Financial Freedom: What does it mean to you?
Financial freedom or financial independence, it goes by many names but I think the one that people think they know it best by is Retirement. Retirement by definition is the act of leaving one’s job and ceasing to work. Most people tend to retire in their later years around 65. This is usually when their pensions mature and old age security or whatever financial programs they have in place are able to be taken advantage of. But is retirement financial freedom? If you could retire earlier, would you?
In my opinion financial freedom is not retirement, it’s the ability to not depend on the pay cheque from a regular job to maintain your desired lifestyle. People seem to want to make Financial Freedom and retirement the same, but they are two different things.
People don’t always retire because they are financially free, people are sometimes forced into retirement through injuries or layoffs in their last few years of planned work. No one is ever forced into financial freedom, even those that win the lottery often go bankrupt through poor or high risk financial planning or spend all of their winnings within the first 5 years(44% according to this one small sample). Financially free people have enough money to live their lifestyle and have no need to take large risks that could lead them to bankruptcy.
The average retirement age in Canada is 65, that’s more than 116% of my current life away. The average age to being financially free? Who knows, financial freedom is different for everyone.
Being financially free could give you the chance to pursue passions that you may only be doing as a hobby or maybe have given up on because your day job has consumed the majority of your time. I personally don’t know what I would do with my financial freedom, but I’d have a great amount of confidence knowing that if I lost my job tomorrow, I wouldn’t lose my level of comfort or have to make many sacrifices to get by if I was currently financially free.
I think with that extra cushion of having financial freedom, many of us might take more risks with our time. The idea of operating your own business wouldn’t seem so daunting because you don’t need to draw a salary from it. Or what if you wanted to learn how to do your own home renovations? or learn a new hobby? Or teach yourself some new skills? I’d like to think positive here and say that a lot of us would be much healthier, there’d be no excuses for not having time to be active and exercise. (eventually you’d run out of Netflix shows and HAVE to exercise, right?)
To me, Financial Freedom is a cushion. It’s a safety net to be able to take the risks I want to take without having to worry about losing my current lifestyle. That being said, once I get to the point of financial freedom I don’t think I would drop everything. Maybe I’ll want to build the nest egg even further or save for a vacation of several months(by that time I’d deserve it right? :D) Or maybe I’ll just want to take a few years off to become a stay at home dad. I have no idea when I’ll achieve my goal and I have no idea where I’ll be in life at that point. Whatever the outcome, you’ll be able to see my journey in the pages of this blog.
What’s your definition of financial freedom? I’d love to hear other people’s views on it. Comment below!