At first glance the term Financial Freedom seems easily understandable. It suggests a state of monetary being where one can live however one chooses. Yet, upon closer review we find that definition perhaps too general to be truly actionable. In order to create movement towards achieving financial freedom, we must narrow our definition. And, define our terms. This then allows us to create specific goals and measures to determine if we are on the right track.
There are several terms often used interchangeably when we speak of financial freedom. Financial Security comes to mind. Also, Financial Independence is seen as closely associated with Financial Freedom. Then there’s Wealth Building and Management. Are these terms really just different ways of saying the same thing? Well, not really. While related they are not identical.
The excerpt below is from a longer article by “Kevin” a writer for the Invest It Wisely site and outlines more precisely the meanings of the two most common terms Financial Freedom vs. Financial Independence.
It is entitled “The 3 Stages of Financial Freedom” and is a quick read. The longer article will be published here in the future.
(Please note that the views and information in this excerpt are strictly those of the author and do not necessarily reflect those of Financial Freedom News, its editors and staff, or its affiliates/clients, etc. Readers are urged to exercise due diligence prior to applying any of the recommendations made in this article. Readers are further urged to use due diligence regarding he purchase of any products/services offered by the author’s publications/website.)
Let us know your thoughts about the author’s views in the comments section. FFN Editors
The 3 Stages of Financial Freedom
- by Kevin” href=”http://www.investitwisely.com/author/iiw_admin/” rel=”author”>Kevin
Last week, I talked about the three stages of financial despair. We all want to get out of the rat race, but before we get there, we need to get out of the hole and onto level ground.
Financial independence is one of my life-long dreams. I don’t really believe in the “traditional paradigm” of working until your mid 60s, and then rushing to catch up on everything that you missed during the preceding decades.
I also don’t believe in the minimalist approach to financial independence. I think it’s great if some people are willing to live in a trailer, or carry all of their possessions in a couple of suit cases. If you want to achieve early financial independence, then you will need to be a bit more extreme about it. This approach has its merits, but I am not willing to be that minimalist.
My philosophy of financial independence
My approach to financial independence is rooted in the following philosophy:
- The world level and quality of capital is increasing, in spite of the best efforts of entrenched interests (including governments and certain businesses) to prevent this. There will never be an end to scarcity, but I believe that absolute poverty will be eradicated within this century. It already mostly is in the rich western nations.
- Quality and quantity of life will increase hand in hand. I expect that most people younger than 50 today can fully expect to live to 100 and beyond. I have a series of posts where I talk more about this.
I personally think that it’s amazing that people today even have the opportunity to achieve financial independence and retire early. We have access to an amazing set of opportunities that our forebearers could only have dreamed about. We truly stand on the shoulders of giants.