People equate financial freedom with being rich. Such a shame. All those people who will never be rich — folks like me who have to work hard for every red cent we make — longing for a goal that’s unattainable. What exactly is “rich” anyway? Ask a hundred people how much money they’d need to feel rich, and you’ll get a hundred different answers. Give folks the amount they classify as “rich”, ask them again, and watch the bar for “rich” rise.
I consider myself to be rich. I’ve got a happy home life, two kids I’d die for, work that I love to do. And I’m financially free. You can be too. All it takes is a commitment to doing the detail and a sense of balance.
If you define financial freedom as freedom from stress, then the road to freedom must be paved with more than good intentions. It requires action: small steps that lead to a big sense of well being. And that’s where doing the detail comes in. Being free means not having to worry. To not worry, you’ve got to take care of all the what-if’s.
You must save. If you want to have money set aside for the future — tomorrow, next week, the year 2025, you have to NOT spend it today.
You must manage your cash flow to keep yourself in the black, minimize your credit costs, and eliminate the midnight spectre of bogeyman reminding you that you’ve bounced yet one more cheque. And if you want to protect yourself and your family, at least financially, from life tragedies — death and disability — you need insurance.
None of this is, in itself, difficult.
To save you take $5, $10, $25 a week or month from your cash flow and put it somewhere that you can’t spend it.
To invest, you choose a financial vehicle you understand that meets your needs in terms of time and risk/reward, and use it to put your money to work for you. You start with an easy investment that you understand completely and as you learn more you become more adventurous.
To gain control of the credit, you throw the cards behind the freezer so you can’t use them for a while, transfer your balance to a cheaper form of credit so you’ll pay less in interest, and squirrel away as much as you can to pay off that debt so you can eventually live debt free.
For those who see these small steps as overwhelming — you want to run and hide from past sins and a future that seems less than rosy — stop measuring yourself by external standards. Anyone can be smart about money. It doesn’t take a special brain. It doesn’t require a degree of any kind. And being smart about money — once you’ve committed to doing the detail — is more about having a sense of balance than anything else.
Balance, of course, is the ability to deal with a variety of things at once, giving each just as much attention as it deserves. Don’t be influenced by someone else’s — anyone else’s — standards. Doing nothing because you can’t meet some standard arbitrarily set by someone else is dumb. How much is enough? Only you can decide.
When you do set goals for yourself, make them realistic so you don’t end up beating yourself up for missing the mark. Work steadily toward whatever it is you want to accomplish. And remember that as long as you’re moving towards your target, you’ll be on the right road.
Today, if you haven’t begun an emergency fund, decide you’re going to save just $10 a week. Come on, finding $10 is totally doable. If you don’t have a will, decide that by the end of the month you will have made an appointment with a lawyer. And if you haven’t yet established a debt repayment plan, sit down this weekend, do the math and calculate your debt-free forever date so you know what you’re working towards.
Also decide that you’re not going to feel bad, overwhelmed, stupid, stressed, or anything else negative about your money anymore. Instead, you’re going to do something about it — no matter how small those steps — so you can achieve your own sense of financial peace.