lot of “stuff” or millions of dollars. I just want enough to have some choice in my life, and to be able to help out others. (I agree with Michael about financial responsibility to others — i’d like that).

I think financial freedom comes from financial literacy and having realistic expectations, not from a big pay check.

J.D.
J.D.
11 years ago

Thank you, LDK. That’s exactly it. I’m just not doing a good job of expressing the concept, so thankfully you’ve done it for me. 🙂 And you’re right: This primarily applies to wants. Now, of course, I’m going to be mortified if Rhonda sees this because I messed up the description…

Eden
Eden
11 years ago

Certainly people will have varying definitions, but for me it comes down to wanting to set my own schedule and not be subject to a boss or a creditor.

I’m not there yet, but I’m working on it.

Brenda
Brenda
11 years ago

Like others have said, financial freedom to me is having enough money to be able to afford the freedom of choice. It’s being able to take a vacation and actually go somewhere other than just staying at home. It’s being able to afford a house if you want to. It’s being able to afford to pay for disasters that come your way, or eat out when you want to, or buy a steak for dinner if you feel like one, without blowing your entire food budget for the week. While I am completely debt-free (yay!) I have not yet achieved… Read more »

Livingmylifedebtfree
Livingmylifedebtfree
11 years ago

Financial freedom would mean that I wouldn’t have to be a slave to the things that I own. It means I would be free to choose where I live and where I work. It would mean flexibility and peace of mind. It would mean that I could help other people and travel the world. Most importantly, it would mean teaching my future children to live their lives the same way.

ASW
ASW
11 years ago

To me, financial freedom means I never have to ASK for a day off. That means I either work for myself, am completely retired, or have enough money so that I dont have to depend on an employer to survive.

Wise Money Matters
Wise Money Matters
11 years ago

For me it would be freedom to live where I want or at least travel a whole lot. That is very important to me.

Tyler Karaszewski
Tyler Karaszewski
11 years ago

These are all good goals, but they’re also all overstated as being implied by “financial freedom”. You don’t necessarily get any of these by having a couple million bucks in the bank, which to be frank, is really what people mean when they talk about “financial freedom” — what people really mean when they say that is something like “I’ve saved 20 years worth of living expenses at my current comfort level.” For instance — freedom to choose your work: You don’t get to work for Apple building the next iteration of the iPhone just because you’ve saved a bunch… Read more »

Joey
Joey
11 years ago

Financial Freedom/Financial Independence is neither necessary nor sufficient for freedom from worry; that has far more to do with one’s mindset than with one’s bank account.

Furthermore, it’s impossible to truly be FF/FI while partaking in a monetary currency; everyone around you (i.e., your neighbors) has to agree your money is worth something.

If banks fail or economies collapse, you’re no better off than anyone else. True FF/FI doesn’t rely on currency; having more money just makes you less financially *dependent*, not FF/FI.

Sandy E.
Sandy E.
11 years ago

@ Tyler — I think what people really mean by financial freedom here is what happens once they make the mindshift to live on less than they earn. In so doing, they are getting their “fortune”, so to speak, in installments – one paycheck at a time. If you live say on 80% of your income, then you have 20% to use to work on paying off debt, building an emergency fund, savings fund, investing for retirement, and elsewhere, etc. When you live below your means, you can build wealth, reduce stress and increase options. And it increases your peace… Read more »

Mike Pastore
Mike Pastore
11 years ago

Being financial free means that you can live free. You don’t have to worry about people living your life for you rather than you living your own life. You can come into work (if you own your own business) and make the decisions you feel you should make. No one would tell you…you better come in or else your fired! If you are financially free, you can say “so what”. Not worrying about your money means that your family is protected and you will always have money on the table. You can provide a great life for your family and… Read more »

Anthony
Anthony
11 years ago

I think freedom from worry is a big one for myself, I think my debt has been a freight train, consider the following:

1. Someone incurs a small amount of debt which they cannot pay of immediately.
2. The same person gets down in the dumps about their debt.
3. You compulsivly buy something to raise your spirits incurring more debt.

This was definatly my story.

Brian
Brian
11 years ago

I think for some people financial freedom seems like a marketing ploy, but I actually think it’s for real. Currently, I am not financially free, as I still have credit card/student loan debt to pay off.

Which, right now, is hindering me from pursuing passions of traveling and learning new languages and cultures around the world. I do have a plan in action, though, and am on track to be financially free in the next few years.

I resonated with all of those freedoms….thanks for speaking truth and articulating the benefits of being financially free. : )

Pirate Jo
Pirate Jo
11 years ago

“I’m wondering how much other readers perceive mortgages differently from general debt. Would you say a mortgage enslaves you just as any other debt or would you rather view it purely as an alternative to paying rent (which you would have to anyway)?” I see a mortgage as being the same as any other debt, just a lower interest rate. My whole point in buying a condo instead of renting was that someday I wouldn’t have to make those payments anymore. When I bought, I didn’t really pay much attention to the monthly payment – I looked at how long… Read more »

bethh
bethh
11 years ago

I’m not financially free, and won’t be for a long time. However I’ve been financially smart even though I’ve often not made a lot of money. This has allowed me to things like: quit my job, move cross-country, and start my life over (age 25); thrive in unemployment (twice!) because I could actually meet my financial needs on unemployment compensation (about $400/week at the time, if I recall correctly) (ages 30 & 31); take a 50% pay cut in order to go to grad school and change my career (age 31); move to a much more expensive city to accept… Read more »

mike
mike
11 years ago

To me, financial freedom means I’ll be able to live comfortably and pursue my own interests without worrying about monetary limits too much. It does not mean living in a mansion and having 20 cars in the garage. At the current time, I feel like I have obtained this goal, I am in my 20s and have a stable job with a reasonable mortgage. But this will change as I get older and need to provide for a family. I plan on achieving this goal by looking out for any new and exciting opportunities that might further my career goals,… Read more »

Rob Bennett
Rob Bennett
11 years ago

Financial freedom means being able to pursue opportunities that otherwise would not be open to you.

This is one of the reasons why I do not agree with the idea that saving requires sacrifice. If you save effectively early in your life, you are free to pursue opportunities otherwise closed to you. That translates into earning a bigger income. That translates into being able to afford a lot more luxuries. It’s a mistake to equate effective money management with self-denial.

Rob

MoneyEnergy
MoneyEnergy
11 years ago

I love thinking about being truly financially and psychologically free – it’s about getting out of “existential debt” – you can just go after what you want, what your life is about, your life’s work. So anything we can do that can get us closer to financial freedom is just one more wedge that gives us that little bit more leverage in our lives. That’s the image I’m focused on, anyway:)

NotkeepingupwiththeJoneses
NotkeepingupwiththeJoneses
11 years ago

Financial freedom means peace of mind in the financial sense only. To be able to correct situations that may need quick finances in order to accomplish a closure without stress. Buying a new HVAC unit for a house or purchasing a car in cash because your current one just died or is about to. The ability to stay out of debt, when a big ticket item is needed. Make interest off others while you pay no interest to others. Your money will balloon incredibly no matter how much you make as long as you stay within your means or mostly… Read more »

sandy
sandy
11 years ago

I think a wild card in financial freedom is health care. In the USA, anyway. Having lived in several European countries, and given birth in one, and used the health care (which is incredible, despite what some would tell you)for myself, my husband and children, and knowing lifelong residents of these countries, what is impressive to me is that they NEVER worry about the payment of their healthcare. NEVER have to think about going bankrupt due to an illness. NEVER have to think about pre-existing conditions, etc…or if the HMO will pay for this procedure or not…it’s always paid for.… Read more »

Chris Roland
Chris Roland
11 years ago

I agree with MoneyEnergy that is:
“it means never having to work to further someone else’s goals”

I also would like to add, it’s working for myself, but doing what I am passionate about. I can make money several different ways, but I would rather trade money for happiness any day.

Leah
Leah
11 years ago

Your post makes me realize that, according to your definition, I am financially free. I only make $800 a month (and a free room in a shared house), but I have no debt and few bills to worry about. Because I didn’t have loan payments and whatnot to concern me, I was able to quit something I didn’t enjoy (grad school — finished my masters and left instead of pursuing the PhD) and go pursue a career that is fun. I don’t know if this will be a long term solution for me, but I certainly do enjoy what I’m… Read more »

Jan
Jan
11 years ago

Financially free? Having the mind set to not go into debt. We have never had tons of money. One of us stayed home until the children went to college. We both work because we love our jobs. Definately a choice since we both choose to stay at lower levels where the stress is less. We travel when we want or need to. No mortgage or car payments….but there are always house taxes (which are as high here as rent!) and repairs. We could sell it all and move to France- but WHY? We love our lives! That is the point… Read more »

Frida Beamy
Frida Beamy
11 years ago

My working definition is (I think) from “Your Money or Your Life”. Simply when your passive income exceeds your normal monthly expenses. So, I work hard on increasing my passive income (in my case rental income), and decreasing my monthly expenses in order to make this happen.

Good luck to all who are on this journey.

Jessica
Jessica
11 years ago

To me, financial freedom enables a closer relationship to my true self. I’m able to make decisions based on full evaluations of what I truly want to do (for the most part) and not based on how much I owe. Career moves are much easier when you’re not feeling stuck in a paycheck to paycheck situation. Major life changes like having kids is more enjoyable when you know you have a cushion to handle the unexpected.

Jane
Jane
11 years ago

We are Europeans living in the US. We have always been careful with our money and it has enabled us to live on one income and move ourselves and our three kids around the world for the past 12yrs. At present my husband is in a bad job situation. If we lived in any other country, our savings would enable him to walk out of that toxic environment tomorrow, but because we live in the US and have 2 children requiring daily medication, he feels he has to stay for the medical benefits. It saddens me deeply that we will… Read more »

KS
KS
11 years ago

I’m in the cynical “marketing ploy” camp, at least for many Americans. There’s only so much I can control. Health insurance and sketchy retirement options put a wrench in the spokes, the “wild card”, as Sandy put it. I guess I have more of it than most – a well-paid and very secure position that I love, a husband with a portable and flexible career he loves, good benefits, and on my way to debt free if not there. Ah well. Might as well enjoy the ride while it lasts!

Kevin@OutOfYourRut
11 years ago

I think most of all it means freedom to be who you are. Most of us have been the perverbial link in the chain for so long that we don’t realize how much The System has come to dominate not only our actions but also our thoughts. We come to want the things we’re taught to want, and to resist what someone else tells us we can do with out. Take away debt and a high cost lifestyle, and add in a generous amount of savings and the ability to live on very little, and we’re pretty much free to… Read more »

chaosting
chaosting
11 years ago

Under the influence of Rich dad,Poor dad, for me, financial freedom means money makes money instead of work so that I have time and money to pursue my other goals, such as travelling all around the world.But what concerns me most is how to reach financial freedom.Can you post some articles about it? Thanks.

Bulldog Gin Co.
Bulldog Gin Co.
11 years ago

I spent $67 bucks on yummy fruit (plums, nectarines, pumelo, melons, and cherries) yesterday. Nothing is better than fresh fruit everyday. If i didn’t have my finances i’d be bummed.

As I have a good chunk of change in the bank.. i go to work with little pressure. I work out of joy, not out of necessity, which leads to resentment.

Just like when i went to graduate school. I LOVED IT b/c i didn’t care about my grades. If i did i wouldn’t have liked it as much.

Jeremy M
Jeremy M
11 years ago

As T. Harv Ecker puts it, “How you do anything is how you do everything.”

If you blow off one part of your life, you are out of balance and not really doing the other parts justice.

David
David
11 years ago

Being debt free shouldn’t be confused with having money. Financial independence simply means that your income allows for all of your needs, and that you owe no financial obligations to anyone. It should not be confused with being ‘rich’. In fact, some of what is suggested — travel, living abroad, doing the job you like — is easier managed when you’re poor. Couch surfing, volunteer work, and more makes sense when active income streams aren’t controlling your life. Like making money to pay the rent. These active income streams can be just as much a hinderance as any large debt.… Read more »

Tracy
Tracy
11 years ago

To me financial freedom would mean that I would be in a position to finally give back. Be it to the community, the less fortunate, or those who helped me along my way. It’s been great to read everyone’s response on this issue. What I find a bit sad is how many people seem to have/are sacrificing their happiness for a job they hate. Money is great, but it is not the end all. I’ve quit jobs I hated and I’ve quit jobs I loved in locations I hated and moved. It may have put me back a few steps… Read more »

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