Financial Freedom

“When you realize that your ‘self worth’ is not determined by your ‘net worth’, then you’ll have financial freedom.”

–Suze Orman

If there’s something I recently discovered is, there’s quite a lot of people that are familiar with the term “financial freedom” but don’t have a clear understanding of it. As my dad would tell my siblings and I, “if you say you know something but fail to explain it to another person in such a way that they overstand it, then you don’t know it.”

This is the main purpose of this article, to give my readers a better understanding of financial freedom and to also put out there the importance of it. When I was still drafting my article, I found it quite challenging to come up with a short but brief definition of the term, but I was lucky enough to have succeeded.

When we define financial freedom, we say it is the stage of financial stability, where one is free from all debts (good and bad, let us remember that good debt can always turn into bad debt) and is able to sustain their lifestyle without being in a rat race, i.e living paycheck to paycheck. You are able to take certain life decisions without the worry of what life will throw at you since you have prepared yourself.

Let me use ‘freedom from hunger’ as an example. As human beings, one of our basic needs for survival is food, we need food to keep us going, right? But because of the relative abundance of food we have, hunger shouldn’t have to be a driving force in our decisions. If I didn’t have food, getting just enough to eat would be the only thing I think about. Being financially free is the same. It’s true that money will always play a significant role in our lives but when it is no longer the dominating influence in your decisions (when you control your finances and aren’t controlled by them), then you’ve reached financial freedom.

Chasing Financial Freedom Is More Important Than Chasing Riches

Being financially free is not the same as being rich or wealthy, even though people may confuse the two. These are two separate goals. A person can reach financial freedom earning R300 000 per year, another may be making millions but could be trapped and drowning in serious debt.

When it comes to food, there is a limit to the amount you can consume. Once you go beyond that limit, chances are you’re going to feel sick (in economics, we call this the law of diminishing marginal utility). So once you’ve reached a certain threshold, you are guaranteed freedom from hunger. However, there is no limit for spending money, and this is the reason why most are free from hunger but aren’t free from money.

If your spending rises above your income, you aren’t financially free; rich or not. Being rich/wealthy is the goal, but if there is something people don’t know is that, it doesn’t guarantee peace of mind, and it doesn’t guarantee the satisfaction that comes with financial freedom.

So why do I say chasing financial freedom is more important than chasing riches? It’s because when you’re financially free, you get to live your best life. I know most people might think that having fancy possessions and material things is living your best life, but material things and fancy possessions only lead to short term happiness, the goal of financial freedom is long term.

Not only will you be the one in charge of your finances but you will be free to live the life you want without thinking of the “what ifs.” You’re able to do what you love on your own terms and you never have to worry about what would happen if you lose your “J.O.B.”

Most would think it is impossible to achieve this, but need I remind you of the saying that says, “Nothing is impossible. Even impossible itself says I’m possible.” It May be hard but it is no way impossible. Let us keep in mind that it is the decisions you take today that are going to impact your life tomorrow.

You Don’t Need A Lot Of Money To Enjoy Life To The Fullest

I once read a story about a rich tourist and a local fisherman. It goes something like this:

A rich businessman while on holiday in a foreign land approaches a local fisherman who is relaxing next to his boat watching the waves gently rustle up the shore.

“Why aren’t you out there working?” he asks the man.

“Because I have already caught enough fish for the day,” the fisherman replies.

“But if you were out there fishing now you could sell all the fish you catch and make extra money,” urges the foreign businessman. “You could save up the extra money you earn and buy another boat. Keep on working like that and soon you could own a whole fleet of boats and start up a business in international trade.”

“And why would I want to do that?” asked the fisherman, barely looking up from under the brim of his straw hat.

“So that you could become rich enough like me to be able to sit back and enjoy life.”

“But what,” replied the fisherman, “do you think I am doing now?”