Freedom!…

Financial freedom is something that pretty much everybody wants.  I think most folks would focus on two key elements; time and money. But I don’t think it’s a simple matter of having lots of pounds and lots of free time. Instead, I believe financial freedom rests on two key pillars.

Spend Your Time How You Wish

First, can we spend our days as we wish? Time is the ultimate limited resource, which is why things that waste time such as waiting in queues, sitting in traffic or phoning utility companies can be so infuriating.

None of us knows how much time we have left but we DO know that one day it’ll run out, so it’s crucial we make the most of the days have. We should spend our time with those we love and doing the things we love (not necessarily in that order!).

For those who love their job (and maybe their colleagues) even though they’ve not achieved financial independence in the traditional ‘I never have to work another day in my life’ sense, they’re pretty close because not only do they get to do what they love but they also get paid for doing it.

That brings me to what I think is an outdated definition of retirement. Over the years, I’ve heard people say that if someone’s still earning money, even if it’s from part-time work in their 60s or 70s, they aren’t truly retired.

I think that’s a dangerous mindset. Next thing you know, they may decide that doing anything that looks like work, paid or unpaid, is against the rules of retirement, and soon they’ve committed themselves to a dreary life of nothingness.

My feeling is we all need a sense of purpose, whether we’re working or retired. The great thing about financial freedom is that we can CHOOSE our purpose. 

We have the freedom to decide to devote time to things we’re passionate about and find fulfilling.  It could be volunteering, time with family, hobbies, travel, pub(!).  The list is, of course, endless.

There’s great pleasure in working hard at things we care about deeply.  Who cares if these activities happen to pay a little money?

Don’t Worry About Money

A lot of people worry constantly about their finances, often because they have to! They struggle to live within their means (not always their fault) so spending, even if it’s intended to boost their happiness, often ends up boosting their stress levels. And, no, this isn’t just an issue for those on low incomes.

That raises the age-old question: Does money buy happiness? If we’re struggling to afford life’s necessities, the answer is a resounding ‘yes’ but, If we can lift ourselves out of poverty, or do so with help from others, our happiness will be greatly improved. Throw a few thousand pounds into the bank account, and we’ll also have a sense of financial security that’s crucial to peace of mind.

But once we’ve achieved a minimum standard of living and have some sense of financial security, happiness for a lot of people becomes less about our absolute level of wealth and more about our standing relative to others.

A recent study found that the higher our income rises, the happier we’re likely to be, with the gains in happiness becoming smaller with each incremental pound. That suggests that our income relative to others is what matters.

I’m not suggesting the research is wrong, though I do think the results are likely skewed by what’s called a focusing illusion. In other words, when those who are better off are asked about their happiness, they think about their fortunate financial standing relative to others and that prompts them to say they’re happy. This is the power of gratitude at work.

Instead, I’d argue the researchers are focusing on the wrong ‘relative’. True happiness doesn’t rest on how we stand relative to others (though those around us may influence our material desires). Rather, happiness hinges on how we stand relative to our individual wants and needs which is much harder to measure.

If we earn great chunks of money but our desires regularly run ahead of our income, we’ll suffer enormous financial stress because we’ll never feel like we have enough. To be sure, earning more or having more means we’re more likely to have sufficient money to cover our wants and needs, but there’s no guarantee that we’ll feel like we have enough.

Financial freedom isn’t a massive bank balance or investment portfolio. It’s knowing we have enough to pay for the life we want. It’s the ability to enjoy two great luxuries; spending our time as we wish and not having to think about money.

I’d be keen to know if you agree or disagree with my observations but, please, be polite!

Until next time…